The Albanese government, fresh from electoral victory and emboldened by a tighter alliance with the Greens, has wasted no time signalling its intentions: the nation’s nest eggs are in its sights with their plans to tax unrealised gains on super accounts over $3m.
It was a policy that seemed to go with minimal challenge by Dutton during the election campaign, no doubt paralysed in fear that he would be accused of pandering to the 80,000 slightly wealthier who have saved hard for their retirement.
For the progressive left this nest egg is ripe for the raiding as this isn’t your standard tax grab on income or capital gains. No, this is something altogether more audacious—a proposed tax on unrealised capital gains within large superannuation balances. In other words, the government wants to tax profits that haven’t been made yet, assets that haven’t been sold, and value that hasn’t been banked. The taxman is no longer content with your earnings; he now wants your projections.
It’s a dangerous shift in the philosophy of taxation, and one that poses deep constitutional and legal questions. Under Australian law, capital gains tax is levied when a real-world transaction occurs: a sale, a disposal, a transfer. That is, there must be a CGT event. To move from realisation to valuation is to redefine what it means to gain—and in doing so, the government is not taxing wealth, but possibility. This distinction is more than academic; it lies at the heart of our tax system’s legal integrity.
Let’s not forget that Australia’s power to tax is broad but not limitless. Under Section 51(ii) of the Constitution, the Commonwealth may impose taxation, but under Section 51(xxxi), it may not acquire property on unjust terms. So when the ATO turns up to assess tax on money that hasn’t been realised—on paper profits that may vanish in the next market cycle—is it still taxation? Or is it something closer to compulsory acquisition?
This question strikes at the very foundations of our legal tradition. Since the Magna Carta in 1215, when barons forced King John to relinquish his power to seize property at will, Western legal systems have recognised the centrality of property rights. The principle that the Crown cannot take without consent, compensation, or due process was enshrined in the Bill of Rights 1689 and carried through centuries of common law into the High Court’s modern doctrine. As recently as JT International SA v Commonwealth, the Court reaffirmed that while taxation is not necessarily acquisition, it must not cross into confiscation.
Yet what else can we call a regime that taxes growth without sale, and which leaves taxpayers to foot the bill on the basis of fluctuating market values? Would the government refund the taxpayer if the value falls? Of course not. Like the house that always wins, the tax office will take its cut on the way up and disappear on the way down. That’s not symmetrical taxation—it’s structural expropriation. And if the taxpayer must sell assets simply to pay this tax, we are edging into the realm of constructive acquisition—where ownership is rendered meaningless by force of law.
Superannuation is, fundamentally, private property. It is not charity from the state, nor a government-backed entitlement. It is the product of decades of deferred wages, accumulated and managed with the intention of personal retirement security. For Canberra to demand tax based not on income, but on an assumed trajectory of future worth, is to treat super not as your property, but as a public reservoir—tapped at will when fiscal appetite demands it.
And make no mistake, the appetite is growing. Today it’s your super. Tomorrow, perhaps, your farm. If property can be taxed on valuation alone, why not your family home? Why not the retirement block on the beach, or even the livestock on your paddock, if someone behind a desk decides they’re worth more this year than last? This is the logic of a state that no longer respects the difference between ownership and obligation. It is the slippery slope from liberal governance to arbitrary extraction.
We’ve been here before. Australia once dabbled in death duties and wealth taxes—both eventually scrapped for being economically distorting and morally corrosive. Yet here we are again, watching the state use fairness as a cloak for fiscal opportunism, while quietly testing the waters for the next intrusion. The rhetoric is always the same: equity, sustainability, shared burden. But underneath it lies an enduring truth: governments rarely give up power once they’ve claimed it. And taxing unrealised gains is a power grab unlike any we’ve seen in generations.
If this measure is legislated and survives legal challenge, it will set a dangerous precedent: that value alone is taxable, regardless of liquidity, intention, or capacity to pay. That holding property is, in itself, a taxable offence. That wealth—no matter how paper-thin—is now fair game.
If ever there was a case for the National Farmers to rally the troops to donate to the fighting fund I think this is the one. But even if such a fight to kill off this tax succeeds, the damage will be done. The sheriff will have knocked and does not like being turned away empty handed. Left wing governments never have enough of your money so they will eventually find a way to slice and dice the growing super pie, the family home or the family farm.
