Wealthy baby boomer's infuriating question about how Anthony Albanese's new tax will affect his $8MILLION in superannuation
Under Labor's tax plan, Australians with more than $3million in super will pay an additional 15 per cent tax on the portion of their earnings above $3m.
Given only an estimated 80,000 Australians have super balances above the $3m threshold, the new tax would currently affect about 0.05 per cent of the population.
The limited scope and applicability of the tax hike hasn't stopped the country's top-earners from scrambling for advice on how best to shield their account balances.
Enter the anonymous boomer who recently asked Sydney Morning Herald columnist Noel Whittaker whether his $8million Self Managed Super Fund (SMSF), through some eleventh-hour readjustments, could be spared the additional tax.
The frugal fellow explained the facts as follows: the man, aged in his mid-to-late 80's shares the SMSF with his wife, with 58 per cent allocated to his account and 42 per cent to his wife's.
In the 2025/26 financial year, they will both draw the minimum pension of nine per cent, totalling about $333,000.
His first question to Mr Whittaker was: if they sold enough assets to bring the balance below $6million by June 30 next year, would they be exempt from the new tax?
The answer: it depends. The tax is calculated per member, meaning if a single account held more than half the $6million balance, that account would be liable, he said.
Assuming the pensioner reduced his personal super account to $3million on which he earned $400,000 over the next financial year, Mr Whittaker estimated the extra tax would cost him only $7056.
His second question, which answered in the affirmative, concerned whether pension withdrawals affected the relevant balance for tax purposes.
Mr Whittaker clarified that the tax only applies to the portion of a super balance over $3million. So, in his example, a balance of $3.4million would be liable to pay $7056 in tax.
According to ATO data, the average Australian man has a super balance of $182,000 while the average woman has $146,000.
Calculations by the Australia Institute estimate 97 per cent of Australians currently in the workforce will never have $3million in superannuation let alone the roughly $4.64million held personally by the boomer in question.
Sympathies, then, were understandably in short supply among readers of the article.
'Accumulation of huge wealth with huge tax concessions and still not wanting to pay a fair share to fund a more equitable society doesn't seem right,' one user wrote.
'$8millilon and they're whingeing abut paying just a little extra tax,' another user said.
Another reader wrote: '$8million in super... far out! That is more than enough for two people to retire on.
'Super IS NOT an inheritance vehicle to ensure wealth is passed down the generations whilst paying the least amount of tax.'
While few sympathise with the efforts of Australia's wealthiest to avoid the new tax rate, others have called out the fact the $3million threshold is not indexed to inflation.
It's a position shared by the Greens, who Labor will likely have to rely on to secure the bill's passage through parliament given the Coalition's stated opposition.
Economists estimate that, by 2040, a $3million threshold would be worth about $2million in today's dollars, meaning more Aussies will creep into the affected bracket.
AMP economist Diana Mousina has been outspoken in her criticism of the decision not to index the bill, claiming it would eventually affect a wide swathe of earners.
While the figures are widely contested, Ms Mousina calculated the average 22-year-old earning average wages for life would eventually reach the $3million threshold.
'Do you think that the proposed $3million superannuation cap tax won't impact you because the Labor government said it only impacts 0.5 per cent of people now? Think again,' she said.
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