Warning about Anthony Albanese’s ‘wealth tax’ that could hit thousands of Australians: Here’s what you need to know about the planned super shakeup
- Labour’s super plans described as ‘wealth tax’
- Center for Independent Studies is concerned
Anthony Albanese’s planned super shake-up has been described as a ‘wealth tax’ that could discourage Australians from investing in retirement.
Prime Minister and Treasurer Jim Chalmers is going into the next election with a plan to double the concession rate for those with $3 million or more in retirement savings.
If Labor were re-elected, the wealthiest 0.5 per cent of the population would see their favorable tax rate on super-contributions double to 30 per cent – from 15 per cent from 1 July 2025.
The Center for Independent Studies, a conservative think tank, has described this as a “wealth tax” that would discourage the wealthy from investing in super to avoid paying more taxes.
Anthony Albanese’s planned super shake-up has been described as a ‘wealth tax’ that could discourage Australians from investing in their retirement (the Prime Minister is pictured right with his girlfriend Jodie Haydon)
Robert Carling, a senior fellow, likened it to a land tax where someone was taxed on unrealized capital gains, in a submission to the Treasury made public Thursday.
“In effect, the proposed calculation of income makes the new tax a wealth tax — or at least a tax on the annual increase in this portion of one’s wealth,” he said.
“There are no other comparable taxes in Australia apart from the states land taxes.
“So for the first time in the Australian system unrealized capital gains are included.”
The Center for Independent Studies argued that Labor’s proposal would discourage the wealthy from investing in retirement.
The Center for Independent Studies, a conservative think tank, has described this as a ‘wealth tax’ that would discourage the wealthy from investing in super to avoid paying more tax (pictured: Sydney’s Royal Randwick Racecourse)
“Another consequence will be that those affected by the change will do their best to avoid it by reducing their total super balances to below $3 million — or even getting out of super altogether,” it said.
The federal government says the proposal would only affect 80,000 Australians, but the Financial Services Council, which represents retail superfunds, argued it would harm 500,000 people over the coming decades, including 204,000 now under 30, unless it was indexed for inflation.
Labour’s Better Targeted Superannuation Concessions proposal announced in March aims to saves the budget $2.3 billion a year in lost revenue.
But the Center for Independent Studies said the policy would only encourage tax avoidance.
‘Any claim of significant additional income is dubious; as the new tax is likely to be met with strong tax avoidance behavior responses, as noted above,” it said.
“In short, the government’s proposal should be shelved and reconsidered only in the context of a broader tax reform package.”
The rate of mandatory employer contributions increased by half a percentage point to 11 percent on July 1, rising annually in steps of half a percentage point until reaching 12 percent in July 2025.
Labour’s plan to raise taxes on contributions is the biggest shake-up since the introduction of the compulsory super in 1992 under the leadership of a Labor prime minister, Paul Keating.