What you need to know about Labor's new super tax
But people with superannuation funds of more than $3 million will face an additional 15 per cent tax on any investment returns (including interest, dividends or capital gains) they earn on the amount above this threshold.
For example, someone with a $3.5 million super balance will continue to be taxed the discounted rate of 15 per cent on everything they earn on the first $3 million of their balance. Investment returns on the additional $500,000 will be taxed at 30 per cent.
What are unrealised gains?
A controversial element of Labor's tax reform is that the super tax would also apply to 'unrealised gains', which refers to the growth in the value of an asset or investment that an investor holds but hasn't yet cashed in.
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For example, an investor could hold property or shares that increase (and decrease) in value over time. However, unless they sell these assets, any rise or fall in their value is seen as 'paper profits' because they have not yet been converted into cash and locked in.
Generally, earnings are not taxed until they hit your pocket. But Labor's tax on unrealised gains would mean Australians with superannuation balances of more than $3 million – while relatively wealthy – would receive a tax bill even if they hadn't actually earned any income (potentially forcing them to sell assets to pay that bill, and reduce the total amount of money in the nation's super pool, affecting returns for all super members).
If a person records an unrealised loss one year – where their super balance falls due, for example, to a market downturn – that unrealised loss will be used to offset the tax on earnings from their super balance in future years.
The final tax bill is generally paid directly by your super fund to the Australian Tax Office. For self-managed super funds, the tax amount is usually paid through BPAY or using a debit or credit card.
What is indexing?
Indexation of the super tax – or lack thereof – is another aspect that some people have criticised.
Indexing refers to the practice of increasing a threshold or entitlement to change in line with another measure such as inflation, wages or tax.
In the case of the super tax, Labor has not promised to tie the threshold for the 30 per cent tax rate to changes in price growth. This is a problem because $3 million this year will not have the same purchasing power as the same amount in 20 years' time.
Assuming an inflation rate of 2.5 per cent, an indexed threshold would capture funds with more than $5 million in 2045.
While the proposed tax only affects about one in 200 Australians now, it would apply to many more if not indexed. Independent MP Monique Ryan, for example, has criticised the lack of indexation, saying it means the tax could affect all of Gen Z by the time they turn 60.
What does the treasurer say?
Treasurer Jim Chalmers has stood by the new tax, first announced by Labor in early 2023.
Chalmers, speaking on a podcast with Michelle Grattan this week, maintained it was a 'modest change' that still gave concessional treatment – although slightly less so – to people with large super balances.
'This will help us fund our priorities, whether it's Medicare, the tax cuts and other priorities in our budget repair,' he said, noting he had consulted widely on the changes and that the controversial inclusion of unrealised gains was 'the best, simplest way to go about it' according to advice from Treasury.
Chalmers also said it was wrong to assume the $3 million threshold would never change.
'There are so many instances in the tax system where thresholds aren't indexed, and from time to time, governments take decisions to raise those thresholds,' he said. 'I'm anticipating that that's what would happen here.'
Who is talking about it?
Several prominent figures have chipped into the conversation around the super change: among them, former treasury secretary (and author of the Henry Tax Review) Ken Henry and former RBA governor Phil Lowe.
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In an article in The Australian, Lowe said the change was not an example of good public policy design, saying the government should explore alternatives.
In the same article, Henry said the system needed to be more equitable. 'To do that, you do not need to tax unrealised capital gains,' he said, pointing to suggestions in his more-than-decade-old review.
What happens next?
Chalmers told The Conversation in a podcast that he was yet to start talks with the Senate crossbench. Labor will likely need support from the Greens to get the proposal turned into law.

