New data released by the Financial Services Council (FSC) shows the Labor government’s proposed Division 296 tax has the potential to impact more than half a million current Australian workers by the time they retire.
For those currently under 30, the tax policy with an unindexed threshold of $3 million could have a financial impact in excess of $200,000, the FSC calculations found.
The Greens policy for a $2 million threshold with indexation would impact more than 200,000 Australians currently in the workforce.
A negotiated outcome of a $2 million unindexed threshold would hurt the most Australians at 1.8 million, potentially enforcing a $780,000 cost on those currently under 30, while a $3 million threshold with indexation would impact the fewest Australians at 64,000.
“The FSC is concerned that the absence of indexation is a deliberate and cynical design feature of the new tax, that targets younger Australians, in full knowledge that Australia’s deteriorating financial position means future governments will be too cash strapped to introduce indexation at a later stage,” FSC chief executive Blake Briggs said.
According to the FSC calculations, an indexed $3 million threshold would have an impact of just over $1300 for those under 30, rising to $10,355 for those aged over 75.
While recognising the merit in ensuring the superannuation system remains fair and fiscally sustainable, Briggs said the government’s current approach risks undermining consumer confidence in Australia’s retirement system by changing the goal posts on current and future retirees.
“The FSC encourages the government to consult on options that would not unfairly target future generations of Australian superannuation consumers and undermine confidence in our retirement system by introducing a new, contentious tax on unrealised capital gains,” he said.
