I have no idea why every news article on this matter makes it sound like everyone should be against these changes. Superannuation has for decades been a neat place to dump surplus salary to get it taxed at a lower income tax rate.
Under the superannuation tax changes, the concessional tax rate on earnings for balances between $3m and $10m will double from 15% to 30%.
Balances above $10m will be subject to a new, higher 40% rate.
Most of us are not affected by these changes. I truly, genuinely wish I were affected.
If you retire at 60 with 3 million in super, you could spend $70k per year for 40 years
With $3m in super, you could draw $100k/year and assuming 5% growth you’d have over $3.5m after 10 years:
Year,Starting Balance,Withdrawal,Interest Earned (5%),Year-End Balance 1,"$3,000,000","−$100,000","+$145,000","$3,045,000" 2,"$3,045,000","−$100,000","+$147,250","$3,092,250" 3,"$3,092,250","−$100,000","+$149,613","$3,141,863" 4,"$3,141,863","−$100,000","+$152,093","$3,193,956" 5,"$3,193,956","−$100,000","+$154,698","$3,248,653" 6,"$3,248,653","−$100,000","+$157,433","$3,306,086" 7,"$3,306,086","−$100,000","+$160,304","$3,366,390" 8,"$3,366,390","−$100,000","+$163,320","$3,429,710" 9,"$3,429,710","−$100,000","+$166,485","$3,496,195" 10,"$3,496,195","−$100,000","+$169,810","$3,566,005"“But $100k won’t be enough in ten years!” I hear you say. Ok, let’s give ourselves a 10% pay-rise every 10 years.
Year Range,Annual Withdrawal,Year-End Balance (End of Decade) Years 1–10,"$100,000.00","$3,566,005" Years 11–20,"$110,000.00","$4,355,900" Years 21–30,"$121,000.00","$5,497,281" Years 31–40,"$133,100.00","$7,196,668"With a starting fund of $3m, and a 10% payrise every decade, after 40 years we have over $7m in our super fund. Now, what happens to our poor rich person who needs to pay 30% on growth above $3m?
Year,Annual Withdrawal,Ending Balance,Annual Tax Paid 1,"$100,000","$3,045,000",$0 10,"$110,000","$3,472,749","~$6,144" 20,"$133,100","$3,871,911","~$12,048" 30,"$161,051","$4,110,378","~$15,716" 40,"$194,872","**$4,052,857**","~$15,271"Instead of ending up with $7m after 40 years, this poor individual now only has $4m after 40 years.
As I said, I really wish I had this problem!
Sure $3M would be a nice ‘problem’.
But I’m more concerned about poor suckers like me and maybe you.
Your key assumption is that the asset value never goes down. And you are ignoring the impact of inflation.
We are looking at long terms here, and when and where things happen matters.
So, in the case of a ‘comfortable’ $800K. Well, if the market tanks, that could easily be 400K. Not so comfortable now? And the $50K a year you were taking out, maybe you have to halve that to make it last. Oh, and whatever you were drawing out? $50K in 10 years time, assuming 4% inflation, is only worth 2/3 of whatever you take out today. And if you start budgetting for increased health care and aged care as you grow older, well…
Even this has a large dose of ‘assumes the status quo’ in it
This article is discussing a tax on earnings in super funds above $3m.
I think that people who are earning more than my annual salary just from growth in the value on their pile of cash should be charged tax on that growth.
They can afford it better than any of us, and I’m always amazed at people who think this is a bad thing.
None of the present changes apply to your examples.
Perhaps that’s the answer to my question: people criticise this tax because they worry it’ll affect them?
If you have $3m in Superannuation, with a standard 6% ROI annually, you could spend $180K of “earned interest” every year without ever touching your principal.
Because wages are inadequate and passive wealth or capital inheritance are the new pathway to upward social mobility. It’s not that I think most people think like this (yet), but news articles are mostly written by people from wealth now, because who can live on a journalist wage these days.
People with inadequate wages don’t have $3m super accounts. This law affects 0.5% of Australians.
That logic is bad because while yes, it’s taxed at a lower rate, you can’t access it until you turn 67!!! If you access it before then you get slugged with a huge tax on it.
It’s like when I see people telling others who are struggling to put food on the table or petrol in the car to make sure they contribute to their own super to the max every year - it’s a stupid idea, yet many of the people who say things like that also think like you do in your post, which makes no sense.
Successful people are already punished enough by the tax man for being good at what they do. Finding more ways to fuck them over isn’t going to end well for our country and economy, as eventually they’ll all up and leave, taking 50% of the countries income tax with them.
Do you honestly think that 0.5% of the population are responsible for 50% of the nation’s income tax? That’s hysterical.
We aren’t talking about specialist doctors and lawyers and successful salespeople. Those peasants on their measly half-million annual salaries are not putting enough away to be affected by this law.
In point of fact, these people are rich enough to employ wealth managers and accountants to manage their tax affairs. Retainers who know and utilise every tax loophole to minimise the tax they pay. You’d be surprised how little as a percentage of their income they are paying the ATO. Economically, we would miss none of them if they left.
We’re talking about people who are putting over $100k per year into their super funds. They are not moving in the same circles as you and me.
The top 1% of earners pay roughly 40-45% of all income tax. Did you seriously not know this?
