Australia tax reforms drive surge in superannuation contributions

Australia’s proposed housing tax reforms, scheduled for July 2027, are driving significant shifts in investor behavior. The changes include a ban on negative gearing for established rental properties and an overhaul of capital gains tax (CGT), which includes replacing the 50% CGT discount with an inflation-based deduction and imposing a minimum CGT rate of 30%.

In response to these changes, there has been a surge in voluntary contributions to superannuation funds as investors seek to shelter wealth. Major funds, including AustralianSuper and MLC, have reported significant increases in extra contributions, with MLC seeing a 35% spike between May and August. Many of these contributors are aged 50 to 66, and some financial planners suggest investors are considering selling property to move capital into the superannuation system.

Modelling based on 18 years of property data suggests that approximately 53% of property investments would pay more total tax under the new regime, while 47% would pay the same or less. While negative gearing remains a central point of debate, analysis indicates that the changes to capital gains tax may have a larger overall impact on investors.