Keating hails new super tax rules a ‘huge policy achievement’
The former prime minister Paul Keating has just responded to the new superannuation tax changes, saying they will resolve a political “impasse” and ensure “that superannuation accumulations will be successfully taxed”.
Keating released a long statement, pointing to changes by John Howard and Peter Costello in 2007 to abolish the Keating government’s “reasonable benefit limits” for superannuation that placed an upper limit on the tax benefits you could obtain in the system. He wrote:
The government and Treasurer Chalmers have spent well over a year seeking to [devise] a method whereby the Howard/Costello runaway scheme could, with all reasonableness, be brought under control by setting new permissible limits and above which taxation applied at a higher rate. …
The Treasurer’s success in working through and resolving this impasse will now mean that superannuation accumulations will be successfully taxed but taxed only on a basis of realisation, but more than that, taxed at a new limit and at a higher rate, restoring much needed equity following the Howard/Costello rampage of 2007.
Former prime minister Paul Keating. Photograph: Bianca de Marchi/AAP
Keating went on to say there was little doubt Chalmers had seen “great difficulty” setting new upper limits, but said the changes would be a “huge policy achievement”.
It is reform of a kind that shares substance with necessity. Necessity that every government since 2007 has conveniently overlooked or simply regarded as too difficult.
Importantly, these decisions solidify superannuation tax arrangements in a manner the community can now rely upon for the long-term security of their retirement savings and with it, their peace of mind.
Updated at 22.35 EDT
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Josh Taylor
Yahoo probed on ‘inappropriate’ bald heads on site
Yahoo, which was a popular search engine years before Google’s domination but is now considered a “challenger” site, has faced questions from Liberal senator Sarah Henderson over a BuzzFeed article featured on its homepage during a Senate inquiry.
The inquiry is examining search engine and social media age verification, as well as other incoming internet codes.
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Henderson asked Yahoo’s director of public policy, Logan Smith, why the BuzzFeed article, which featured the bald heads of two men behind a woman, was on the website’s homepage:
I’ve just had a look at your website, and you’re displaying on the front page, the homepage of the website, a photograph which looks like a woman exposing her buttocks. Then when you go into it, you see that there are two bald heads in front of the woman. But it was clearly designed to look as if a woman was in a very inappropriate and sexually explicit position, can I ask you to explain why that’s on your homepage?
Smith replied that it was likely partner content from a third party. Henderson said:“It shouldn’t matter, it’s on your homepage.” She said:
I’m concerned, based on your assurances that there is, there isn’t inappropriate content on your homepage, and that Yahoo is not taking that obligation seriously enough.
Smith said no policy or filter was foolproof, meaning Yahoo would rely on manual user reports.
Henderson also said she saw an ad by Temu “promoting what I can only say is an explicit BDM type costume, which I won’t describe in detail, but I would put to you is also very inappropriate for a younger audience”.
Smith took the questions on notice, but said there were ad policies in place.
Updated at 22.21 EDT
‘No good reason’ for high and low income earners to get same super tax concessions, Chalmers says
Chalmers just summed up one of the baseline ideas behind some of the changes in a quick sentence:
Really what I’m saying here is there is no good reason for people with hundreds of millions of dollars in super to get the same kind of tax concessions as people with smaller balances, and that’s what this change reflects.
Updated at 21.44 EDT
Chalmers has had ‘initial’ conversation on changes with the Greens
Chalmers said he has had an “initial conversation” about the changes with the Greens leader, Larissa Waters, after cabinet agreed to the recommendations. The treasurer said Waters would confer with her colleagues and the Greens would make their position on the matter known “in due course”.
Chalmers said:
I have appreciated throughout and I appreciate today the opportunity to engage constructively with the Greens in the Senate …
It was a constructive conversation [and] I do not want to pre-empt the Greens party room. They will consider this.
Guardian Australia has reached out to Waters for comment.
Updated at 21.39 EDT
Chalmers says government always takes feedback ‘seriously’, reflecting changes to super tax plans
Chalmers was asked if this is a major retreat from the initial plans to change the superannuation tax system. He said:
As treasurer and as a government we always try to take feedback seriously. We always try to find the best way through …
We found another way to satisfy the same objectives. It means a fairer superannuation system from top to bottom, and means a better outcome for people on the lowest incomes and better targeted concessions for people with the biggest balances.
And that is a good outcome from our point of view.
Treasurer Jim Chalmers. Photograph: Mick Tsikas/AAPShare
Updated at 21.28 EDT
Fourteen times more people will benefit from new super thresholds than be adversely affected, Chalmers says
Summing up these changes (and justifying them), Chalmers says:
This is a government which takes feedback seriously, which works through issues and advice in a methodical and a considered way, and you’re seeing the fruits of that today. Our superannuation system is the envy of the world. It is a proud Labor creation, but it has its imperfections, and today, with these announcements, we are addressing at least two of them – the sustainability of concessions in the highest balances, and also adequacy for women and low income earners. And in doing that, we are reinforcing the objective of super as a vehicle for decent retirement savings. This goes hand in hand with our other reforms. We’ve actually done a lot to strengthen super, to make it fairer and more sustainable. We’ve legislated the objective. We got super to 12% – we’re making the changes so that we have payday super, we’re paying the superannuation guarantee on paid parental leave, and we’ll also make sure that the performance test is doing its job as well.
