Shadow Treasurer Says Super Tax Backflip a ‘Victory’ for Everyday Australians

The new superannuation tax plan will need to pass the Senate.

Manager of Opposition Business Alexander Hawke and Deputy Leader of the Opposition Ted O'Brien react to an answer in Question Time in Canberra, Australia, on Oct. 9, 2025. Hilary Wardhaugh/Getty Images

Shadow Treasurer Ted O'Brien has described Treasurer Jim Chalmers’ backflip on taxing unrealised capital gains under his superannuation reforms as a “victory” for hard-working Australians.

“I think this is a victory for those everyday Australians who were otherwise going to be taxed unfairly by the government. It is, first and foremost, a victory for them,” O'Brien said on ABC Radio National.

He said the original reforms would have stung average income earners in their 20s and smashed small businesses and farmers with buildings or land in their self-managed super funds.

“They were going to have to pay tax on theoretical profits, profits that didn’t exist, no money in the bank account as a result of any increase in valuation—Jim Chalmers and the government were going to tax them,” O'Brien said.

He paid credit to industry leaders, economists, Labor luminaries, and his Coalition colleagues who called out the “fundamental unfairness” in taxing unrealised gains.

Shadow Defence Minister Angus Taylor said taxing unrealised capital gains was always a bridge too far.

“They have backed down, rightly. It’s taken way too long for them to work out that this is completely unacceptable. They’re also backing down on indexation,” Taylor said.

“So, we’re pleased with that backdown. Obviously, we’ll look at the details of what else is being proposed.”

Chalmers Talks Up New Plan

Under Labor’s new superannuation tax plan, a tax of 30 percent will apply to realised gains on super balances between $3 million and $10 million. A 40 percent tax rate will apply to earnings on super more than $10 million. Both thresholds will also be indexed to inflation to avoid bracket creep.

The superannuation tax changes will apply from July 2026 if they pass parliament, requiring the support of either the Coalition or the Greens.

Chalmers also included a sweetener for low-income earners, raising the low-income superannuation tax offset (LISTO) from $500 to $810. This is a government payment that refunds the 15 percent contributions tax for low-income earners.

The income at which individuals are eligible for this offset will increase from $37,000 to $45,000 in 2027.

Chalmers said this would help 1.3 million Australians retire with more super.

“This is also all about making sure that by better targeting superannuation tax concessions for people with millions of dollars in super already we can provide this better outcome for Australians on low incomes,” Chalmers told reporters in Brisbane on Oct. 14.

Chalmers said the reforms would improve outcomes for low-income workers while tightening concessions on wealth accounts.

“This is meaningful and substantial tax reform which will make the superannuation system fairer from top to bottom. It means better outcomes for people on low incomes. It means a better targeted concessions for people who’ve already got millions of dollars in their super,” Chalmers said.

Could Indexation on Personal Income Tax Be Considered?

O'Brien also hinted that indexation on personal income tax was being looked at, but he clarified the Coalition’s economic policies were “under review.”

“Now we’re certainly looking right across the economy. And I think you go to the issue of personal income taxes and the lack of indexation,” he said.

The Menzies Research Centre called for urgent tax reform to end bracket creep by indexing income tax to inflation in August.

“Tax brackets should be indexed to inflation in the same way that welfare payments and pensions are. This would bring Australia in line with the majority of OECD nations that already index tax brackets,” the Menzies Research Centre said in a statement to The Epoch Times.