A superannuation ad on a tram in Sydney.

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The federal government is taking a second crack at reforming superannuation in a move that would give more than a million low earners a retirement boost while hitting the nation’s wealthiest with a higher tax rate.
Treasurer Jim Chalmers this morning introduced the Better Targeted Superannuation Concessions bill to parliament.
If passed, the new laws would change how superannuation is taxed for two groups of Australians at opposite ends of the wealth spectrum: about 90,000 people with the highest super balances, and roughly 1.3 million of the nation’s lowest-paid workers.
A superannuation ad on a tram in Sydney.
The government is attempting to pass major changes to the superannuation system for the second time.(Glenn Hunt/Fairfax Media)

The combined adjustments are projected to add approximately $1.6 billion annually to the federal budget through increased tax revenue.

The introduction of today’s bill comes after an aborted attempt to pass similar legislation during the last parliament and following May’s federal election, when the government faced significant criticism, particularly on the proposal to tax unrealised gains and a refusal to index the thresholds for the higher tax rates.

Initially, the legislation included several components, but now, only a higher tax on realized earnings remains, with the thresholds set at $3 million and $10 million, both of which will be indexed.

Despite the modifications, the fate of the current bill remains uncertain. The Coalition stands against the proposed changes, necessitating support from the Greens for the government to secure approval in the Senate.
According to the Australian Financial Review, the minor party could demand more stringent measures targeting wealthy accounts in exchange for its backing.

In the face of this opposition, ASFA has called on both the Greens and the Coalition to endorse the legislation.

“These adjustments collectively contribute to making super tax settings more equitable and sustainable,” stated ASFA’s chief executive, Mary Delahunty.

“I urge the parliament to expedite the passage of this legislation,” she added.

“Aussie workers on low incomes cannot wait another day for the fairness that this package delivers to them.”

If passed, the higher tax rates on wealthy accounts will come into effect on July 1, while the LISTO boost will follow a year later.

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