Potential Tax Break Reforms Pose Major Implications for Those With Large Superannuation Balances

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Albanese and Chalmers are eyeing up tax breaks to fill the budget holes likely to mean bad news for those with substantial retirement balances.

On February 22, Wednesday, Prime Minister Anthony Albanese addressed the National Press Club with the theme “Stability, Confidence, and Security” to bring his agenda for 2023 together into a single, comprehensive strategy.

The Prime Minister joined the Treasurer in supporting superannuation reform at the Press Club. As was generally the case with the discussion surrounding the Stage 3 tax cut before the October budget, Jim Chalmers is not being left to fly this kite alone.

Chalmers and Albanese are on the same page. They wish to define superannuation’s goals as “sustainable” and “equitable.” Both reassure people with an “average” super balance of $150,000 that they should not be concerned.

“There’s nothing that impacts the system’s sustainability from punters out there who’ve got $150,000 in their accounts,” Prime Minister Albanese said. “That’s not an issue at all.”

The debate may not benefit the most from that “average,” which includes young workers. Chalmers, though, has a set of numbers that are more compelling from a political standpoint and provide a clear indication of his direction.

“For less than 1 per cent of people in the system, they’ve got balances higher than $3 million,” said in an interview on Wednesday. “The average amongst that group is $5.8 million, and they have access to a whole bunch of tax concessions.”

Chalmers bases his argument for action on a prediction that, by 2050, the cost of superannuation tax breaks to the budget will surpass that of the age pension. He is “not convinced” it will be viable. “We simply can’t afford it,” as expressed in treasurer jargon.

Ultimately, the super tax proposal could have significant repercussions for those with large balances, and it is essential to be aware of how any changes could affect retirement plans. 

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