The Australian Government has paused plans to introduce a controversial new tax on large superannuation accounts, according to media reports.
The Labor Government is considering possible changes to plans to impose an extra 15% tax on retirement (pension) accounts with balances above A$3 million (US$2 million), according to an article in the Australian Financial Review (AFR) newspaper.
The decision follows internal discussions and is in response to a mounting backlash about the fact that it would tax unrealised capital gains and would not be indexed to inflation, The Australian newspaper and Sky News reported.
Citing unnamed sources speaking on the condition of anonymity, the AFR reported that although no decisions had been made, discussions had been held in recent weeks as Prime Minister Anthony Albanese’s office showed increased interest in the policy.
During the last election campaign, aspiration was cited as important by Albanese, who has been lobbied by former Prime Minister Paul Keating, a strong critic of the tax, which in turn is being championed by Treasurer Jim Chalmers.
“Although the government intends to proceed with the measure in some form, one source said the motivation to consider changes was based on sensitivities about the message that the bill, in its original shape, would send in terms of voter aspiration,” the AFR wrote.
Although Labor has a huge majority in the House of Representatives, it needs support in the Senate from the Greens, who support the tax but want the $3 million threshold lowered to $2 million and the tax to be indexed.
It would impose an extra 15% tax on the earnings applying to the element of a super fund that is above $3 million.
The proposed tax, which the Government has said would affect initially only 80,000 people (0.5% of taxpayers), is forecast to raise $2.3 billion in 2027/28, the first full year of collection at a time when the Government is battling high debt, but critics point out it would catch many more younger people as their balances grow over their working lives.
Azzet approached the Treasurer’s office for comment but had received no response at the time of writing.
