‘Up against it’: Treasurer Jim Chalmers accused of rushing superannuation reforms

Federal Treasurer Jim Chalmers has been accused of rushing his contentious superannuation reforms, with an industry body warning the short consultation period “makes it difficult to identify unintended consequences”.

The Government on Friday released draft legislation on the changes, under which earnings on super balances above $3 million will be taxed at 30 per cent, instead of 15 per cent at the moment.

A second threshold would be added to lift the tax rate to 40 per cent for balances above $10m.

Both thresholds would be indexed so they rise each year in line with inflation.

Submissions on the legislation will close on January 16, a consultation period of just four weeks, which includes Christmas Day, Boxing Day and New Year’s Day holidays.

SMSF Association chief executive Peter Burgess said the Government was “up against it” with the timeframe they were working towards.

“It is a bit of rushed process at the moment because they do need to go through due process,” he said.

“The challenge with short timeframes like this is it makes it difficult to identify unintended consequences.”

Dr Chalmers said he wanted to introduce the super tax legislation “as soon as possible in 2026”, with the changes set to come into force from July 1.

“They’ll be looking at introducing this legislation into the Parliament in the February sittings, I would imagine, so that they could get a pass hopefully before the end of February,” Mr Burgess said.

“People are only going to have four months to get their head around this revised approach and to take the appropriate action.”

Less than 0.5 per cent of Australians with super hold more than $3m in their accounts. Around 8000 people hold more than $10m, representing less than 0.1 per cent of Australians with super.

The super tax would also now apply only to realised gains on the balances.

This addressed the two key criticisms of the plan first unveiled in the 2023 Budget, that it would gradually capture more people if the thresholds were not indexed and that it taxed unrealised capital gains.

“SMSFs will no longer be penalised for system limitations that do not exist in their sector,” Mr Burgess said.

The Government will also increase the low-income superannuation tax offset — effectively a top-up of people’s super accounts — from $500 to $810 a year and raise the eligibility to $45,000 annual income, to make sure that once the third stage of its tax cuts kick in people don’t pay more tax on their superannuation balances than their income.