Labor’s emphatic victory on Saturday night, including what looks like an increased presence in the Senate, suggests the legislation is likely to become law in the near future.

Retirement income in Australia

These two pillars are complementary; a person can receive a pension even if they have private super. But the more super they have, the less pension they are eligible for.

There are two types of tax – and tax concessions – on super. First, employer contributions and capped personal contributions are taxed at a concessional rate of 15 per cent. Second, income earned by a super fund is taxed at 15 per cent for balances in the accumulation phase (when contributions are being made). Income earned in the pension phase is tax-free.

So what does the proposed reform entail?

They will also be able to carry forward any loss as an offset against their tax liability in future years.

Concerns with the proposed reform

The move to tax unrealised capital gains is likely to prove particularly onerous for SMSFs. The typical industry super fund has a diversified portfolio of assets of varying liquidity, including significant cash holdings. But SMSF portfolios are often dominated by a large and illiquid asset (ones that cannot be easily sold and converted into cash) such as a farm or business property.

In the United States, former president Joe Biden’s 2025 budget included a similar proposal to tax unrealised capital gains for households with more than US$100 million ($155.9 million) in wealth.

Purpose of the proposed reform

So, is this reform useful?

In response to SMSF concerns about the difficulty in paying tax bills, the government’s proposal gives taxpayers 84 days to pay the tax liability instead of the usual 21 days. This hardly mitigates the risk that SMSF trustees may have to liquidate the main asset in their fund.