By Hannah Wootton
Residents of well-heeled suburbs in the centre of Melbourne and Sydney’s inner-city and north shore are the most likely to be hit by the government’s plan to raise the tax rate on superannuation accounts worth more than $3 million, new data shows.
This comes despite the main opposition to the bill – and the most likely issues to halt its passage through parliament – focusing on farmers in rural Australia.
A centrepiece of Labor’s superannuation reform, the proposal would double the tax paid on earnings from balances in super accounts with more than $3 million – from 15 per cent to 30 per cent.
But the policy is in jeopardy after influential crossbench senators Jacqui Lambie and David Pocock opposed its taxation of unrealised gains, which threaten to particularly affect farmers holding their land in self-managed super funds.
Independent MPs already raised concerns about this aspect of the bill when it was put to debate in the House of Representatives. But Labor has the numbers to push it through the lower house and hopes to do so before the end of next week, and then push it through the Senate in August.
Analysis by the Association of Superannuation Funds of Australia revealed Senator Lambie’s seat of Tasmania would be among the least affected by the new tax.
Regional Tasmanians in particular will not be hit, with residents of areas outside Hobart accounting for just 0.4 per cent of the total number of people with more than $3 million in super.
Hobart accounts for just 1.1 per cent, while 3 per cent live in the Australian Capital Territory, which Senator Pocock represents.
Those living in the statistical area (a Bureau of Statistics measure of splitting the country into 108 geographic regions, largely based on population) of North Sydney and Hornsby, in contrast, represent 8 per cent of Australians with large super balances.
Inner-Melbourne closely followed at 7 per cent, then Sydney’s eastern suburbs at 6 per cent and inner-east Melbourne with 5 per cent.
There were more people with $3 million-plus in their super accounts in the wealthy seaside suburbs of the Mornington Peninsula in Victoria (2 per cent) than all of Tasmania, and the same for Sydney’s northern beaches (3 per cent).
Similarly, retiree hotspots on the Gold Coast and Sunshine Coast accounted for 2 per cent each.
Few farmers
ASFA found just 7 per cent of those hit by the tax were in rural areas, and even fewer were farmers.
Opponents to the unrealised gains portion of the policy have suggested farmers may have to sell land if they are taxed on the unrealised gains to their property value and do not have the cash to pay for it.
Accountants and former judges have also warned there is a risk this could lead to double taxation of some earnings, while others suggest it would stymie investment in venture capital.
But ASFA research found farming regions such as Darling Downs in Queensland, NSW’s Hunter Valley and the Murray along the Victorian and NSW border had among the lowest numbers of residents with more than $3 million in super.
“Not surprisingly, those with over $3 million in superannuation are very well represented in affluent regions within the major capital cities and underrepresented in other areas, including rural areas,” ASFA chief executive Mary Delahunty said.
The proportion of those in regional areas over that threshold who also held a high-value farm in an SMSF would be even lower, she added.
She said the data was a reminder to “keep [the proposal] in perspective”.
“This impacts 80,000 [people] with the largest balances in the country, as opposed to the other around 19 million Australians with superannuation.”
Other areas with remarkably low populations with $3 million in retirement savings included Treasurer Jim Chalmers’ electorate of Logan and shadow treasurer Angus Taylor’s electorate of Hume.
Treasury previously estimated the $3 million super tax would hit 80,000 people when it first came into force on July 1 next year, and would raise $2.3 billion in the 2027-28 financial year. But that threshold is not indexed, meaning both those numbers would steadily rise.
