Agree...commonsense at last. But Labor will return to this honeypot in the future when things get fiscally sticky.
I'm tipping they will relate future attacks on Super, negative gearing & CGT as directly funding future defense commitments a la the Medibank levy.
I agree that the proposed changes, particularly the introduction of indexing, are a significant improvement. The absence of indexing was always my primary concern, as for individuals with balances over $3M, the increased tax was relatively modest in the broader context but the notion of taxing unrealised gains was also a dangerous predicant. These adjustments makes the policy far more reasonable and future proof.
That said, I still believe a simpler and more transparent solution would have been to establish a definitive cap on superannuation balances. For instance, setting a maximum allowable amount, the exact figure of which could be debated, and taxing any excess at the highest marginal rate would provide greater clarity. A transition period, perhaps three years, could be provided to allow individuals to adjust their financial strategies accordingly. While there would be logistical details to address, an approach based on a definitive cap would be fundamentally simpler than introducing multiple tax tiers. The current proposal, though fairer with indexing, still provides a disproportionate tax benefit to those with the largest balances compared to those without.
Side note: An even simpler and perhaps more equitable alternative would be to tax all withdrawals from superannuation at the same marginal tax rates as other forms of income, while preserving the tax benefits during the accumulation phase. This would address the fundamental inequity, as raised by Scott Phillips and Andrew on the Motely Fool Pod Machine, where the current system allows a retiree to withdraw a significant tax free or low tax income, while a younger person earning half that amount pays a much higher rate of tax on their income.
Anyhow back on topic: Ultimately, the revised proposal is a step in the right direction and a much better outcome. It seems that achieving a directionally correct, rather than equitable system, is the most we can realistically hope for from our politicians.
Treasurer Jim Chalmers has just announced significant changes to the proposed Superannuation tax laws. The new proposed changes are a relief as the intention to tax unrealised gains has now been scrapped. I think the new proposed changes look fair and sensible: