Labor's super tax includes option to avoid asset sales by allowing option to pay tax from super fund, Sky News reveals
Sky News can reveal the Albanese government's tax on superannuation balances above $3 million will allow people to pay the charge directly from their super funds.
The move is designed to counter concerns that individuals will be forced to sell assets such as farms or investment properties to meet the cost of the tax.
The option mirrors existing provisions under Division 293 of the tax code, the extra tax on people earning more than $250,000 a year.
Under Labor's plan, the same mechanism will be available, enabling individuals to use their super balance to pay the tax, even though it will apply to unrealised capital gains.
Treasurer Jim Chalmers believes the fact that people can pay the tax out of their super should negate the argument people will have to offload assets to pay the tax.
The proposed tax—an extra 15 per cent on earnings for balances over $3 million—has drawn heavy criticism for including unrealised capital gains.
Critics have warned that taxing unrealised gains could unfairly impact superannuants whose wealth is tied up in volatile or illiquid assets like property or businesses.
Adding to concerns has been the government's decision not to index the $3 million threshold to inflation.
AMP Deputy Chief Economist Diana Mousina conducted modelling that showed the average 22-year-old will be hit by the tax by the time they retire.
The government has said the measure is modest, fiscally responsible, and affects only a small proportion of high-balance accounts.
The Coalition has confirmed it will oppose the super tax 'every step of the way' after speculation about possible negotiation on the indexation and unrealised gains.
Shadow treasurer Ted O'Brien has slammed the proposal as 'grossly unfair' and said it 'flies in the face' of Coalition values.
'To think a person can make a theoretical profit—no money in their bank—and get taxed on it every year, that's not fair,' Mr O'Brien told Sky News on Thursday.
The government is expected to rely on support from the Greens to pass the legislation in the Senate.
The minor party has indicated in-principle support but has floated two possible amendments - lowering the threshold to $2 million and ensuring it is indexed to inflation.
Some politicians under the generous defined benefit pension schemes will not have to pay the tax until after they retire.
Sky News Sunday Agenda also revealed recently that state officials on the old pension schemes will be exempted from the tax due to constitutional protections.
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