Anthony Albanese confirms changes to superannuation
Australia’s super rich are set to pay more on their superannuation funds, Prime Minister Anthony Albanese has confirmed.
The announcement came one week after Treasurer Jim Chalmers declared there would be a review of the superannuation scheme’s future, and that the proposed changes would only impact about 0.5% of Australians, with the added benefit of saving the budget $2b.
The changes would see Australians with over $3m in their super accounts have their concessional tax rate doubled - from 15 per cent to 30 per cent - and won’t be effective until around 2025-26. On average, Australians have about $150,000 in their super accounts. However, for the 80,000 individuals with over $3m to their name, the average rises to a substantial $6m.
The remainder, the other 99.5 per cent of Australians, are set to continue receiving the same tax breaks as they were before, according to Chalmers.
Albanese has now stated that this marks an “important reform” and would not alter the fundamentals of the existing system, and if anything would only serve to make it stronger.
“With 17 people having over $100 million in their superannuation accounts, one individual with over $400 million in his or her account, most Australians would agree that this is not what superannuation is for. It’s for people’s retirement incomes,” he explained. “Confronted with this information, it would be irresponsible to not take any action whatsoever. This reform will strengthen the system by making it more sustainable.”
In a statement, Chalmers expanded on the situation, saying, “the majority of these super tax breaks go to high income earners.
“For instance, over 55 per cent of the benefit of superannuation tax breaks on earnings flow to the top 20 per cent of income earners, with 39 per cent going to the top 10 per cent of income earners.”
Chalmers also explained how the government inherited $1 trillion of debt, and that it was becoming increasingly more expensive with rising interest rates.
“We have persistent and growing spending pressures,” he explained. “Budget pressures are intensifying, rather than easing. This is the mess that we were left with and this is the mess we’re trying to clean up.
“This announcement is part of the effort. Every dollar spent on a tax break with tens of millions of dollars in super, is a borrowed dollar that makes the deficit bigger.”
He added that higher earners would still receive tax concessions, although people shouldn’t expect them to be quite as generous anymore.
“I’m confident that Australians will see this change as modest, reasonable, and fair. But one which makes a difference to the sustainability and affordability of the superannuation system that we cherish.”
Anthony Albanese assured Australians that the changes did not mean that the concessional tax would be altered for the remaining 99.5 per cent of Australians.
“People can see what we’re doing here,” he said. “Which is why we’re proposing a change that will have an impact on 0.5 per cent of the population. There will be no changes this term [to super]. Even this change.
“We can’t be clearer.”
Images: Getty