Also……you don’t get an accountant to do your taxes? You’ve never used a financial advisor?
The top 1% of earners pay roughly 40-45% of all income tax.
That’s not true, though it’s a common misconception. To account for 40% of all income tax, you’d need to incorporate the top 5% of earners. Top 1% vs. top 5% doesn’t sound significant, but it truly is. Someone in the top 1% makes roughly twice the amount someone in the top 5% makes. We’re actually talking about different things and the same things all at the same time. It’s confusing, but bear with me and I’ll hopefully get us onto the same page.
Income streams are logarithmic in nature. This is why we always talk about “median salary” when discussing the topic. If we use the “average” salary (mean), then that would come out to roughly $106,000. However, if you are earning this amount, you’re in the top 25% of earners in Australia. The median salary sits at around $68,000. That number amazes me, since our rent alone is $41,600. I have no clue how people are surviving on the median, let alone half the nation on less than that.
Someone in the top 20% is making $128,000.
Someone in the top 10% is making $165,000. Not a massive jump in salary, this seems reasonable.
Someone in the top 5% is making $195,000. Again, that’s only a $30k jump to account for a decent chunk of the population.
Someone in the top 1% is making $385,000. Roughly double the amount for someone in the top 5%. To speak to your point, their increase in take-home pay is only about $100,700, because yes - they pay 45% tax.
Someone in the top 0.5% is making over $550,000.Now that we have these numbers out of the way, here’s why we’re talking about different things: Someone in the top 0.5% of earners still likely doesn’t have $3m in super. Or if they do, it’s just barely.
Someone in this salary bracket doesn’t hit it at 20. They usually hit it in their late 40’s to 50’s. At that point, they only have 20ish years of work left before they retire. If we assume our top earner is depositing $50,000 into their super fund at 5% growth, it’ll take them 28+ years to attain $3m. They just don’t have time to get to the point where they are affected by this policy. Or if they are super lucky and have managed to attain say $3.1m, they’re only taxed 30% on the earnings of $100k - not the earnings of the remaining $3m.
So, like I said: We’re talking about different things. The top 0.5% earners are not the same as the top 0.5% super fund holders. The top 0.5% super fund holders are not getting there from regular income. They are rich. They probably don’t work, because they don’t need to. They probably don’t pay much income tax, because they don’t need to work. You probably pay more income tax than these people.
Well $3M sounds like a lot now, but I hope they index it, because the way inflation and money printing is going, that will be worth about $3.50 in a decade or two, so everyone will be caught by it.
Don’t buy into the fear-mongering being pushed.
For a comfortable retirement in 2026, the amount required is ~$800K (this is already on the high end).
Assuming a consistent worst-case inflation rate of 4% every year (double the RBA target), it would take 25 years to hit $2m - let alone the $3m+ in question here.
There is a very small, very wealthy cohort with $3m+ in superannuation savings - and you, statistically speaking, aren’t part of it.
Fuck ‘em - they need to be taxed more.
I get and support the gist of this.
In terms of dollar values, I worry about 2 things:
- the official CPI figures don’t track to the actual cost of living, eg mortgages aren’t included
- the issue of money/government debt is uncontrolled
Maybe if it was set as the equivalent of $3M in gold as at 12 March 2026 I’d be OK…
PS:800k might be the comfortable today, but there have been multiple times the share market etc has halved, or even lost 90% of it’s value. Unless you have 2x to 10x 800k, and have a living portion in liquid assets, you are not immune.
As an alternate POV, if somebody had $5M in super today, would we be OK with no extra tax if the markets crashed 50% and that meant their super was only worth $2.5M now? And the $3M fatcat who only held shares in his dodgy cousin’s company that tanked, some NFTs, and cryptocurrency was now worth $100k?
Fuck ‘em - they need to be taxed more
You say this about the people that pay the majority of all income taxes already lol. When did this commie “successful people should be penalised more and more for being successful!” ideology become so popular in Australia?
No amount of extra tax from the wealthy is going to result in reduced taxes for everyone else. The wealthy and the high earners already pay almost all of the tax. All it’s going to do is end up in more government waste and corruption.
Also……why do they need to be taxed more? Are they using more government services than everyone else? Do they get special roads that only they get to drive on?
What’s your suggestion? Tax low income more? People of wealth have a significant ability to manipulate and reduce tax bills. I don’t think payroll tax is the answer, but taxing wealth, assets and corporations is.
No, taxing wealth and assets isn’t the answer. People shouldn’t be punished simply for being successful and owning things.
Your last point is - making corporations actually pay taxes. No more Apple Australia buying iPhones from Apple Scotland for the exact same price they sell them to customers for, meaning no profit in Australia, for example. No more mining giants paying nothing to literally sell the ground out from under us.
Income tax should be abolished, and instead make it spending/usage based. Spend more pay more.
The only thing I agree with “taxing the rich” for is fines - they should be percentage based. $1000 for your passenger having their seatbelt slightly off hurts someone earning $60k a lot more than it hurts someone earning $600k.
It’s not punishment for being wealthy, it’s giving back to the community that helps you live in luxury. The taxes won’t send them broke, or make a big dent in their savings.
And I agree with the fines. Should be a minimum plus a percentage of your last financial year’s income.
It is punishment. The wealthy already “give back” far more than the rest of the population in terms of tax.
It’s just pure jealousy.
