Anthony Albanese’s request for Treasury to examine a controversial proposal to lift taxes on some superannuation balances is “nothing unusual” the prime minister says, rejecting claims he is planning to rewrite it.
The prime minister said a meeting on the tax policy, which was meant to have begun several months ago, was not out of the ordinary.
“No, there are no policy changes, our policy stands. There is nothing unusual,” Mr Albanese said.
“We receive briefings on policy all the time, as you expect the prime minister’s office to do. There’s nothing unusual about that.”
Treasury officials admitted yesterday the prime minister’s office met with the department to discuss the government’s proposal to raise the tax on superannuation earnings — a policy that would normally be the responsibility of Treasurer Jim Chalmers.
Mr Albanese denied he had gone over the treasurer’s head.
The department said it was examining options to address concerns around the tax proposal.
Before the federal government announced a backflip on stage three tax cuts last term, the prime minister and treasurer repeatedly said there was “no plan” to amend the tax cuts.
In the weeks before that backflip, it was leaked that Treasury had been asked to model possible changes to those tax cuts.
Tax increase put on ice
The federal government proposed last term to double the tax on superannuation balances above $3 million, lifting the tax rate on earnings from 15 to 30 per cent.
The change was planned to take effect from July 1 this year, and raise about $2 billion a year.
But it has been met with internal resistance inside Labor, and criticism from party elders including former prime minister Paul Keating, who suggested the average young person today would be hit by the tax increase by the time they retired if it was not changed.
More than two years on, the legislation is yet to be seen.
One of the key criticisms is that because the higher tax rate is not indexed, more people will be captured by it over time due to inflation.
It would also apply to unrealised capital gains, like increases in the value of assets like property, which critics say could expose some savers to a higher tax rate even if they do not technically have access to those earnings.
There is concern the changes could undermine confidence in the superannuation system, if it was perceived that long-term savings plans could be meddled with by future governments.
Treasurer Jim Chalmers argues the change affects only about 80,000 of the wealthiest Australians, and that the threshold could be adjusted in the future to account for bracket creep, as happens with income tax.
