Super Nation is a fortnightly column that examines, explains and analyses key issues in one of Australia's largest, fastest-growing and most important industries: superannuation.
The Federal Budget handed down by Australian Treasurer Jim Chalmers has attracted criticism for its ground-breaking tax reforms, but not from the superannuation industry, which escaped relatively unscathed.
What stood out most was the fact it contained no new taxes, tax breaks or major reforms for the A$4.5 trillion (US$3.2 trillion) retirement savings sector.
This came at a time when the Labor Government significantly changed the capital gains tax (CGT) treatment of assets, including property and shares, and ended negative gearing of existing investment properties purchased after the Budget date, 12 May 2026.
The 50% discount on CGT will be replaced with an inflation-based tax and applied at a minimum effective rate of about 30%.
But they did not affect superannuation, which is already tax-concessional to account for the fact that savings are locked up until retirement, with earnings taxed at 15% and capital gains at 10%, which is below the marginal rate of up to 47% for many working Australians.
As the Government noted in Budget Paper No. 1: “The reforms to negative gearing and CGT are prospective and respect previous investment decisions, and will not impact the main residence CGT exemption or superannuation tax arrangements.”
Widespread relief
The hands-off approach was broadly welcomed by the major super peak bodies that provided public commentary on it.
“For super, this was a steady as she goes budget, with a handful of modest but important new investments,” said Super Members Council, the peak body for profit-to-member (P2M) industry, public sector and corporate funds managing $1.6 trillion for 13 million members.
The Budget papers contained a $17.9 million investment over four years from 2026–27 to strengthen governance requirements and supervision of managed investment schemes.
SCM positioned this as a response to the $1 billion-plus collapse of the Shield and First Guardian master funds, although these funds were not named in the papers.
The funding consists of $10.3 million for the Australian Securities and Investments Commission (ASIC) to enhance its use of data in supervising the managed investment scheme sector and $7.6 million for ASIC, the Office of the Australian Auditing and Assurance Standards Board and the Treasury to strengthen governance requirements for managed investment schemes.
SMC also called out the Australian Taxation Office (ATO) for failing to set performance targets for the recovery of unpaid super from 1 July, when employers will be required to pay super at the same time as wages and salaries, not with a permitted delay of at least three months, as is currently the case
The ATO planned to wait until it had “sufficient data on which to determine a performance benchmark” before setting a target for unpaid super, which costs 3.3 million Australians $5.7 billion a year.
“The Government must set the ATO bold targets to recover that money owed to everyday working Australians,” the peak body demanded.
The Budget was described as a “win” by another peak body, the Association of Superannuation Funds of Australia (ASFA), whose P2M and retail member funds manage most of Australia’s super pool.
ASFA welcomed the Government’s decision to exempt super investors, including self-managed super funds, from changes to the CGT discount, saying they were appropriate and would be unchanged.
CGT inside super is effectively 10% as investors receive a 33% discount on capital gains on long-held assets, given earnings in super are taxed at a flat 15% rather than an individual’s marginal tax rate.
“Tonight’s budget is a win for the 19 million Australians with a super account who value stability in super’s tax settings,” ASFA CEO Mary Delahunty said in a media release.
“Super offers every Australian a deal: if you set aside money for your retirement and reduce your future reliance on the age pension, you are rewarded by paying less tax. Australians rightly expect those tax concessions to remain stable, and that’s what this budget has delivered.”
Reforms continue
The Government also highlighted its plans to strengthen the superannuation performance test, acknowledging worries that its tendency to encourage ‘benchmark hugging’ may discourage investment in sectors, including venture capital.
As this column has observed, peak bodies are not united about the planned reforms, with initial submissions revealing a divide over whether changes should prioritise consumer protection or preserve the test’s simplicity and influence on funds.
Although the politicians resisted the temptation to keep tinkering with super, plenty of change is underway in the sector as a result of activity over the last few years.
They include the increase in the taxation rate on superannuation accounts with high balances which will become law after the Australian Greens agreed in March to support it in the Senate and take effect from 1 July.
The approved change lifts the tax rate on earnings on super account balances above $3 million (US$2.1 million) from 15% to 30% and on balances over $10 million to 40%, but applies only to realised earnings, and the thresholds will be indexed to inflation.
The lift is already influencing behaviour with advisers reporting that clients are restructuring their financial affairs to avoid the increased tax rate.
