Greens ministers have agreed to back Labor’s superannuation tax changes, clearing the path for the laws to pass after a three-year fight. The deal raises tax rates on the largest superannuation balances and removes a previously contentious measure. The Greens say their support is a down payment on broader tax reform expected in the federal budget.
What the Superannuation Tax changes mean
The legislation will impose higher tax rates on the very largest retirement balances: earnings on balances between $3m and $10m will be taxed at 30%, up from 15%, while balances above $10m will face a new 40% rate. Those measures end a multi-year push by the prime minister, Anthony Albanese, and the treasurer, Jim Chalmers, to change taxation for the wealthiest retirees after initial plans failed in the first term.
The package now excludes the initially floated tax on unrealised capital gains after an October announcement by the treasurer that the contentious element would be axed and that the $3m and $10m thresholds would be indexed to inflation. The government also agreed to lift the low-income superannuation tax offset by $310 to $810 and to raise the eligibility threshold from $37, 000 to $45, 000 from 1 July 2027.
Those who opposed the earlier form of the reform argued the measures went too far; the revised superannuation tax package represents a narrowed approach that the Greens were willing to support to secure passage in the upper house.
Political reaction and what’s next
Nick McKim, Greens treasury spokesperson, Greens, framed the decision as strategic. “There is a massive Labor majority in the House of Representatives, the opposition is a rabble and the numbers are there in the Senate as long as Labor shows courage. The only limit is Labor’s level of ambition, ” he said, urging more ambitious changes ahead of budget deliberations. McKim also described the Greens’ backing of the watered-down package as a “down payment” for the government pursuing further reform.
The Coalition’s opposition left Labor reliant on the Greens to pass the laws in the Senate; the Greens chose not to extract extra concessions and instead guaranteed the numbers to legislate the package this week before a scheduled upper-house debate. The move ends a three-year political fight that saw the government refine its proposals following sustained criticism.
Looking forward, the Greens expect the government to pursue wider tax changes in the federal budget, with plans under consideration to scale back the capital gains tax discount and to limit negative gearing. Labor has flagged interest in winding back the 50% capital gains tax discount and potentially capping the number of properties that can be negatively geared as part of efforts to address intergenerational inequality in the housing market.
The coming days will show how the revised measures move through final legislative steps and how quickly attention shifts to proposed broader reforms. The superannuation tax changes now cleared by Greens support will be a key reference point as debate moves towards the federal budget and potential further tax policy shifts.
