Chalmers did super legislation the hard way

Mike Taylor

Managing Editor/Publisher, Financial Newswire

12 March 2026

ANALYSIS

The Government and the superannuation industry has been celebrating the passage of the Building a Stronger and Fairer Super System legislation through the parliament but the reality is it is not the legislation first championed by the Treasurer, Jim Chalmers.

It will be lost on no-one in financial services that the legislation has passed because the Treasurer ultimately dumped those elements which would have meant the taxing of unrealised capital gains alongside the lack of indexing for the $3 million concessional superannuation tax cap.

The Treasurer’s insistence on those elements remaining in the legislative package meant that otherwise that a bill which might have passed the Parliament before last year’s Federal Election has now passed both houses nearly 12 months’ later.

Chalmers ultimately only changed his position at the insistence of the Prime Minister, Anthony Albanese.

The various groupings within the superannuation sector were yesterday playing the traditional game of “welcoming” of congratulating the thanking for the passage of the legislation but the Financial Services Council (FSC) reflected reality when it noted Chalmers’ “responsiveness to industry feedback and for incorporating key improvements to address concerns raised on the original bill”.

“Indexing the $3 million and $10 million thresholds will help prevent ‘bracket creep’, while removing the tax on unrealised gains addresses concerns about liquidity, fairness, and compliance complexity,” the FSC said.

“Enhancements to the Low Income Superannuation Tax Offset (LISTO) will directly benefit low-income earners, expanding access to super tax concessions and supporting stronger retirement outcomes. These changes demonstrate the value of constructive engagement between government and industry,” it said.

“There is more work to be done on the supporting regulations to ensure the final framework is administrable and does not impose undue compliance burdens on superannuation funds,” the FSC said.

The reality for the Government was always that polling always suggested that Australians saw justification in increasing tax on those with over $3 million in tax but were unsettled by the notion of taxing unrealised capital gains while failing to index the $3 million threshold.

For industry funds such as big retailing sector fund, Rest, the increase in the Low Income Superannuation Tax Offset (LISTO) from $37,000 to $45,000 represented the a reward for consistent lobbying of the Labor Government.

Rest chief strategy officer, Tyrone O’Neill said early half a million Rest members receive the LISTO each year, including around 300,000 women.

“These reforms reflect how many Australians work today and confirm that the super system can evolve to better support those on lower incomes.”

The Association of Superannuation Funds of Australia (ASFA) chief policy officer, James Koval said the legislation does two things – boosts retirement savings by strengthening the tax offset for low income workers and applies a higher, but still concessional tax rate, to high account balance holders.

“The critical point is that super will still be concessionally taxed for every Australian,” he said.

But, as the FSC has pointed out, the devil will be in regulatory detail and that remains to be seen.