A 20-year-old earning an average wage – about $90,000 a year in today’s terms – is expected to be captured under federal government changes to superannuation tax concessions, but only by the time they reach their early sixties.
New Treasury documents reveal most people are not forecast to end up with super balances above $3 million when they retire, which is when the changes would kick in.
Under the tweaks promised by the federal government, starting from 2025/26, the concessional tax rate applied to future earnings for balances above $3m will be 30 per cent, rather than 15 per cent.
When introduced, the changes will only affect about 80,000 of people – around 0.5 per cent.
But the failure to index the $3m threshold to inflation has raised concerns from the opposition that a much bigger cohort will be hit by the higher tax rate in the future.
The Treasury documents, tabled under a Senate order for production of documents moved by Liberal senator Simon Birmingham, found only the top 10 per cent of retiring earners will have a super balance of $3m or more in 30 years’ time.
The Treasury analysis includes a range of case studies to illustrate the impact of the altered super tax concessions.
A 35-year-old with a balance of $75,000 earning an average wage of $90,000 is not expected to have a balance above $3m by the time they retire, nor is a 50-year-old earning the same amount with a balance of $200,000.
The analysis also notes the average wage of $90,000 is around 15 per cent higher than the median wage, meaning Treasury’s example subjects are earning more than what 50 per cent of the broader population does.
Treasurer Jim Chalmers said the changes had broad public support because they were “modest and sensible”.
“When Australians are doing it tough, Labor’s highest priority is targeted cost of living relief in a more responsible budget – the Liberals’ highest priority is bigger tax breaks for people who already have tens of millions in super,” he said.
The May 9 budget will include the change to superannuation tax breaks to apply from 2025/26.
Opposition Leader Peter Dutton has promised to repeal the changes should the coalition win the next election.
(Australian Associated Press)