Australia’s Treasurer Jim Chalmers has announced major revisions to the government’s proposed superannuation tax regime, effectively abandoning taxation on unrealised capital gains and introducing a tiered, indexed structure for high-balance accounts.

Under the new proposals, superannuation balances between A$3 million and A$10 million would be taxed at 30 percent (double the standard rate), while balances above A$10 million would incur a 40 percent rate.

Chalmers acknowledged that the revised scheme “fundamentally alters” the original design but maintained it still meets the government’s objectives of making the system more equitable and sustainable.

The key shift: that only realised gains — not paper or unrealised profits — will now be subject to the higher tax.

In defending the change, Chalmers said indexation of both thresholds had always been an option “in our back pocket,” and he denied that he had capitulated to political pressure.

“I don’t accept that [this is a retreat].

we found another way to satisfy the same objectives,” he said.

He conceded the plan now diverges significantly from its earlier iteration, but framed the adaptation as responsible and methodical policymaking.

He described taxing unrealised gains as a “genuine sticking point” for many observers and dismissively challenged critics to support the revised version.

The Treasurer stated that this change removes a key objection standing in the way of broader support from crossbenchers.

The timing of the announcement follows mounting pressure from both opposition and crossbench senators, who had warned that failing to index thresholds would unfairly burden future generations.

Labor sources and reporting suggest that fear of imposing a higher burden on younger retirees was a major factor driving the conceptual overhaul.

Under the revised plan, the government also proposes raising the low-income superannuation tax offset from A$500 to A$810 for those earning under A$45,000, effective from 2027, to offer relief to modest earners.

The reforms will be delayed by a year to allow further consultation, particularly on how to treat defined benefit accounts, historically accumulated gains, and the mechanics of realising a gain for taxation.

While the revised proposal steps back from the more aggressive form of taxation initially floated, it still represents one of the most significant changes to Australia’s superannuation system in decades — narrowing tax privileges for the wealthiest account holders while attempting to avoid triggering a flood of opposition.

Whether the amended reforms can secure Senate approval remains an open question, but Chalmers has signalled he sees this as the path forward.

An independent reaction has already begun: former prime minister Paul Keating praised the shift as a restoration of equity in the system, while some independent and Labor MPs have expressed caution over the changes’ impact on investment decisions and retirement planning among high-net-worth individuals.

Implementation is expected to begin in the second half of the next parliamentary term, after passage through both houses and a final determination of thresholds and valuation rules.

As Australia’s retirement system stands at a crossroads, the government is banking on this more tempered version of its super tax reform winning sufficient support — though serious negotiation lies ahead as stakeholders voice competing demands and concerns.