Money
Australia revises superannuation tax plans for fairness
Australia revamps retirement tax with new thresholds and increased support for low-income earners amid political pressure
Australia revamps retirement tax with new thresholds and increased support for low-income earners amid political pressure
– Treasurer Jim Chalmers announced a 40% tax on retirement balances over $10 million, aiding low-income earners.
– The reform improves the Low Income Superannuation Tax Offset, helping 1.3 million Australians with higher annual payments.
The announcement comes after months of political and industry pressure and represents a major shift from the original policy.
It addresses prior criticisms related to indexation and taxation of unrealised capital gains.
Under the revised policy, balances between $3 million and $10 million will face a 30 percent concessional tax rate.
Both thresholds will now be indexed to inflation to prevent bracket creep affecting middle-income Australians.
The government has also removed taxes on unrealised capital gains, with changes applying solely to realised earnings from 2026.
“This has been a contentious policy,” Chalmers stated, indicating that it affects less than 0.5 percent of Australians, with about 80,000 anticipated to have over $3 million in superannuation next year.
Key Benefits
The reform package significantly improves the Low Income Superannuation Tax Offset (LISTO).
Annual payments will rise from $500 to $810, with an increased eligibility threshold from $37,000 to $45,000 by 2027.
This adjustment will assist approximately 1.3 million Australians, mainly benefiting women.
Eligible workers could gain around $15,000 in retirement, increasing LISTO eligibility to 3.1 million Australians.
The changes could generate about $1.6 billion in net revenue by 2028-29, a decrease from the original $2.5 billion projection due to enhanced LISTO benefits and extended implementation.
