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October 10, 2025
The government is no longer ruling out changes to its contentious proposal to impose a new tax on superannuation balances above $3 million, following revelations that Treasury is actively examining options to address concerns raised by various stakeholders.
Appearing before a Senate estimates hearing on Thursday, Diane Brown, the deputy secretary of the revenue division, also revealed that the Prime Minister's Office had taken an interest in the legislation, which is supposed to be the purview of Treasurer Jim Chalmers.
"There have been some conversations with the prime minister's office," Brown said. "It's probably not unusual for that to occur from time to time. It remains unlegislated, and so stakeholders continue to raise questions about the bill."
She would not divulge the details of the conversations, saying it would affect her ability to provide advice to the government, other than that they were about "concessions and concerns that stakeholders have raised" and that the department had provided advice to the treasurer.
"Stakeholders have raised concerns with us. In order for us to understand it better, we might have done some modelling, and that is for us to provide good advice to government.
"IIts] a case where a stakeholder has indicated that maybe they shouldn't be subject to it. What would be the impact of that?" Chalmers' office stressed it had facilitated the meeting between Treasury and the Prime Minister's Office, and the treasurer attended the meeting. Chalmers declined to comment, while Industry Minister Tim Ayres, who represented the treasurer in estimates, gave the pro forma answer that the superannuation tax remained the government's policy.
That was the same line the government used on the stage 3 tax cuts until it decided to change them.
Early last month, The Australian Financial Review revealed the Albanese government had hit pause on plans to impose an extra 15 per cent tax on earnings of superannuation balances above $3 million as it contemplated change.
The chief criticisms of the bill are that the $3 million is not indexed and that the tax will apply to unrealised gains on property, farms, businesses and other illiquid assets held in selfmanaged funds.
Brown and fellow official Brendan McKenna said, among other things, that they had looked at the impact on investment in start-ups and venture capital a key concern raised by independent MP Allegra Spender but concluded only a "very small share" of the SMSF pool was invested in these areas.
They have also sought to assess the impact on real estate, given the potential for people to dump property from their superannuation to avoid having to pay taxation on the unrealised gains.
Asked by Greens senator Nick McKim whether Treasury had been asked to model specific amendments, Brown said, "There has been no decision to amend the bill", only that Chalmers was being advised on the revenue impact of various changes that had been examined.
"Its reasonable and wouldn't be sur prising for us to understand concerns that people have raised. Thats part of what we may have looked at, what might be the impact on revenue as a result of the suggestion or comment."
The testimony confirms change is being contemplated, although not yet settled upon, and flies in the face of Chalmers' rhetoric after the election that the government had a mandate for the tax and would discuss it with the Greens, whose support he needs, in July.
However, the government has yet to speak to McKim or Greens leader Larissa Waters about the tax. The Greens want the $3 million threshold lowered to $2 million and for it to be indexed.
McKim described the process as a shambles.
"Labor can't even progress legislation to slightly close tax loopholes for the wealthiest 0.5 per cent of Australians. It doesn't bode well for Dr Chalmers' aspirations to address intergenerational inequity," he told the Financial Review.
But opposition finance spokesman James Paterson, who joined McKim in questioning the officials, took a different tack. "Treasury has finally confirmed the worst-kept secret in Canberra," Paterson said.
"The Albanese government is seriously considering changes to Jim Chalmers' friendless unrealised capital gains tax. But no tinkering at the edges can fix this fundamentally flawed bill. It shouldn't be amended, it should be dumped entirely," Before the legislation was put on the back burner, internal discussions centred on addressing the taxing of unrealised gains and a refusal to index the $3 million threshold.
The motivation to consider changes was based on sensitivities about the message that the bill, in its original shape, would send in terms of voter aspiration. There were also fears it could precipitate a scare campaign similar to that around Labor's franking credits policy that hurt the party at the 2019 election.
The proposed Division 296 tax was to start from July 1, 2025 and apply an extra 15 per cent tax on earnings on the component of: a super balance above $3 million. It would have also applied to unrealised gains on illiquid assets held in self-managed funds.