Kylea Tink (North Sydney, Independent) Share this | Hansard source

by leave—I move amendments (1) to (3) as circulated in my name together:

(1) Schedule 1, item 15, page 10 (after line 17), after section 296-40, insert:

296-42 Large superannuation balance threshold

The large superannuation balance threshold is:

(a) for the 2025-26 financial year—$3 million; or

(b) for a later financial year—the amount worked out by indexing annually the amount mentioned in paragraph (a).

Note 1: Subdivision 960-M shows how to index amounts. However, annual indexation does not necessarily increase the amount of the cap (see section 960-285).

Note 2: The rounding amount for indexation is $100,000 (see subsection 960-285(7)).

(2) Schedule 1, page 28 (after line 10), after item 17, insert:

17A Section 960-265 (after table item 10A)

Insert:

17B Paragraph 960-285(3)(a)

After "paragraph (b)", insert "or (c)".

17C At the end of subsection 960-285(3)

Add:

; or (c) if the amount is mentioned in item 10B in section 960-265—the amount for the 2025-2026 financial year.

17D Subsection 960-285(5) (paragraph (a) of the definition of base quarter )

After "paragraph (b)", insert "or (c)".

17E Subsection 960-285(5) (at the end of the definition of base quarter )

Add:

; or (c) if the amount is mentioned in item 10B in section 960-265—the quarter ending on 31 December 2024.

17F Subsection 960-285(7) (cell at table item 3, column 1)

Repeal the cell, substitute:

(3) Schedule 1, item 18, page 29 (line 27), omit "means $3 million", substitute "has the meaning given by section 296-42".

The amendments I'm moving today would ensure that the large superannuation balance threshold is indexed annually, in line with the consumer price index. As it stands, the $3 million large superannuation balance threshold, established in the Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill of 2023, is not indexed, leaving the decision of when and if to lift the threshold to a future government at some unknown time. This is simply not consistent with sound long-term superannuation taxation policy. It does not provide sufficient certainty to those with money in super or the super industry, and, if left unaddressed, it will create intergenerational inequities.

From the outset, experts and commentators have been almost universally critical of this lack of indexation. Indeed, during the consultation process on this legislation, AustralianSuper wrote:

Indexation of the threshold at which the measure applies would lead to greater certainty and promote stability and confidence in the system.

The National Farmers Federation said:

Given the long-term nature of superannuation and rising inflation, the $3 million value will increasingly capture a greater share of Australian farming assets. As such, the NFF recommends indexing the cap to inflation or the Consumer Price Index.

The Tax Institute, the Business Council of Australia and the Institute of Financial Professionals Australia, just to name a few, also all recommended that the proposed $3 million threshold be indexed.

Closer to home, when I talk to people in my community about this bill, even those who wholeheartedly support the intent of it, they see the lack of indexation on large super balances as absurd. Without indexation, the threshold does not currently account for inflation, and, therefore, reform most certainly will impact more and more ordinary Australians over time.

The Treasurer has said that from 2025, the concessional tax rate applied to future earnings for balances above $3 million is expected to apply to around 80,000 people. However, alternate modelling by the Financial Services Council puts that figure closer to half a million Australians if the cap remains unindexed. The number of people impacted in their lifetime would include more than 200,000 Australians under the age of 30.

The lack of indexation is out of step with current accepted tax principles, with most other elements of our super system being indexed, from contribution limits to the transfer balance cap and lump-sum benefits. Leaving the cap at $3 million without indexing it will mean people in my generation will have an entirely different and relatively higher threshold to that of my children, with the real value of the threshold likely falling to $2 million, due to inflation, by around 2040. Take the example of a current 30-year-old. By the time they retire at the age of 65, the real value of the cap will have fallen to $1.3 million, assuming inflation of just 2½ per cent. If inflation is higher, say four per cent, the real value would actually be $760,000—quite the departure from a $3 million cap.

Ultimately, my electorate of North Sydney and many individuals and stakeholders across this country broadly support the intent and principle of this bill—that is, to rein back generous tax breaks for super balances that are beyond what is currently deemed necessary to fund a comfortable retirement. However, in its current form, and without indexation, this legislation leaves many deeply concerned. The large superannuation balance threshold should be indexed to keep pace with inflation, to avoid bracket creep and to ensure greater intergenerational fairness. This amendment does just that. It is sensible, it is simple, it is practical and it is in line with current taxation law. I commend the amendment to the government.

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