Greens Back Labor's Super Tax Changes, Paving Way for Budget Reforms

The Greens confirmed its position ahead of a scheduled debate in the upper house on Tuesday, guaranteeing Labor the numbers to legislate the changes this week. Under the superannuation tax changes, the concessional tax rate on earnings for balances between $3 million and $10 million will double from 15% to 30%. Balances above $10 million will be subject to a new, higher 40% rate.

The expected passage of the laws will come three years after Prime Minister Anthony Albanese and Treasurer Jim Chalmers first announced plans for 'modest' changes targeting the largest superannuation balances. After failing to pass the legislation in its first term, the government faced criticism over the proposal to tax unrealised capital gains. In October, Chalmers announced that contentious element would be axed and the thresholds would be indexed to inflation.

The government also agreed to increase the low-income superannuation tax offset by $310 to $810 and raise the eligibility threshold from $37,000 to $45,000 from 1 July 2027. At the time, the Greens welcomed the tax offset increase but lashed other changes as a 'capitulation to the wealthiest people in the country'. The Coalition's opposition meant the Greens were Labor's only hope for passing the laws in the Senate.

But the minor party has decided against playing hardball, agreeing to support the revised package without demanding concessions. McKim said the stance was a 'down payment' on the Greens' support for Chalmers and Albanese pursuing 'genuine, progressive' tax reform in the 12 May budget. ' Labor is considering winding back the 50% capital gains tax discount and potentially capping negative gearing as it weighs options to address inequality in the housing market.