Massive development in Albo’s plans for superannuation

Labor’s radical plan to double taxes on Australians with more than $3 million in super looks will be scrapped amid opposition in the Senate.

Treasurer Jim Chalmers has now indicated he is unwilling to compromise with the Greens and independent senators to get this bill through before the next election in May 2025.

“The Greens want to vote against fairer taxes on people with millions in super money,” he said on Tuesday morning.

Dr. Chalmers compared the Greens who opposed this bill – because the $3 million threshold was too high – to the small party that previously blocked Labour’s ‘Help to Buy’ and ‘Built to Rent’ plans.

“This is another housing issue, where the Greens say they want fairer taxes and then choose to vote against it,” he said.

“They shouldn’t need us to sweeten the deal to do the right thing.”

In a confusing signal, Chancellor of the Exchequer Katy Gallagher said Labor was still going ahead with its pension plan despite continued opposition in the Senate.

“We are in negotiations to get as much through as possible, but that certainly remains Labor policy,” she told reporters in Canberra on Tuesday.

“I’m not going to give up until the end of the bells when we finish getting all our legislation done this week.”

The government announced on Sunday it would drop its anti-misinformation bill after the Greens expressed opposition, but has yet to officially capitulate on its pensions policy.

Labor announced early last year that the government would double the concessional rate on the top 0.5 percent of pension balances from 15 to 30 percent.

Prime Minister Anthony Albanese’s government argued that this policy of doubling taxes on super contributions would only affect 80,000 people with more than $3 million in retirement savings.

The bill also included an unprecedented plan to tax unrealized profits.

This would essentially see Australians paying tax on the increased value of an asset they still owned and had yet to sell if they had superannuation assets above that $3 million threshold.

The Labor proposal is radical because individuals are normally taxed on assets after they are sold – and not before.

The policy, which has not been implemented anywhere else in the world, would have forced Australians with self-managed super funds to sell things like real estate or farms.

Treasurer Jim Chalmers has now indicated he is unwilling to compromise with the Greens and independent senators to get this bill through before the next election.

Although European countries have taxed unrealized capital gains, they have not focused on retirement savings.

The Greens said in March last year they would oppose Labour’s plan to double taxes on super contributions above $3 million because it did not go far enough.

They wanted the 30 percent tax rate threshold to rise to $1.9 million, with the additional revenue used to increase Social Security benefits.

Blue Green MPs opposed taxing unrealized profits with Allegra Spender, who represents the wealthy electorate of Wentworth in Sydney’s eastern suburbs, working with Canberra-based senator David Pocock to block that policy.

The Labor package was intended to recover $2 billion in lost revenue.

But with Greens and independent senators opposed to the bill, Labor could abandon its high super contributions policy before the next election.

The coalition was against Labour’s super policies from the start.

The SMSF Association last month called on the Senate to reject Labor legislation entirely after the bill passed the House of Representatives.

Prime Minister Anthony Albanese’s government argued that Labour’s policy to double taxes on super contributions would only affect 80,000 people with more than $3 million in pension savings.

Chief executive Peter Burgess said Labour’s pension savings account would be bad for farmers with self-managed super funds, who would be forced to sell farming assets tied up in their pensions.

“In all likelihood, the fate of this bill now rests in the hands of the Senate bench, and we urge them to listen to the concerns of a growing number of voters,” he said.

‘Despite all the evidence of unintended consequences presented to the government since this tax proposal was first mooted in early 2023, it appears determined to continue taxing unrealized capital gains, which will be disastrous for thousands of primary producers and small businesses producers. and family businesses that will be impacted by this tax.”

If Labor goes ahead with this bill and demands a popular mandate, the country will also face a negative campaign from the self-managed super fund lobby in the run-up to the election – echoing what happened in 2010 when Labor proposed a mining tax.