While we were all busily arguing at what amount to cap future super balances and whether to tax the excess or force superannuants to withdraw it, Labor slipped in the real tax heist: Total Superannuation Balance (TSB).
This calculates the difference between a superfund member's Total Superannuation Balance (TSB) for the current and previous financial years (adjusted by net contributions and withdrawals), which includes all notional (unrealised) gains and losses, and charges an additional tax of 15% (on top of tax on all other earnings!) on the portion of the TSB above $3 million. Here's the formula for the mathematically inclined:
Having more than $3 million in a superfund is the equivalent of the old couple on a pension who bought a modest house in the 70s which is now worth several million dollars: it's a legacy problem! No-one, under the existing contribution limits (currently $27,500 before-tax and $110,000 after-tax per year) would've been able to transfer that much into their superfund. Such large balances accumulated largely through unrealised capital gains which under existing legislation are only subject to tax when realised; however, this proposed TSB calculation will make even these unrealised paper profits taxable. It's nothing but a wealth tax! Anyway, if the Government believes that $3 million is enough, then those who find themselves with balances above this cap should be allowed to withdraw the excess, even before preservation age.
If not, since the $3 million cap is not indexed, more and more people will be caught in this sleight-of-hand tax heist which is the first time in Australia's taxation history that tax is levied on unrealised profits.
What's most surprising to me is that no-one in the media, and on ABC television or radio, has picked up on this taxing of unrealised profits! And that it will impose tax on capital gains twice: during their accretion, and when they are finally realised! Apart from Land Tax, I cannot think of any other tax which taxes what we own - we have always been taxed on what we earn.
"We can’t expect ... people to jump from capitalism to communism, but we can assist their elected leaders in giving them small doses of socialism until they awaken one day to find they have communism." These words are attributed to former Soviet Union president Nikita Khrushchev, and they resonate with Labor Treasurer Jim Chalmers, a product of the post-Whitlam years, who advocates the utopian ideal of a virtuous capitalist system, motivated by compassion and fellow-feeling.
So what next? First, Anthony Albanese broke his election promise not to increase taxes on superannuation. Then yesterday, Jim Chalmers opened up the idea of extending capital gains tax to the sale of the family home. When Labor runs out of money, they always come after yours.