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Staff at the Australian-American tech company reportedly learnt that their jobs were axed via a prerecorded video from chief executive and co-founder Mike Cannon-Brookes. Scott Farquhar, who stepped down as joint chief executive of Atlassian in September 2024, defended the move while speaking at the National Press Club on July 30. "We just can't dig our heels in and say the jobs of today will be the jobs in 20 years," Mr Farquhar said. "Some parts of our economy will grow significantly as AI makes them more productive, and some parts of our economy will shrink as we do that," he said. The Australian billionaire said he felt "privileged and blessed" to live in a country with a strong social safety net. He said Australians had "very strong skilling opportunities" that allowed job seekers to retrain in new areas. 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Staff at the Australian-American tech company reportedly learnt that their jobs were axed via a prerecorded video from chief executive and co-founder Mike Cannon-Brookes. Scott Farquhar, who stepped down as joint chief executive of Atlassian in September 2024, defended the move while speaking at the National Press Club on July 30. "We just can't dig our heels in and say the jobs of today will be the jobs in 20 years," Mr Farquhar said. "Some parts of our economy will grow significantly as AI makes them more productive, and some parts of our economy will shrink as we do that," he said. The Australian billionaire said he felt "privileged and blessed" to live in a country with a strong social safety net. He said Australians had "very strong skilling opportunities" that allowed job seekers to retrain in new areas. 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The Advertiser
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The 1980s was the birth of superannuation for Aussies, but in the beginning, it was generally limited to public servants and white collar employees of large corporations. It was only in 2003 that provisions came in to allow the splitting of superannuation between divorcing or separating spouses, while 2007 saw investment losses for Australian superannuation funds of more than $200 billion thanks to the global financial crisis (GFC). The other flipside to all this: is if an older person does want to keep working they are either financially penalised (if they're on the age pension) or they're discriminated against by employers (according to the research by the Human Rights Commission and Australian Human Resources Institute). Who's with me and standing up for the rights of our wise elders? Retirees are humans too, with basic needs like anyone else. It's time the generations before them showed some respect. Share your comments below if you agree ... or disagree ... The attacks on Baby Boomers, labelling them as "wealthy" to the detriment of "families and young people" just because their home has increased in value, needs to stop. Brendan Coates, an economist with the Grattan Institute, was given a soap box on July 24 to air concerns "wealthy pensioners" should be penalised to benefit the rest of Australian society. Perhaps Brendan forgets people over the age of 65 are also valued members of society, and if they're eligible for the age pension (the current base payment being $27,333 a year for singles and $41,210 for couples, before tax is taken out) it's because they are just scraping by. Compulsory super only began in 1992 at 3 per cent, whereas Brendan enjoys 12 per cent as of July 1. The age pension is below minimum wage, and far below the wage of an economist (in excess of $100,000 according to "[Retirees] can be in Potts Point or Toorak with a $5m house and receive the same pension that a person in a $500,000 unit in Bendigo or Bathurst is receiving," he is quoted as saying in the Australian Financial Review. "People with substantial wealth are receiving the pension who arguably don't need it." Read more from The Senior: Mr Coates believes a retiree's family home (regardless if they bought it 40 years ago for next to nothing, then for the pandemic to jack up the land value) should be included in the pension assets test to better help "those who need it". But Brendan isn't a fan of retirees with superannuation either. A Grattan Institute report by Brendan Coates, released a day after his quotes around "wealthy pensioners", ironically called for more tax on superannuation funds. Not sure about you Brendan, but my grandparents on the Gold Coast have lived far longer than they expected and are now living day to day, as their meagre super dwindled to nothing. Pensioners and self-funded retirees are being slammed every which way as the "cash cows" of society, that should be pushed out of their homes - "and downsize" - to make way for a seemingly more important demographic: anyone under the age of 50. In 2025, around 58 per cent of Australians aged over 65 (around 2.4 million people) receive either the full or part age pension. But why would someone not have enough super to retire on comfortably? Compulsory super only came into play 30 years ago (around 10 years after Brendan Coates was born). "While Australians have reason to feel proud of the success of Australia's superannuation system ... the need for review, refinement and reform continues. An example is the retirement savings of Australian women," the Australian