On 28 February 2023, the Federal Treasurer announced a plan to tax superannuation account balances above $3 million at a rate of 30%. It is proposed that this would start from the 2025/26 financial year, which is after the next Federal election. There are a few key issues with this proposal that have generated significant debate. The first is with respect to the apparent refusal to index this figure, which would result in the number of impacted Australians increasing significantly over the years. The second is with respect to how the amount of the income on the balance above $3 million would be calculated. The suggestion is that income would be assessed inclusive of unrealised gains. This is inconsistent with other tax treatments and has generated a lot of debate.
There has been some strong opposition to these changes, and it will be dependent upon the result of the next election, however it will require some careful consideration of the practical issues.
We welcome member feedback on this proposal to increase the tax rate on higher superannuation balances. Please send your thoughts to email@example.com.