Where you’re being taxed on money you haven’t even made yet.
Let’s start with the basics. In Australia, superannuation, or super, is not the pension. It is not some generous government handout that allows you to stop working at 60, drink wine before midday, and collect a lovely weekly cheque just for surviving this long. No, that fantasy is reserved for the Age Pension, which is only available if you’ve somehow managed to make it to 67 and own roughly two pairs of socks and a toaster, and not much else.
Superannuation, on the other hand, is your own money. Sort of. It’s money that your boss legally has to put aside, currently 11.5% of your wages, into a special account that you can’t touch until you’re 60(ish). You can add in extra cash yourself, but it’s like saving for retirement with your hands tied behind your back, while someone else chooses the piggy bank, its color, and the interest rate.
Super was made compulsory in 1992 by then-Prime Minister Paul Keating (of Zegna suits, antique clocks, and insults so sharp they could julienne a carrot). The idea was that super would give people dignity in retirement. A noble pursuit. But fast-forward to now, and unless you’ve been earning CEO money since the year dot or had the foresight to start salary sacrificing before you could legally vote, your super balance probably isn’t going to buy you much more than a second-hand recliner and a few tins of tuna.
Now, about the pension. In order to get the full Age Pension from the government, you have to be 67 and basically living like a hermit on a budget. The current maximum is about $1,149 a fortnight for singles, which might sound fine until you realize that a Felafel Roll these days is around $15 and that electricity costs more than some studio apartments.
Even worse, you don’t even qualify for the full pension unless you earn under $5,668 a year and have very few assets. That’s not modest living. That’s quiet desperation with a Woolies supermarket rewards card.
So to be crystal clear, super is intended to stop you needing the pension. It’s a DIY retirement fund where you invest your own money (with a bit of employer help) and cross your fingers that you’ll live long enough to spend it on something other than medication and arthritis chairs.
And if you’ve played by the rules, well done! You’ve skipped the cocktails, side-eyed the Zara sales, and diligently funneled your money into superannuation like a responsible grown-up with dreams of Pilates at sunrise and cruises that involve more champagne than stress. Then just when you thought you’d earned a peaceful retirement, the Australian government casually announces, “By the way, we’ll be taxing you on your super’s imaginary earnings, the ones you haven’t actually received.” Pardon?
Welcome to Australia’s Schrödinger’s Super Tax, a legislative proposal that’s both alive and dead in Parliament, just like the unfortunate metaphorical cat. Officially, it’s called the Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023, which sounds like something you’d avoid at a dinner party. And trust me, the debate around it is just as awkward.
Rich People Loopholes
The Albanese government, being all “fairness and reform” this, “rich people loopholes” that, has proposed adding an extra 15% tax on super earnings for balances over $3 million, including the unrealized gains, aka the money you haven’t even touched yet. It’s like being taxed for owning a house because it might go up in value. Do you feel taxed just reading that? Same.
So now your super fund has become a metaphysical mystery. Is it rich? Is it poor? Is it taxed if it hasn’t even made a profit yet? Yes. Yes, it is.
Who’s Applauding, Who’s Fainting?
Treasurer Jim Chalmers is leading the charge, insisting it’s all about “fairness” and only affects the top 0.5% of super holders, about 80,000 of Australia’s wealthiest souls.
But the critics? Oh, they are legion. There’s the Coalition, obviously. Then there are accountants (who are finally having their moment), farmers, small business owners, and that rare breed of humans who say “Self-Managed Super Fund” without blinking. James Chirnside from Dart Mining is horrified. Philip Lowe, former governor of the Reserve Bank of Australia, and Ken Henry, economist and former secretary of the Department of Treasury, have both raised eyebrows. Even Chartered Accountants Australia and New Zealand called the bill flawed, which in accountant-speak is the equivalent of flinging your calculator across the room.
So, What Exactly Is the Tax?
Technically, it’s Division 296 of the Income Tax Assessment Act 1997. Romantically, it’s where super goes to have its soul crushed. From July 1, 2025, anyone with a balance over $3 million will pay 30% total tax on their earnings, including unrealized capital gains.
You don’t have to sell your assets for this tax to apply. If your property portfolio looks a bit plump on paper, the ATO comes knocking with its calculator and says, “That’ll be 15% extra, thanks.” Whether you actually have the cash is your problem. Think of it like getting charged rent for a holiday house you merely drove past once in 1997.
Oh, and the tax is applied to you personally, not the fund. So there’s no hiding behind the retirement couch.
When’s It Happening? Maybe Never. Maybe Soon. Maybe Yesterday?
The bill was introduced in November 2023, limped through the House of Representatives, and promptly tripped over its own shoelaces in the Senate by February 13, 2025, just before the election was called. So now it’s stuck in legislative limbo, sipping a cocktail called “Maybe Later.”
If passed post-election (because let’s face it, stranger things have happened), it’ll kick in nationwide from July 2025. The ATO will start issuing bills a year later. Possibly in glitter. Possibly not.
Why the Massive Drama?
The government says the bill is about making sure super is used for actual retirement, not hoarding wealth like a cartoon dragon. They reckon it’ll raise $2.3 billion by 2027–28 and help pay for, I don’t know, hospitals or hovercrafts.
But opponents say it’s unfair, unrealistic, and—most damning of all—un-Australian. Farmers in Toowoomba are freaking out because their super is mostly their land, which isn’t exactly something you can just slice up and sell like a Sara Lee cake.
And since the $3 million threshold isn’t indexed to inflation (rude), more and more middle-class savers will sneak over that line just for having a moderately decent financial plan.
Venture capitalists and mining investors are also alarmed, with some (like Wilson Asset Management founder, Geoff Wilson) suggesting it could dry up funding for startups and kill off innovation faster than you can say, “Shark Tank rejection.”
And don’t get people started on the defined benefit schemes—you know, the kind that conveniently cover politicians and public servants? They get a “deferral option.” That translates to “not our problem just yet.”
And the Schrödinger’s Bit?
Ah yes. You’re taxed on gains you haven’t made. And if you do pay tax and your asset value drops later? Too bad. No refunds. The tax is real even if the money was never there to begin with.
The only consolation is that you can carry the losses forward, like emotional baggage, into the next financial year. Charming.
Progressive Policy or Political Pandora’s Box?
This tax could either be the great leveler Australia needs, or the retirement apocalypse disguised in Treasury letterhead. It’s paused but not forgotten. Like an ex with your Netflix password. With the election behind us, you can bet this drama will rise again, probably at a press conference disguised as a budget update.
In the meantime, keep an eye on the Senate, a hand on your wallet, and maybe send your accountant a nice cheese hamper. They’re going to need it.
