Labor’s Revised Super Tax: What the Changes Mean for Australians
After two years of political debate and industry pushback, the Federal Government has walked back several key features of its proposed high-balance superannuation tax. Treasurer Jim Chalmers announced the revised plan this week, describing it as “another way to deliver on the same objectives — but fairer.”
The new framework aims to strike a balance between addressing overly generous super concessions for the very wealthy and maintaining confidence in Australia’s retirement system.
What’s changed
The government has responded to widespread concerns from investors, advisers and economists that the original proposal was too complex and potentially unfair. The headline revisions include:
The plan to tax unrealised gains has been dropped. This means individuals won’t be taxed on “paper gains”, such as rising property or asset values, that haven’t been sold or realised.
The $3 million threshold will now be indexed to inflation, preventing “tax creep” over time.
Tiered tax rates: Earnings between $3–10 million will be taxed at 30%, while earnings above $10 million will be taxed at 40%.
Defined benefit schemes (such as those for judges and long-serving politicians) will receive equivalent treatment.
Support for low-income earners: The Low-Income Super Tax Offset (LISTO) will rise from $500 to $810 from July 2027, with the income threshold lifted from $37,000 to $45,000.
Together, these changes mean the revised policy will apply to fewer Australians and raise less revenue than originally planned — around $2 billion in 2028–29, down from $2.5 billion under the first version (ABC News, 2025).
What this means for Australians
For high-balance investors: The removal of the unrealised gains tax removes significant complexity and cashflow risk. Self-managed super fund (SMSF) trustees and asset-heavy investors will no longer face liquidity challenges or forced sales to cover tax obligations.
For workers growing their super: Indexing the $3 million threshold protects future balances from inflation-driven “tax creep.” This ensures those simply growing their retirement savings over time won’t unintentionally be caught in the higher tax bracket.
For pre-retirees and retirees: Those living off super income streams, particularly individuals with property or illiquid investments, can breathe easier. The changes mean taxes will only apply to realised gains, not to asset revaluations that exist on paper but not in cash.
For low-income earners: The LISTO boost is a meaningful win. By lifting both the offset and income threshold, the government aims to close the gender and income gap in superannuation outcomes, improving retirement balances for those earning under $45,000 a year.
References
ABC News (2025). Here’s how Labor’s revised super proposal would work. https://www.abc.net.au/news/2025-10-13/labor-super-tax-changes-explained/105885434
Australian Financial Review (2025). What the super tax changes mean for you. AFR. https://www.afr.com/policy/tax-and-super/what-the-super-tax-changes-mean-for-you-20251013-p5n24q
