A new superannuation tax proposal by the Australian government has raised significant concerns among young Australians. The plan aims to tax superannuation balances exceeding $3 million at a higher rate of 30%, up from the current 15%. This change, which primarily targets the wealthiest Australians, has prompted financial experts, including Yellow Brick Road’s Mark Bouris, to warn that it could have long-term consequences for those entering the workforce today. According to Bouris, the financial reality for young Australians could be far worse than previously anticipated.
Superannuation, Australia’s mandatory retirement savings system, has long been considered a vital tool for securing financial stability in retirement. However, Bouris and other experts fear that the government’s proposed tax changes could undermine the system’s effectiveness, particularly for younger generations. The adjustment to the tax rate is designed to target those with substantial super balances, but it could have unintended consequences for workers striving to build their retirement savings over the long term.
Understanding the New Tax Proposal
Under the new plan, the Australian government intends to double the tax rate on earnings from superannuation balances over $3 million, raising it from 15% to 30%. The proposal is expected to affect only around 80,000 individuals, as the vast majority of Australians do not have super balances that approach this threshold. Currently, the superannuation system taxes earnings on balances up to $3 million at the standard rate of 15%, while balances above this amount would be taxed at the higher rate.
The change is designed to target Australia’s wealthiest superannuation holders, who are earning significant income from their superannuation investments. According to data from the Australian Taxation Office (ATO), individuals with balances exceeding $3 million are typically earning around $381,000 per year. This tax increase, aimed at addressing growing wealth inequality, has stirred debate about its broader impact on the retirement savings system.
Potential Impact on Young Australians
Mark Bouris has expressed strong concerns that this tax proposal could disproportionately affect younger workers, particularly those who aim to accumulate significant superannuation balances over their careers. Bouris highlighted that people entering the workforce today are likely to work well into their 70s or even 80s, as they may not be able to save enough for a comfortable retirement.
The new tax rate could potentially limit the benefits that young Australians would have enjoyed under the current system, where superannuation earnings are taxed at a low rate. Bouris argued that future generations won’t be able to take advantage of the tax benefits that were available to older Australians, who have enjoyed more favorable conditions since the superannuation system was established under former Prime Minister Paul Keating.
MSM are just getting ridiculous and embarrassing over the superannuation tax changes. Anyone with over $3m in super is using it as a tax shelter ripping off all of us. https://t.co/76zgjOgy7S
— Chris Barrett 🐯 🇱🇻 (@selga55) June 9, 2025
Criticism of the Proposal’s Lack of Indexation
One of the key points of contention regarding the proposal is the fact that the $3 million threshold will not be indexed to inflation. This means that over time, the value of $3 million will decrease in real terms, and more people could be caught by the higher tax rate. Treasurer Jim Chalmers has suggested that the threshold may be indexed in the future, but there are significant concerns that this could lead to an unfair system where more Australians are taxed at the higher rate despite not being part of the wealthy elite.
Bouris and other critics argue that the lack of indexation could diminish confidence in the superannuation system, which has long been regarded as one of the pillars of Australia’s retirement savings model. Without indexation, more middle-class workers could find themselves facing the higher tax rate, which could discourage savings and damage the long-term sustainability of the system.
Historical Context and Financial Security for Future Generations
The debate over superannuation taxation isn’t just about the wealthy. Many older Australians, who have built their super balances over decades of work, have benefited from the low-tax environment that has been in place since the introduction of superannuation. Bouris pointed out that these older Australians built their super balances under the understanding that earnings would be taxed at a favorable rate of 15%. However, this new proposal could create a stark divide between the benefits received by current workers and the benefits enjoyed by those who have already accumulated wealth in their super accounts.
Former Prime Minister Paul Keating, who is credited with establishing the superannuation system, has expressed concerns that the proposal could undermine public confidence in the super system. Keating fears that the changes could deter people from contributing to their super accounts, particularly when the benefits of doing so no longer seem as clear-cut.
