The Albanese Government’s once super-scary boogie man, otherwise known as Treasurer Jim Chalmers, has backflipped on his threatening super tax changes. And here’s what Dr Jim has changed.

Ahead of Halloween later this month, the Albanese Government’s once super-scary boogie man, otherwise known as Treasurer Jim Chalmers, has backflipped on his threatening super tax changes.

This is the change of mind he (and we) had to have. While the new super tax changes will hit the very rich, the new reforms are more tolerable.
Because super is historically never super interesting (unless it threatens or helps your future near-term wealth), let me give you the new softer super slugs in a nutshell.

Here goes:
1. The tax on unrealised gains has been canned.
2. The $3 million starting point for a 30% tax on super earnings is now to be indexed to changes in inflation.
3. This latter change means future generations of Aussie super savers won’t be caught by the $3 million threshold, when a 15% tax on super becomes 30%.
4. Some 90,000 Aussies should like these reforms.
5. A new threshold with a 40% tax on super earnings applies for those with a $10 million balance in their fund.
6. This 40% tax is on the earnings on the balances starting from the $10 million starting point.
7. This $10 million threshold will also be indexed.
8. There are 8,000 Australians with $10 million or more in super, who’ll be negatively affected by this change.

However, the 8,000 won’t see their unrealised gains taxed. That would have been a huge hit in the hip pocket for this group of very wealthy people, who politically probably wouldn’t be Labor voters.

That said, if ever the Federal Opposition (which looks to be in disarray) had an issue to drum home as something to be worried about the Albanese Government, it was the promise to tax unrealised gains.

Here the Treasurer wanted to tax gains on your super that came from a rising stock market, higher property prices or any other asset in your super fund that you haven’t sold to pocket the gain. Currently in super you are taxed on the income your super fund earns (such as interest, dividends or rent) or if you sell an asset that has gained in value, effectively turning that capital gain into income in your super bank account.

I’m talking about a realised gain that any fair person can cop. But when a government wants to tax unrealised gains, they’re asking to be voted out of office by any sensible voter.

As former US President Ronald Reagan once said of governments and taxpayers: “The taxpayer: that’s someone who works for the federal government but doesn’t have to sit the civil service examination!”

By the way, there’s one final change for low income Australians, which abc.net.au explained this way: “A tax offset for low-income earners would also be increased from $310 to $810 and would be offered to workers earning up to $45,000, which Mr Chalmers said would give those people about an extra $15,000 at retirement on average.”

This means if you’re low income earning with part of your income going into super, that money going into super won’t cop a 15% tax on the way into the fund.

By the way, all this starts on 1 July 2027, so rest easy until then. If you have over $10 million in super, you have time to work out how to minimise the super slugs coming your way.

And given we weren’t told about these super tax changes before this year’s election, these new reforms (while still sneaky) are more acceptable. Effectively, Dr Jim has become less scary.

Before I go, let me share another Reagan take on governments and taxation: “Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidise it.”