The sneaky way Anthony Albanese will turn Australia into a high-taxing European nation with new super tax
The federal government wants to impose a new 15 per cent tax on unrealised gains on super balances above $3million, where capital growth would be taxed before assets are sold.
Wilson Asset Management chairman Geoff Wilson said this departure from taxing capital gains after assets are sold would see Australia share a similarity with European nations, which are renowned for their high taxes and targeting the rich.
'Australia is proving to be no different from Norway, Spain and Sweden, where taxing unrealised gains led to capital exodus and therefore lower than expected tax revenue,' he said.
In 2023, the Labor government announced that from July 1, 2025, 0.5 per cent, or 80,000, of super balances with more than $3million would be hit with a new 15 per cent tax on unrealised gains.
This would be in addition to the 15 per cent tax on earnings that already exists for all super during the accumulation or working phase.
The debut of a new tax on unrealised gains also marks the biggest change to the capital gains tax since it was introduced in Australia in 1985.
Previously, European nations have been the main enthusiasts for taxing the notional or paper value of assets, based on gains during a financial year.
Norway applies a 38 per cent unrealised gains tax on the wealth of those who leave.
Sweden does a similar thing, but with a 30 per cent exit tax on unrealised gains.
Spain also has an exit tax, based on unrealised gains, if someone with a large investment portfolio leaves the country to become a tax resident elsewhere.
Germany during the 1970s and 1980s taxed unrealised gains on wealth, but the policy was notoriously difficult to administer.
France still has a wealth tax that applies on assets worth more than €1.3million (AU$2.1million) of real estate assets, but it stops short of taxing unrealised gains.
Other European nations, renowned for having higher income taxes to fund more services, do not touch retirement savings in the way Labor is proposing to do.
US Democrat presidential candidate Kamala Harris last year campaigned to tax unrealised gains on wealth - but only for the ultra rich with assets worth US$100million (AU$152million) or more.
Australia would be the first to apply an unrealised gains tax to superannuation, in a bid to raise $2.3billion a year in Budget revenue.
Left-leaning crossbench senators David Pocock and Jacqui Lambie last year declined to back Labor's Better Targeted Superannuation Concessions bill, because they are opposed to taxing unrealised gains.
The Greens back taxing unrealised gains but want the threshold reduced to $2million, but indexed to inflation.
They hold the balance of power in the Senate, and Labor is still negotiating amendments with the minor party.
The government has previously flagged giving Australians a year's notice from the time legislation is passed, with Mr Wilson noting panic selling was already occurring in self-managed super funds to avoid the potential new tax.
'Despite requiring Senate approval, the proposed tax on unrealised gains has already prompted a rush to liquidate assets ahead of the 30 June 2026 implementation date,' he said.
Wilson Asset Management has proposed an alternative super tax strategy to Labor's plan to tax unrealised gains, in a submission to the government's Economic Reform Roundtable, where it argued it would raise $2.433billion in revenue.
'The outcome of the proposal would allow the government to increase tax revenue from high balance accounts without breaching the realisation principle of the tax act,' Mr Wilson said.
'Our proposal is in the national interest and a Budget-positive alternative to the government's proposed policy to tax unrealised gains in superannuation.'
He proposes to keep the existing structure of taxing realised capital gains, but adding a new 15 per cent tax to balances of $3million to $6million.
A 17.5 per cent tax would apply for balances of $6million to $10million, rising to 20 per cent for balances of $10million to $20million and 25 per cent for balances above $20million.
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