I wanted to leave you with this comparison: 14 times more people will benefit from the low income super changes than will be impacted by the better targeted tax concessions. This is a fairer superannuation system from top to bottom, and it’s another part of us ensuring, as a Labor government, that more Australians are earning more, keeping more of what they earn, and also retiring with more.
Updated at 21.27 EDT
Chalmers says the third area of further consultation is to “find the best way to adjust the treatment of capital gains accrued prior to the start of these new arrangements, to make sure that we’ve got the base appropriately captured when it comes to the new calculations”.
Updated at 21.25 EDT
Chalmers says the second area where they will do “more work” is on the calculation and attribution of the realised gains.
We are anticipating that it will be calculated at the fund level and then attributed to members with balances above $3m and $10m, but we want to be upfront with you and say that we will do a little bit more work on that. We’ve done some work behind the scenes in the lead-up to this announcement, but there is a bit more work to do.
Updated at 21.24 EDT
Chalmers says there are three main areas where “we will do a bit more consultation and a bit more work”.
The first one is to make sure that we have commensurate treatment of defined benefit in these arrangements we’re announcing today, as we had in the original proposal. For example, we want to make sure that federal politicians are in when it comes to these changes. But more broadly, we want to make sure that defined benefit schemes are appropriately calculated and included in these changes in a way that they were in the original proposal.
Updated at 21.23 EDT
Exemption schemes for federal judges to better align with state counterparts
Chalmers says the sixth change is to better align the treatment of federal judges’ defined benefits interests with the existing constitutional exemptions for state judges:
Judges might have a bunch of different super accounts. This is really about the judges’ pension scheme, to make sure that there is better aligned treatment of federal and state judges when it comes to their defined benefit interests.
Updated at 21.47 EDT
Changes to come into effect from 1 July 2026
Chalmers says the fifth change is made necessary by those other changes, which is a one-year delay “to consult and bed down the changes”:
And then, ideally, legislate them as soon as we can in 2026. So pushing the start date from the middle of this year to the middle of next year, in order to do a bit more consultation, to bed down the changes and to legislate the changes.
For all of these changes we’re announcing today, the new start date becomes 1 July 2026 except for the [low income superannuation tax offset] change, which is timed in 2027 to coincide with the government’s third tax cuts.
Updated at 21.36 EDT
New super tax arrangements will only apply to realised capital gains, Chalmers says
The fourth set of changes Chalmers says is to apply these new tax arrangements to realised gains:
And I’ll come back in a moment to the future work, the extra work that we will do in consultation with the sector to implement that change.
Updated at 22.13 EDT
New super tax thresholds will be indexed, Chalmers says
The third change Chalmers says is to index both of these thresholds to maintain relativity with the transfer balance cap, which was introduced by the Coalition:
The transfer balance cap is indexed to CPI. These thresholds will be indexed to the transfer balance cap to maintain an appropriate relativity between the two sets of thresholds.
We have always had in our back pocket this indexation, or an indexation like this, in order to get it through the parliament. We have also always said to you, publicly and privately, that we expect future governments would have lifted the old threshold. Here we are indexing that, to make that clear, indexing both thresholds.
Updated at 21.19 EDT
New $3m and $10m thresholds for super tax concessions
The second change, Chalmers says, is to introduce two thresholds for the better targeted superannuation tax concessions:
The first threshold is $3m, the second threshold is $10m. For earnings on super balances between $3m and $10m the rate remains 30%; the rate for over $10m becomes 40%.
So this is still a concessional tax arrangement, but it’s better targeted. It will still only impact less than 0.5% of Australians. With the updated years and taking into consideration earnings, this means about 90,000 Australians next year will have more than $3m in their super, and about 8,000 will have more than $10m. And you’d be aware in recent weeks and months that people have been recommending a cap to us for super – this second threshold, at $10m is really instead of going down that path.
Updated at 21.34 EDT
Low-income super tax offset to increase from $500 to $810 for those earning under $45,000
Chalmers goes on to “run through the main changes.”
The first one is to increase the low income superannuation tax offset (Listo), to increase it from $500 to $810 and also to raise the eligibility from $37,000 cut off to $45,000 in 2027 to coincide with the government’s third tax cuts, this will mean more superannuation for 1.3 million Australians, of whom, 60% are women. It means the total number of eligible Australians for the Listo will become 3.1 million, and by one realistic calculation, it means about an extra $15,000 at retirement.
Treasurer Jim Chalmers speaks to media at Parliament House. Photograph: Mick Tsikas/AAPShare
Updated at 21.48 EDT
Chalmers:
This morning, on my recommendation, the cabinet agreed practical changes to make the superannuation system stronger, fairer and more sustainable. There are six main changes to the proposal that we put forward a couple of years ago, including one entirely new element, which is an increase to the low income superannuation tax offset. These are sensible changes, which take more than two years of feedback into account. We have worked through the issues, and we found another way to deliver on the same objectives. This means a better deal for low income workers and also better targeted concessions for the biggest balances. This will make the superannuation system fairer from top to bottom.
Updated at 21.14 EDT
Chalmers reveals surprise changes to super tax rules
The treasurer, Jim Chalmers, has just stepped up to announce some surprise changes to the super tax rules.
Updated at 21.13 EDT