The Federal Government has released exposure draft legislation towards doubling the concessional tax rate for super balances exceeding $3 million.
It is consulting on the Treasury Laws Amendment (Better Targeted Superannuation Concessions) Bill 2023 (the Bill) and the Superannuation (Better Targeted Superannuation Concessions) Imposition Bill 2023 that would lift the tax rate from 15 per cent to 30 per cent for those with multi-million super balances.
The revised rate, which would apply from July 2025, was announced by Prime Minister Anthony Albanese and Treasurer Jim Chalmers in February this year.
The rate would not be retrospective, applying only to future earnings, and was expected to impact 0.5 per cent of superannuation accounts, or roughly 80,000 Australians.
“The Bill reduces the tax concessions for individuals with a total superannuation balance (TSB) above $3 million by imposing an additional 15 per cent tax on certain earnings under a new Division 296 of the Income Tax Assessment Act 1997,” the consultation stated.
“The Bill also amends several Acts to include provisions relating to the calculation of earnings, withdrawals and contributions, modifications for earnings of certain constitutionally protected interests, debt deferral provisions for defined benefit interests in the pre-end benefit phase, and changes to the definition of TSB.
“Special rules for modified treatment of defined benefit and some retirement phase interests, including the valuation of such interests, will be addressed through specific provisions in subsequent regulations.”
The consultation will close on 18 October 2023.
Previously, Labor’s super tax legislation faced a roadblock from the federal Greens who announced its support for planned changes to super tax concessions will be contingent on ensuring super on paid parental leave (PPL).
It said it would use its Senate balance of power to hold up proposed changes to the tax treatment of large superannuation accounts until the government puts super on PPL.
Based on modelling, the reform is expected to generate revenue of about $2 billion in its first full year of revenue. Meanwhile, paying super on PPL would cost the government less than 10 per cent of that, an estimated $200 million per annum according to the Association of Superannuation Funds of Australia (ASFA).
“The Greens will use our balance of power in the Senate to ensure the government makes superannuation on Paid Parental Leave a priority reform, as part of its changes to super,” said Larissa Waters, Greens leader in the Senate and spokesperson on women.
“This is such a timid proposed change to the tax concessions the obscenely wealthy receive. If Labor is not going to improve it, the least they can do is put it to good use.”
