What changes are being proposed to tax concessions, capping balances and everything to know

We now have some clarity about what is happening to superannuation funds and the Labor government has promised this is the last of the changes.

Here is a breakdown of what we know so far.

What is superannuation?

Superannuation is all about saving for retirement.

It’s a long-term investment that sees your employer pay a percentage of your salary or wages into the fund.

You can also make your own contributions to boost your final retirement figure.

Over time, this builds up and the idea is you have a nice nest egg for when you retire.

What has the government announced?

Albanese and Chalmers announced on Tuesday that from July 1 2025, Australians who have a superannuation balance over $3 million will be taxed at a concessional rate of 30 per cent, up from 15 per cent.

What are super tax concessions you ask? Well, it is where you can make a before-tax contribution to your super in addition to what your employer pops in.

Currently, all super balances regardless of how high they are have a tax rate of 15 per cent.

These tax concessions are costing the government about $50 billion a year.

But from 2025, anyone with more than $3 million in their super accounts will be taxed at 30 per cent instead.

Albanese said this change will impact around 80,000 Australians.

Anyone with below $3 million in their super balance from that time will still be taxed at 15 per cent.

It should put $2 billion back in the budget when it comes into effect – as Australia faced $1 trillion in debt.

Why has this been a topic of conversation?

Chalmers has been on a pursuit to overhaul superannuation after he slammed the Morrison government’s policy allowing people to withdraw up to $10,000 early from super funds as “disastrous”.

It cost super funds nearly $36 billion and now Chalmers is on a mission to reform super.

There is also the big $50 billion hold super tax concessions blow in the budget and Chalmers is on a mission to save as many dollars to tackle the country’s massive debt.

There has been a plethora of proposals about changes to superannuation in the past few weeks.

These include Labor Party president Wayne Swan’s suggestion to tax super accounts with more than $3 million in them – which the government is now set to implement.

The other suggestion was to cap super balances for people who have millions of dollars sitting in their fund.

There are more than 11,000 Australians with more than $5 million in their super piggy bank.

But Albanese has been firm to say there will be no further changes to superannuation.

“There will be no changes, no changes, this term, even this change is pointing towards 2025,” he said.

What does the opposition have to say?

Opposition Leader Peter Dutton hasn’t responded to the government’s tax concession changes as of yet.

But he has previously slammed the back and forth as causing uncertainty for Australians.

He said it would have a deleterious effect on super investment.

Dutton has not been impressed with the suggestion of taxing different wealth categories for their superannuation.

“So people have pumped money into superannuation and the uncertainty that the prime minister’s creating, I think it just shows they can’t manage the budget or the economy,” he said last week.

“You’ve got a reasonable balance in superannuation and the government now is saying that they’re going to tax it.”

He said the Coalition would seek to block any changes to super proposed in parliament.