Plans to Boost Wealth Super Tax Scaled Back
The original idea aimed to double the tax rate on earnings from super balances over $3 million. This was designed to limit generous tax breaks that mainly benefit high-income earners. While only about 80,000 Australians currently have accounts above that level, critics warned the threshold wasn’t indexed to inflation. This meant more people could be caught in the future.
The government has now made several key adjustments, following a community and industry backlash. The start date has been pushed back to 1 July 2026, and the tax structure has been revised to better reflect different balance levels. Under the new plan, balances between $3 million and $10 million will attract a 30% tax on earnings, while balances above $10 million will face a 40% rate.
One of the biggest changes is the decision to drop the tax on unrealised gains. This means people will no longer be taxed on paper profits that haven’t actually been cashed out. The $3 million threshold will also be indexed to inflation, ensuring everyday workers aren’t pulled into the higher-tax bracket over time.
To help balance the reform, the government is boosting the low-income superannuation offset. This will provide extra support for around 1.3 million lower-income Australians, many of whom are women.
Treasurer Jim Chalmers said the changes are designed to make the super system more sustainable and equitable while protecting the retirement savings of most Australians. The government estimates the delay in implementation will cost about $4.2 billion over four years.
While the final version of the plan is less aggressive than the original, it still aims to ensure that Australia’s wealthiest investors contribute a fairer share to the nation’s finances. Opposition parties have yet to confirm whether they’ll support the revised legislation, but early reactions from the superannuation industry suggest the compromise has been well received.
Most Australians won’t be affected by the higher rates, and low-income earners will see a modest boost to their future super balances. The updated plan strikes a more balanced approach, protecting everyday savers while asking those with multi-million-dollar nest eggs to shoulder a little more of the tax burden.
