Chalmers says Labor will push ahead with delayed super tax plan despite Spender urging rethink
Jim Chalmers says Labor will push ahead with delayed changes to tax treatment for superannuation accounts worth more than $3m, stressing the moves are modest and will apply to politicians and public servants on defined benefit schemes.
Coalition MPs – including newly re-elected Victorian Liberal Tim Wilson – want the opposition to go after Labor over plans to legislate the new super tax, which would mean earnings on retirement balances worth more than $3m are taxed at 30%, rather than the current 15% rate.
The plan also includes tax on unrealised gains from assets including small businesses, farms and shares held in self-managed retirement accounts.
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Some within the Coalition believe the former opposition leader, Peter Dutton, should have campaigned more strongly on the plans, which Labor struggled to get through parliament before the 3 May election.
Independent MP Allegra Spender on Wednesday called on the treasurer to rethink the changes, even as she conceded Labor had a mandate to press ahead. The Wentworth MP helped build opposition to the plan among crossbenchers in the last parliament, warning they would unfairly hit self-managed account holders.
But Chalmers on Wednesday signalled Labor would press ahead. After 1 July, Labor will be able to pass legislation in the Senate with the support of the Greens, and will no longer require crossbench votes, including David Pocock and Jacqui Lambie.
The Greens want the threshold lowered to $2m, but Chalmers ruled out that change as well.
'You read from time to time on social media that somehow politicians on the old scheme before 2004 have been exempted – that's not the case,' Chalmers said.
Chalmers was referring to defined benefit rules, which are based on the formula for retirement savings, usually based on an individual's salary level at retirement, rather than contributions made throughout their working life. Public servants, politicians and judges are among defined benefit recipients.
Chalmers said those individuals would be included in the changes, if they had 'very substantial balances'.
'We spent a lot of time between the announcement and the legislation, making sure that we can appropriately recognise people on defined benefits.
'These changes have been in the public domain now for more than two years, they've been in the parliament for a big slice of that.
'We've made it clear that these changes are relatively modest, but they're important in the context of the budget and defined benefit schemes have been appropriately recognised as part of our effort.'
The tax changes are due to come into force from 1 July, and Labor expects the plan will raise $2.3bn for the federal budget in 2027-28, the first full year of operation.
Over a decade, the taxes are expected to raise $40bn.
But the complicated rules of defined benefit retirement schemes have been a challenge for the design of the laws.
Wilson, who defeated teal MP Zoe Daniel to win back the Victorian seat of Goldstein, has likened the super tax plan to Labor's unpopular proposal to clawback cash refunds for franking credits, considered critical to the party's 2019 election loss under Bill Shorten.
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