Albo and Dr Jim Chalmers are creating a super headache for themselves, their re-election chances and many superannuation members. And the more the potential fine print is exposed, the more the headache turns into a migraine.

The first problem our leaders created for themselves was not allowing the $3 million cap on super to be indexed it to inflation. Under these new rules, if you have more than $3 million in your super and you receive income from your super investments over $3 million, you will pay 30% tax on that income.

In 10 years’ time, because of inflation, $3 million will be less valuable in terms of what you can buy. And more people will have $3 million and the Government will capture more tax dollars.

So, Labor’s super idea not only hits retirees now but also those in their 50s and eventually those in their late 40s. Super is a set-and-forget wealth-builder but if the Government wants to make changes that will bite in 10 and even more in 20 years’ time, then people like me must explain it.

But the next potential devil in the detail is the news that Treasury wants to tax UNREALISED gains on your shares, in particular, in your super fund.

One expert quite rightly said if the Government tries this, it would be like taxing you on the unrealised gains in the value of your home!

The AFR quoted Deloitte partner Andrew Boal, who explained that “…the methodology for calculating earnings, including unrealised gains, could cause serious cash flow problems for self-managed super funds with high allocations to illiquid assets such as property.”

That’s code for this: to meet their tax obligations that would now be 30%, a property or shares that are good income payers (rent or dividends) and which are kept for a long time to help bankroll the retiree’s pension, would have to be sold!

This tax idea is trying to make SMSFs face the same treatment of big industry funds and other APRA regulated funds that have to put unrealised gains from ‘unusual’ investments in their overall gains.

However, because these gains are not valued by something objective such as a stock market, there are accusations that industry funds have often overvalued assets they hold to keep their returns high.

This won’t surprise many, but these changes favour industry funds over SMSFs. “This will most significantly affect SMSF members who invest predominately in listed assets, such as shares, whose prices are valued daily,” Anne-Marie Tassoni, a partner at private wealth managers Cameron Harrison, told the AFR.  “On the other hand, APRA funds tend to hold a large proportion of unlisted assets whose values are not priced on an open exchange; if those assets are not revalued upwards to market at 30 June each year, then APRA-regulated fund members will not be stung by the same tax on unrealised asset performance.

“This is highly discriminatory, favouring the industry super funds.”

Also, this action means that retirees will chase reliable stocks that pay good dividends to avoid the likes of holding an Afterpay-like stock, where the huge gains would see you slugged by 30%. This would mean you’d have to sell it to pay for the gains!

Many voters could cop a 30% tax on actual earnings banked over $3 million in super but unrealised gains, with no indexing of the $3 million cap, looks like a get-even for those retirees that dumped Bill Shorten for Scott Morrison in 2019. And you can’t help thinking that both Albo and Dr Jim are under pressure from the trade union dominated industry funds, which have been good super performers for their members. I have been a big fan of industry super funds, but as they grow in funds, they are looking like and acting like big bully boys.

Looking at these crazy potential super changes, it looks like the boffnss in Treasury were smoking something when they put their ideas to Dr Jim.