Prudential Regulation Authority states on their website. Older women are the fastest-growing group of homeless people in Australia. The 2021 Census reported a 6.6 per cent increase to women over 55 experiencing homelessness. Divorce and lack of super (due to raising children) are a big factor. Banks also won't give older people a loan for a home and rents have skyrocketed. The Superannuation Guarantee, with a mandatory three per cent contribution rate for employers came into effect in 1992 - nearly 20 years after reader of The Senior Suzanne G finished high school. "As a woman of 67 soon 68 ... back in 1974 when I finished school there was no superannuation," the retired pensioner told The Senior. She said she's worked all her life, owns her own home, and had a "meagre private super" which was cashed in some years ago to complete home renovations. The 1980s was the birth of superannuation for Aussies, but in the beginning, it was generally limited to public servants and white collar employees of large corporations. It was only in 2003 that provisions came in to allow the splitting of superannuation between divorcing or separating spouses, while 2007 saw investment losses for Australian superannuation funds of more than $200 billion thanks to the global financial crisis (GFC). The other flipside to all this: is if an older person does want to keep working they are either financially penalised (if they're on the age pension) or they're discriminated against by employers (according to the research by the Human Rights Commission and Australian Human Resources Institute). Who's with me and standing up for the rights of our wise elders? Retirees are humans too, with basic needs like anyone else. It's time the generations before them showed some respect. Share your comments below if you agree ... or disagree ... The attacks on Baby Boomers, labelling them as "wealthy" to the detriment of "families and young people" just because their home has increased in value, needs to stop. Brendan Coates, an economist with the Grattan Institute, was given a soap box on July 24 to air concerns "wealthy pensioners" should be penalised to benefit the rest of Australian society. Perhaps Brendan forgets people over the age of 65 are also valued members of society, and if they're eligible for the age pension (the current base payment being $27,333 a year for singles and $41,210 for couples, before tax is taken out) it's because they are just scraping by. Compulsory super only began in 1992 at 3 per cent, whereas Brendan enjoys 12 per cent as of July 1. The age pension is below minimum wage, and far below the wage of an economist (in excess of $100,000 according to "[Retirees] can be in Potts Point or Toorak with a $5m house and receive the same pension that a person in a $500,000 unit in Bendigo or Bathurst is receiving," he is quoted as saying in the Australian Financial Review. "People with substantial wealth are receiving the pension who arguably don't need it." Read more from The Senior: Mr Coates believes a retiree's family home (regardless if they bought it 40 years ago for next to nothing, then for the pandemic to jack up the land value) should be included in the pension assets test to better help "those who need it". But Brendan isn't a fan of retirees with superannuation either. A Grattan Institute report by Brendan Coates, released a day after his quotes around "wealthy pensioners", ironically called for more tax on superannuation funds. Not sure about you Brendan, but my grandparents on the Gold Coast have lived far longer than they expected and are now living day to day, as their meagre super dwindled to nothing. Pensioners and self-funded retirees are being slammed every which way as the "cash cows" of society, that should be pushed out of their homes - "and downsize" - to make way for a seemingly more important demographic: anyone under the age of 50. In 2025, around 58 per cent of Australians aged over 65 (around 2.4 million people) receive either the full or part age pension. But why would someone not have enough super to retire on comfortably? Compulsory super only came into play 30 years ago (around 10 years after Brendan Coates was born). "While Australians have reason to feel proud of the success of Australia's superannuation system ... the need for review, refinement and reform continues. An example is the retirement savings of Australian women," the Australian Prudential Regulation Authority states on their website. Older women are the fastest-growing group of homeless people in Australia. The 2021 Census reported a 6.6 per cent increase to women over 55 experiencing homelessness. Divorce and lack of super (due to raising children) are a big factor. Banks also won't give older people a loan for a home and rents have skyrocketed. The Superannuation Guarantee, with a mandatory three per cent contribution rate for employers came into effect in 1992 - nearly 20 years after reader of The Senior Suzanne G finished high school. "As a woman of 67 soon 68 ... back in 1974 when I finished school there was no superannuation," the retired pensioner told The Senior. She said she's worked all her life, owns her own home, and had a "meagre private super" which was cashed in some years ago to complete home renovations. The 1980s was the birth of superannuation for Aussies, but in the beginning, it was generally limited to public servants and white collar