Federal government agrees to changes on super tax concessions

ABC NEWS (Australia)

Treasurer Jim Chalmers has outlined changes to his stalled superannuation tax reform bill for people with balances of more than $3 million. After two years of saying there was no room to move, six changes have been endorsed by the cabinet.

Transcript

00:00About the only thing that remains the same from these changes that Treasurer Jim Chalmers

00:06has announced today is that for people with balances in their super of more than $3 million,

00:12there will be a higher concessional tax rate. But he has caved in to some criticism that's

00:18been unrelenting since these changes were announced two years ago. The first is that

00:22it will now only apply to realised capital gains, not unrealised as initially proposed,

00:28and it will index these new thresholds year on year. So what we're going to see is for people

00:33with balances of more than $3 million on their annual earnings, they're going to have a concessional

00:39tax rate of 30% going forward. And for people with balances of more than $10 million, that tax rate

00:45is going to be 40%. Now, that's going to raise a little bit less than expected. It was initially

00:51supposed to be $6.2 billion over the forward estimates. That's now going to reduce to $2

00:56billion over the forward estimates. But Treasurer Jim Chalmers says that's mostly because these new

01:02changes are going to take effect a year later than expected. He's now hoping that they'll get through

01:07by July 1, 2026. The other big change is an increase to the low income super tax offset for

01:14low income earners of up to $45,000. That's going to increase from $500 to $810. Now, all the media

01:23commentary so far is Treasurer Jim Chalmers has been rolled by Prime Minister Anthony Albanese,

01:29who's never quite been as confident and exuberant about these changes as the Treasurer has. Lots of

01:34questions got put to the Treasurer today at his press conference. Here's what he had to say.

01:41First of all, I don't accept that, because what we're talking about here is tax reform in super,

01:49which makes the system more sustainable. And we found another way to do that. The Prime Minister

01:55and I have had discussions over recent months about finding another way to satisfy the same objectives,

02:02and that's what's happened here. I do accept that this is a change to the proposal that we made more

02:08than two years ago. And I think what it demonstrates about me as Treasurer, but also more importantly

02:15about the government as a whole, is that we work through these issues in a considered and methodical

02:20way. We're always looking for the best way forward, and I'm confident this is it.

02:23These changes have a bit of something for everyone. There's the low income super tax offset to try and

02:28get the progressive side of politics and the Greens on board. And then there's some changes for the

02:33Coalition, who talked about the unrealised gains being a deal breaker for them and the lack of

02:38indexation. So Treasurer Jim Chalmers now is able to walk into the room and say,

02:43let's support this and get it going. He said he's had productive conversations already with

02:48Greens leader Larissa Waters. We're expecting to hear from her very soon. The Treasurer says

02:53he's hopeful. He doesn't expect a big fight from the superannuation lobby either. So it will be

02:59really interesting to see how the government goes about getting this through. But there are big

03:03changes now, and there'll be questions for Jim Chalmers to answer for a long time about how he's gone

03:08from two years of insisting that it's his way or the highway. And now there's significant moves away

03:14from that.

03:23For people with balances of more than $3 million, after two years of saying there was no room to

03:30move, six changes have been endorsed by the Cabinet. Political reporter Adam Langenberg joins us now.

03:37Hi there, Adam. So just take us through what's been announced.

03:39About the only thing that remains the same from these changes that Treasurer Jim Chalmers has

03:45announced today is that for people with balances in their super of more than $3 million, there will

03:51be a higher concessional tax rate. But he has caved in to some criticism that's been unrelenting since

03:57these changes were announced two years ago. The first is that it will now only apply to realised capital

04:04gains, not unrealised as initially proposed, and it will index these new thresholds year on year.

04:10So what we're going to see is for people with balances of more than $3 million on their annual

04:15earnings, they're going to have a concessional tax rate of 30% going forward. And for people with

04:21balances of more than $10 million, that tax rate is going to be 40%. Now that's going to raise a little

04:27bit less than expected. It was initially supposed to be $6.2 billion over the forward estimates. That's now going to

04:33reduce to $2 billion over the forward estimates. But Treasurer Jim Chalmers says that's mostly because

04:40these new changes are going to take effect a year later than expected. He's now hoping that they'll

04:45get through by July 1, 2026. The other big change is an increase to the low income super tax offset for

04:53low income earners of up to $45,000. That's going to increase from $500 to $810. Now, all the media

05:01commentary so far is Treasurer Jim Chalmers has been rolled by Prime Minister Anthony Albanese,

05:07who's never quite been as confident and exuberant about these changes as the Treasurer has.

05:12Lots of questions got put to the Treasurer today at his press conference. Here's what he had to say.

05:31our office and the Treasurer Jim Chalmers was also focusing on and is looking at the Treasurer Jim Chalmers if

05:50the Treasurer Jim Chalmers was looking at the Treasurer Jim Chalmers that he has to have all the

05:55So Adam, what are the chances of this actually being supported in Parliament?

06:08Mel, these changes have a bit of something for everyone.

06:11There's the low income super tax offset to try and get the progressive side of politics

06:15and the Greens on board.

06:17And then there's some changes for the Coalition who talked about the unrealised gains being

06:21a deal breaker for them and the lack of indexation.

06:24So Treasurer Jim Chalmers now is able to walk into the room and say, let's support this

06:29and get it going.

06:30He said he's had productive conversations already with Greens leader Larissa Waters.

06:34We're expecting to hear from her very soon.

06:37The Treasurer says he's hopeful.

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