Super and capital gains tax breaks cost budget more than $100 billion

The lower tax rate on employer contributions into their workers’ superannuation will be worth $23.3 billion this year, a 6.6 per cent increase over 2021-22.

When it came to the lower tax on superannuation contributions, 91 per cent of the benefit flows to people with an above-median income. Men enjoy the largest benefit, at $1950, compared to $1390 for women.

Chalmers noted the report did not signal government policy or intent.

But he said the report showed the majority of superannuation tax breaks flowed to high-income earners, and the overall pressures facing the budget.

“Since coming to office, the Albanese government has been upfront and consistent about the challenges facing the economy and the budget,” he said.

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“As well as the cost of servicing a trillion dollars of debt, Australia also faces fast-rising expenditure in areas such as health, the NDIS, aged care and defence.

“We have begun the hard yards of repairing the nation’s finances. We will maintain this responsible and sensible approach to improving the nation’s finances in the May budget and beyond, in the interests of all Australians, the budget and the economy.”

The single largest tax concession remains the exclusion of the family home from capital gains tax. Due to the surge in house prices through 2020-21, this has climbed to $48 billion.

The discount on CGT for individuals and trusts cost another $23.7 billion. This discount skews heavily to the top 10 per cent of income earners who accrued 75 per cent of the benefit.

Men received 61 per cent of the benefit of the CGT discount, at an average rate of $16,100. Women, on average, received $11,970.

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By age, the largest share of this benefit went to people aged 75 or older.

Superannuation and capital gains discounts or exclusions rank as the top six tax expenditures. Work-related expenses are the seventh, at a cost of $9.9 billion, followed by the GST exemption on fresh food ($8.4 billion) and the exemption of NDIS services ($8.1 billion).

The lower rate of tax paid by small businesses will cost $3.6 billion this year.

The report also notes so-called negative tax expenditures, where governments tax certain goods or services more heavily than others. Customs duty will raise an additional $2.1 billion, the luxury car tax $1.1 billion, while separate excise on low-nicotine cigarettes will raise $890 million.