The Albanese government will cut tax concessions on super accounts with more than $3m, promising to legislate this term for a change to take effect in 2025.
From 1 July that year, superannuation on balances above $3m will be taxed at a rate of 30%, up from the current concessional rate of 15%.
After releasing the tax expenditure statement, which shows super tax concessions have ballooned to $50bn a year, the prime minister, Anthony Albanese, on Tuesday appeared to rule out more super changes to take effect before the election but gave the government scope to pursue other measures in future.
The treasurer, Jim Chalmers, described the measure as a “modest” adjustment, but the pair left the door open to put the budget on a sustainable footing by clawing back more revenue after the election.
Albanese and Chalmers said the change would affect 80,000 accounts, with 99.5% of Australians unaffected. The changes would also apply to defined benefits schemes, but the treasurer said this would require further consultation.
The measure will raise $900m over four years, rising up to $2bn in its first full year of operation and increasing over time as the $3m threshold will not be indexed to rise with inflation.
Earlier in February the Albanese government announced it would legislate an objective for superannuation, using the requirement that it should be “sustainable and equitable” to start a political debate about super tax concessions.
Albanese told reporters in Canberra it would be “irresponsible to not take any action whatsoever” but played down the changes by noting they take effect “after the next election” and are “not retrospective” because they apply to future earnings.
The Coalition has already said it will block any changes to super taxation, citing promises by Labor not to make “major” changes before the last election.
Albanese said this would see the opposition leader, Peter Dutton, siding with people with supersized balances, including 17 people with more than $100m in retirement savings.
Chalmers said the government did not “begrudge anyone who has made a lot of money or saved a lot of money, or takes advantage of the tax breaks that are legitimately available to them”.
“We have a duty … to make sure that superannuation is affordable and sustainable in the future,” he said. “We’re not trying to diminish anyone’s superannuation balance.”
In addition to the $50bn a year spent on super tax concessions, the tax expenditure statement outlines that capital gains tax concessions for a main residence cost $48bn in 2022-23 and rental deductions a further $24.4bn.
Asked if there would be further changes to super or other tax concessions, Albanese replied “everyone can see what we’re doing here, which is consistent with the commitments that we’ve made”.
“People can see what we’re doing here. Which is: we’re proposing a change that will have an impact on 0.5% of the population.”
Chalmers replied “our focus is superannuation” because it constituted one-third of the top 10 biggest tax concessions, worth $150bn.
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Chalmers reiterated that the tax expenditure statement was “not a policy statement” and “not a statement of intent”.
“There will be no changes, no changes, this term,” Albanese said.
“Even this change, what we are doing is … pointing towards 2025. Now, we can’t be clearer, not just in our words, but in our actions.”
Chalmers said that some people may choose to withdraw or not save as much in super “but more likely, people compare the 30% headline rate with their marginal tax rate and decide to leave it where it is”.
Since Labor unveiled its proposed purpose for superannuation the Coalition and several independent MPs have raised concerns, accusing the government of “kite-flying” and scaring those saving for retirement.
But Liberal moderates Russell Broadbent and Bridget Archer have broken ranks and endorsed a debate about super tax concessions.
On Tuesday afternoon the shadow treasurer, Angus Taylor, said Labor had walked away from an “unambiguous … commitment to not add taxes to superannuation”.
Taylor noted the government had “refused to rule out” imposing capital gains tax on Australians’ homes or getting rid of negative gearing.
The Greens leader, Adam Bandt, complained that the government is “winding back super tax cuts on one hand, only to give the very same people a $9,000 a year tax cut” through the stage-three income tax cuts.
Crossbench senators including the independent David Pocock and the Jacqui Lambie Network have suggested they could support the plan.