The Money Puzzle Special Edition: Your questions answered on new super tax
May 22, 2025
Hugh Robertson, a leading advisor from Centaur Financial Services, dives deep into the controversial new super tax affecting high-income earners in Australia. He explains the frustrations around taxing unrealized gains and the lack of inflation indexing. Listeners are advised on alternative investment strategies, including the potential of investment bonds, to mitigate these taxes. The discussion also addresses compliance issues and the implications for future retirees, stirring up critical questions about fairness and transparency in the superannuation system.
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Unrealized Gains Tax Explained
- The new super tax applies a 15% rate on super balances exceeding $3 million, on top of the existing 15% over $2 million.
- It is controversial mainly because it taxes unrealized paper gains, not just realized income.
Unindexed Threshold Grows Burden
- The tax threshold of $3 million is not indexed for inflation, so its relative impact will grow over time.
- This non-indexation makes the tax increasingly relevant even for those who initially consider it out of reach.
Purpose of Super Tax Breaks
- Super tax breaks incentivize self-funded retirement by encouraging savings through preferential tax treatment.
- Governments benefit by collecting taxes on earnings during working years, reducing future pension costs.