Australia’s retirees are urging the Federal Government to rethink its proposed superannuation Division 296 tax, warning that the changes could unfairly penalise those already in retirement.
The Australian Independent Retirees (AIR) has welcomed some improvements to the legislation — including the removal of taxing unrealised gains and the introduction of indexation for the $3 million threshold — but says the amendments still fall short of protecting older Australians who planned their finances under previous rules.
AIR Chief Advocate Wayne Strandquist said many retirees have limited ability to restructure their financial arrangements and should not be disadvantaged by retrospective tax changes.
“People over 65 complied with the rules in place at the time,” Mr Strandquist said. “Once you are retired, it is more difficult to unwind or restructure financial arrangements. Applying new tax settings to those already in retirement is effectively retrospective and fundamentally unfair.”
AIR is calling for the legislation to include a grandfathered exemption for Australians aged 65 and over, arguing that this group entered retirement based on long-standing superannuation and tax settings.
The organisation also raised concerns about fairness for couples, noting that one partner could exceed the $3 million threshold and face the new tax while the other holds a much smaller balance.
“There should be a mechanism that allows couples to rebalance superannuation accounts,” Mr Strandquist said. “This is an equity issue, as women are more likely to retire with lower super balances due to interrupted work patterns and caring responsibilities.”
AIR further warned that the proposed system lacks provisions for tax refunds when superannuation investments incur losses and adds unnecessary administrative complexity, potentially undermining confidence in the retirement system.
Mr Strandquist said retirees are not opposed to reform but want changes that are fair, transparent, and considerate of those who have already retired.
“AIR urges the Government to reconsider the legislation to ensure it delivers a genuinely fair and equitable outcome for Australians who are already retired,” he said.
