Shadow treasurer slams Labor’s super tax and GIC deductibility changes

As the new financial year rolls around, shadow treasurer Ted O’Brien has unleashed fresh criticism on Labor’s tax policies, including the Div 296 super tax proposal to introduce an additional 15 per cent tax on super balances over $3 million.

“If legislated, this tax would double the rate from 15 to 30 per cent and apply not just to realised earnings, but to unrealised gains – taxing Australians on paper profits they haven’t even received,” O’Brien said in a statement.

“This is a broken promise that punishes aspiration, undermines trust in the system, and sets a dangerous precedent for future raids on unrealised gains on other investments.”

Treasurer Jim Chalmers has remained stalwart against critics of the Div 296 super tax changes, asserting that the change would only affect the wealthiest 0.5 per cent of Australians.

“The [super tax] concessions here are still very generous. You know, we're not eliminating tax concessions for people with big balances, we're still providing very substantial tax breaks, just slightly less substantial,” Chalmers said at a press conference in June.

O’Brien also labeled the removal of general interest charge (GIC) deductibility as “a tax on small business.”

Accounting industry bodies have previously raised concerns about this change. CA ANZ said that it would substantially increase the cost of falling behind on tax obligations, especially for small and medium enterprises (SMEs) operating on tight margins.

“Previously, small businesses may not have been concerned about accumulating interest on tax debt, as it was deductible at tax time,” Susan Franks, leader of tax and financial services at CA ANZ, said.

“But from 1 July 2025, small businesses could find themselves in a difficult situation and if not managed carefully, interest owed to the ATO could quickly exceed the amount of tax they were originally meant to pay.”

The GIC is currently set at 11.17 per cent and compounds daily, CA ANZ said. Given that small businesses owe the ATO over $45 billion in tax debt, the professional body warned that SMEs would be hit hard by the change.

The shadow treasurer also slammed Labor’s New Vehicle Efficiency Standard (NVES) as “a new tax on vehicles,” applying to popular car models including utes and 4WDs.

Labor introduced the NVES to reduce Australia's road emissions by imposing stricter efficiency standards on car retailers. In its 2023 consultation paper for the NVES, the government noted that Australia and Russia were among the only developed countries that did not have fuel efficiency standards.

O’Brien warned that the vehicle efficiency standards could increase car prices by thousands of dollars at a time when families are already stretched.

Labor has recently touted a slew of cost of living measures including a boost to minimum superannuation contributions to 12 per cent, an increase of paid parental leave to 24 weeks, energy bill rebates and cuts to student loan debt.

It also called on the Fair Work Commission to deliver a boost to minimum wage above inflation, which was delivered in June, and introduced Commonwealth Prac Payments for students undertaking compulsory placements whilst studying nursing, midwifery, teaching and social work.

“Under Labor, inflation is down substantially, real wages are up, unemployment is low, our economy is growing, debt is down and interest rates are falling, but we know people are still under pressure,” treasurer Jim Chalmers wrote in a statement in June.

“In our second term, the Albanese Labor Government will continue to help Australians with the cost of living, finish the fight against inflation, strengthen Medicare and build a stronger economy.”

However, as tax changes loom large over the new financial year, O’Brien has accused the Labor party of being “tone deaf” with its triumphant tone on cost of living relief.

“While the Government pats itself on the back, it’s leaving future generations to foot a growing bill. Labor’s boastful spin about so-called “cost-of-living relief” has never been more tone deaf.”