Treasurer Jim Chalmers has kicked a hornet’s nest by signalling “sustainability” changes in super tax concessions.

Australia's superannuation system offers a range of tax benefits to encourage people to save for their retirement. Mr Chalmers says the government is considering reforms in the May budget that mean from July 1 2025, Australians who have a superannuation balance over $3 million will be taxed at a concessional rate of 30 per cent, up from 15 per cent.

“Less than 1 per cent of people have got more than $3 million in their super, the average amount that people have when they’ve got more than $3 million is $5.8 million,” Mr Chalmers told Sydney radio 2GB this week.

“And so I think, well, we should be up for a conversation about whether paying a lot of taxpayer money in concessions for that group is the best use of that money.”

The government wants to tax unrealised gains and losses in superannuation funds, and Treasury says it will include “all notional gains and losses” in its calculation of earnings under the controversial plan.

These changes would largely affect self-managed super funds (SMSFs), with most accounts with balances over $3 million being in the self-managed sector. APRA-regulated super funds already calculate members’ annual interests as including unrealised earnings.

Mr Chalmers opened the debate over super concession sustainability ahead of the release of a new tax expenditure statement. In coming days, the official report is expected to quantify the value of a range of concessions, from franking credits to capital gains.

The very suggestion that the generosity of tax concessions could be reduced is sparking a backlash from people intent on using superannuation as a wealth generation vehicle. 

Liberal deputy leader, Sussan Ley, has told Australians that the government is “coming after your money”. The “your” she referred to would be everyday Australians with over $3 million in superannuation. 

“We in the Coalition know that superannuation is your retirement savings,” she said. 

“It’s what you have worked your whole life and for the government to try… and change your returns on your own superannuation is completely a broken promise and it’s another example of this prime minister and this government leaving Australians behind.”

Mr Chalmers said the government’s plans would not be about “taking shots at anybody with lots of money” but the sustainability of the concession system.

“The question really, for us is, you know, can we continue to pay big tax concessions, when you weigh that up against some of the other things that I want to fund in the budget,” he said.

“I want to make Medicare better… I want to strengthen aged care, I want to pay decent wages for people who work in aged care, all these sorts of things.”

Analysis by the Financial Services Council (FSC) over 500,000 Australians are likely to pay the proposed superannuation tax increase over the coming decades.

Prime Minister Anthony Albanese had said the change should impact about 80,000 people, but the FSC, a lobby for big retail super funds, says six times as many Australians could be affected.

FSC’s analysis found that when younger people start to retire over the coming decades, they may have to pay the tax because the $3 million cap is not indexed to inflation.

“Leaving the cap stuck at $3 million will mean that in today's dollars, a 30-year-old will have a real cap of around $1 million, calling into question the intergenerational fairness of an unindexed cap,” FSC chief executive Blake Briggs said.