Put a Lid on It: Tax Breaks for Multi-Millionaire Retirees Reined In Down Under

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Retirees with multi-million dollar nest eggs just had their golden goose cooked down under – and it’s about time!

On Tuesday, the Australian government declared they would be capping tax exemptions for pension holders with more than A$3 million ($2 million) in assets in response to mounting budgetary pressure and extended deficits.

Just a few days prior, the Labor government deliberated on how to restructure retirement funds to make them sustainable and equitable. They have made the decisive move that will ultimately shape Australia’s future pension system.

Estimated to affect 80,000 people, Prime Minister Anthony Albanese announced during a media briefing that high-income earners will experience an increased tax rate of 30%, up from 15%.

“This proposal will not alter the fundamentals of our superannuation system. It is estimated that 99.5% of individuals with a superannuation fund are unaffected by this reform,” Albanese said.

Effectuating on July 1, 2025-likely post the upcoming federal election- this move is estimated to generate roughly A$2 billion in its first full year.

In the past thirty years, Australia’s pension pool has grown exponentially to a whopping A$3.3 trillion – maintained by approximately 16 million Australians! It is now ranked third-largest globally and has seen its superannuation funds rise from an impressive A$148 billion.

According to Treasurer Jim Chalmers, a staggering A$50 billion ($33.7 billion) of the government’s budget is spent on tax breaks for high-income earners’ retirement funds yearly! If this persists by 2050, these tax cuts will cost more than the state pension.

The Australian government has predicted that the annual deficit will expand dramatically over the next five years, reaching a staggering A$50 billion ($34 billion) by 2025/26. This increase will subsequently cause total debt to balloon up to an estimated A$1.16 trillion, or 43% of the gross domestic product.

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