employees of large corporations. It was only in 2003 that provisions came in to allow the splitting of superannuation between divorcing or separating spouses, while 2007 saw investment losses for Australian superannuation funds of more than $200 billion thanks to the global financial crisis (GFC). The other flipside to all this: is if an older person does want to keep working they are either financially penalised (if they're on the age pension) or they're discriminated against by employers (according to the research by the Human Rights Commission and Australian Human Resources Institute). Who's with me and standing up for the rights of our wise elders? Retirees are humans too, with basic needs like anyone else. It's time the generations before them showed some respect. Share your comments below if you agree ... or disagree ... The attacks on Baby Boomers, labelling them as "wealthy" to the detriment of "families and young people" just because their home has increased in value, needs to stop. Brendan Coates, an economist with the Grattan Institute, was given a soap box on July 24 to air concerns "wealthy pensioners" should be penalised to benefit the rest of Australian society. Perhaps Brendan forgets people over the age of 65 are also valued members of society, and if they're eligible for the age pension (the current base payment being $27,333 a year for singles and $41,210 for couples, before tax is taken out) it's because they are just scraping by. Compulsory super only began in 1992 at 3 per cent, whereas Brendan enjoys 12 per cent as of July 1. The age pension is below minimum wage, and far below the wage of an economist (in excess of $100,000 according to "[Retirees] can be in Potts Point or Toorak with a $5m house and receive the same pension that a person in a $500,000 unit in Bendigo or Bathurst is receiving," he is quoted as saying in the Australian Financial Review. "People with substantial wealth are receiving the pension who arguably don't need it." Read more from The Senior: Mr Coates believes a retiree's family home (regardless if they bought it 40 years ago for next to nothing, then for the pandemic to jack up the land value) should be included in the pension assets test to better help "those who need it". But Brendan isn't a fan of retirees with superannuation either. A Grattan Institute report by Brendan Coates, released a day after his quotes around "wealthy pensioners", ironically called for more tax on superannuation funds. Not sure about you Brendan, but my grandparents on the Gold Coast have lived far longer than they expected and are now living day to day, as their meagre super dwindled to nothing. Pensioners and self-funded retirees are being slammed every which way as the "cash cows" of society, that should be pushed out of their homes - "and downsize" - to make way for a seemingly more important demographic: anyone under the age of 50. In 2025, around 58 per cent of Australians aged over 65 (around 2.4 million people) receive either the full or part age pension. But why would someone not have enough super to retire on comfortably? Compulsory super only came into play 30 years ago (around 10 years after Brendan Coates was born). "While Australians have reason to feel proud of the success of Australia's superannuation system ... the need for review, refinement and reform continues. An example is the retirement savings of Australian women," the Australian Prudential Regulation Authority states on their website. Older women are the fastest-growing group of homeless people in Australia. The 2021 Census reported a 6.6 per cent increase to women over 55 experiencing homelessness. Divorce and lack of super (due to raising children) are a big factor. Banks also won't give older people a loan for a home and rents have skyrocketed. The Superannuation Guarantee, with a mandatory three per cent contribution rate for employers came into effect in 1992 - nearly 20 years after reader of The Senior Suzanne G finished high school. "As a woman of 67 soon 68 ... back in 1974 when I finished school there was no superannuation," the retired pensioner told The Senior. She said she's worked all her life, owns her own home, and had a "meagre private super" which was cashed in some years ago to complete home renovations. The 1980s was the birth of superannuation for Aussies, but in the beginning, it was generally limited to public servants and white collar employees of large corporations. It was only in 2003 that provisions came in to allow the splitting of superannuation between divorcing or separating spouses, while 2007 saw investment losses for Australian superannuation funds of more than $200 billion thanks to the global financial crisis (GFC). The other flipside to all this: is if an older person does want to keep working they are either financially penalised (if they're on the age pension) or they're discriminated against by employers (according to the research by the Human Rights Commission and Australian Human Resources Institute). Who's with me and standing up for the rights of our wise elders? Retirees are humans too, with basic needs like anyone else. It's time the generations before them showed some respect. Share your comments below if you agree ... or disagree ...

AU Financial Review
5 hours ago
- AU Financial Review
Labor to amend penalty rates bill after ‘retrospective' concerns
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