7am How Labor’s new super tax works
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Jun 3, 2025 Mike Seccombe, National correspondent for The Saturday Paper, dives deep into Labor's plan to tax superannuation balances over $3 million. He discusses the criticism surrounding this proposal, particularly its impact on unrealized gains and the fairness debate. The conversation also highlights Labor's economic priorities in its second term and the political dynamics influencing support and opposition, including the role of the Greens and resistance from affluent Teal independents. It's a revealing insight into the complexities of superannuation reform in Australia.
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Origin and Purpose of Superannuation
- Superannuation was introduced in Australia to provide people comfortable retirement savings and reduce pension burden on taxpayers.
- It involved compulsory employer contributions and concessional tax rates to encourage long-term saving.
Super as a Wealth Preservation Tool
- Superannuation has drifted beyond its original purpose with some having tens or hundreds of millions in their accounts.
- Critics say it functions as a tax-subsidized inheritance scheme preserving wealth across generations without proper taxation.
Labor's New Super Tax Details
- Labor plans to apply a 30% tax on super balances exceeding $3 million, up from 15%.
- Uniquely, the tax will apply to unrealized gains, taxing notional increases in value even without asset sales.