Barefoot Investor Scott Pape on Labor's controversial new tax on superannuation

Daily Mail​

26-05-2025

The Barefoot Investor has likened Treasurer Jim Chalmers to a thief targeting a bank as he takes aim at Labor's proposed unrealised gains tax on super.
Pape received a letter from a reader asking about a new 15 per cent capital gains tax on superannuation balances above $3million.
'I think everyone would love your view as you speak from your heart and not your ego,' the letter to Mr Pape read.
In a radical move, retirement savings will be taxed on the notional value of assets before they are sold.
This would force self-managed super funds to sell assets like property or farms to avoid incurring a capital gains tax, which is now only charged on investments after they have been sold.
Pape labelled Chalmers a 'smart politician' saying 'his new tax should be hung up in the Lodge toilet so that future prime ministers can pay homage to it while they're on the throne'.
'Both parties went to this election with a record amount of unfunded spending promises. Now Jim Chalmers needs to find gushes of money,' he wrote.
'So he's chosen to tax super, for the same reason bank robbers hold up banks - because that's where the money is.'
Pape said there was trillions of dollars just sitting in super, waiting to be taxed, with the government's superannuation tax plan not indexed for inflation.
Labor is planning to impose a new 15 per cent tax on unrealised gains above $3million and also double earnings taxes to 30 per cent over this threshold.
'Yet his real genius is that he's gone back in history and borrowed from the biggest bazooka of them all - bracket creep,' Pape said.
The Barefoot Investor explained half of his readers would probably have no idea what bracket creep was.
'Bracket creep works like this: inflation pushes your income into a higher tax bracket, even if you're not actually earning more in real terms,' he said.
'No new laws. No headlines. Just billions quietly hoovered up by the tax office.
'And, by not indexing the $3million cap, Jim's effectively extended bracket creep into retirement.
'The upshot is that younger Aussies like me, who've been diligently adding to our super, may eventually get slugged.'
The Barefoot Investor said he was not particularly angry at the prospect, claiming he was a 'realist'.
'And what about his plan to tax unrealised capital gains?' he said.
'Unrealised capital gains tax means paying tax on something before you've sold it.
'It's like the taxman sending you a bill just because your house went up in value, even though you haven't sold it and haven't made a dollar.'
Pape labelled it an 'unflushable turd'.
'There is absolutely no way he'll get away with it. After all, I've got family members who own their farms in SMSFs (self-managed super funds),' he said.
'If the value of their farm goes up one year, do they sell off a paddock to pay tax? And in a drought when the value of the farm falls, does the ATO send them a refund?'
Labor's Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill in 2023 last year stalled in the Senate, with independent senator David Pocock concerned about taxing unrealised gains.
But the government's landslide re-election means Labor will also have more senators from July 1, which means they would only need the Greens to get legislation passed.
The Greens want a $2million threshold, instead of $3million, but with indexation for inflation.