13/10/2025

Shadow Assistant Treasurer and Shadow Minister for Financial Services Pat Conaghan MP has welcomed Labor’s retreat on its controversial superannuation tax, calling it “a victory for common sense” and a humiliating flip-flop by the Treasurer.

“Taxing paper profits was always unfair and unworkable. It would have taxed everyday Australians on money that hadn’t even hit their bank account yet – risking forced sales to pay the tax bill for family farms and small businesses with illiquid assets. Today’s backdown means they can breathe a little easier,” Mr Conaghan said.

Under the changes announced today, Labor has dumped the unrealised-gains formula and will tax only realised earnings, with a new 40 per cent rate for balances over $10 million, indexation of thresholds, and a delayed start until 1 July 2027.

This represents a major shift from the original plan, which would have taxed Australians on unrealised or paper gains, an approach widely criticised by farmers, small businesses and tax experts.

Mr Conaghan said the shift is a clear acknowledgement the original design was wrong.

“Labor’s admission that it got the design wrong shows how out of touch this government has been with regional and small business realities.”

“Jim Chalmers was the architect of this tax and defended it to the hilt. He told Australians the paper-profits method was ‘the most efficient, simplest and best way’ and vowed to pass it ‘without amendments’. Today he’s admitted what farmers and small business owners have been saying to him all along: it fails the pub test.”

The Shadow Assistant Treasurer said the Coalition will go through the detail of Labor’s new proposal.

“This is a fundamental redesign of the tax. There are new thresholds, new rates, new rules. We’ll scrutinise the fine print and listen to stakeholders views on Treasury’s consultation. We want to make sure there’s no sneaky return to taxing unrealised gains or other surprises in their new tax.”

He also called for full transparency from Treasury on how the new model will affect investment decisions, regional industries and retirement savings, noting that the lack of open consultation on the previous design had only delayed the need for changes.

Mr Conaghan said regional Australians were at the sharp end of Labor’s abandoned model.

“If land values jump on paper during a drought, there’s no cash available to pay a ‘paper-profits’ tax. Under Labor’s super tax, farmers and small business owners were staring down the barrel of selling the family farm or the shopfront to meet a tax bill for money that never hit their bank account.”

Mr Conaghan also noted the now abandoned model would have led to intergenerational unfairness, declaring that young Australians are the biggest winners from Labor accepting indexation.

“Young Australians are the biggest winners of today’s announcement. Labor’s refusal to index would have acted like a slow-motion tax trap – dragging more Australians into the net every year just because of inflation and wage growth,” Mr Conaghan said.

“Indexation ensures fairness over time and prevents bracket creep from quietly increasing Australians’ tax burdens,” he added.

“Without indexation, it’s the youngest Australians who would have copped it. A 30-year-old starting their career today would have been the most likely to cross an unindexed threshold in the decades ahead. The Coalition were never comfortable with this terrible deal for young people.”

“This backflip is more proof that Labor can’t be trusted to look after Australia’s tax system. His first instinct is to tax Australians more and he’ll only listen after years of Australians pushing back.”

What Labor said in their own words:

• Jim Chalmers (5 Mar 2023): taxing unrealised gains was “the most efficient, simplest and best way to go about it.”
• Andrew Leigh (20 May 2025): “We’re doing it the way Treasury has recommended because that’s the simplest path forward and the lowest cost path forward.”
• Jim Chalmers (4 Jun 2025): vowed to pass the plan “without amendments.”