Recent Revisions to Labor’s ‘Better Target Super Concessions’ Policy
Labor’s ‘Better Target Super Concessions’ policy has undergone substantial revisions in response to extensive consultation and feedback from industry stakeholders. The changes are aimed at creating a fairer and more practical framework for superannuation taxation.
Key Components of the Announced Changes
1. Deferred Commencement Date
The start date for the revised policy has been postponed by one year. Implementation will now begin on 1 July 2026, focusing on taxpayers’ Total Superannuation Balance (TSB) as at 30 June 2027. This extension provides additional time for thorough consultation and legislative drafting.
2. Two-Tier Thresholds for Large Superannuation Balances
A gradual taxation model will be introduced to apply different tax rates according to superannuation balance thresholds:
· Balances up to $3 million: earnings taxed at 15%
· Balances between $3 million and $10 million: earnings taxed at 30%
· Balances above $10 million: earnings taxed at 40%
3. Indexation of Thresholds
Both the $3 million and $10 million thresholds will be indexed to maintain consistency with the Transfer Balance Cap and to account for inflation over time.
4. Taxation of Realised Earnings
Under the updated policy, the new tax rates will apply exclusively to future realised earnings, rather than unrealised gains. This addresses prior concerns that taxing unrealised gains could create cash-flow challenges for SMSFs and funds with illiquid assets. Treasury will undertake further consultation regarding the calculation and member attribution of realised gains.
5. Defined Benefit Scheme Equity
Defined benefit schemes will receive equivalent tax treatment, ensuring comparable outcomes across all superannuation structures. Treasury will also consult on the methods for calculating these outcomes.
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