Major superannuation changes to become law, with a push for further tax reform later this year

The federal government's proposed changes to the way superannuation is taxed will soon become law, after the Greens agreed to back the reform.

Under the plan, roughly 1.3 million of the nation's lowest-paid workers will get access to the low-income superannuation tax offset (LISTO), while about 90,000 ultra-wealthy Australians will have their superannuation earnings taxed at a higher rate.

The move will also raise an extra $1.6 billion a year in revenue for the federal budget.

IRANFLATION: Fuel shortage to drive up grocery prices as inflation bites

While the government easily has the numbers to pass legislation through the lower house, with the Coalition opposing the change, it required the support of the Greens to get the bill through the Senate.

This morning, the minor party announced it will back the laws, while at the same time urging the government to pull the trigger on major tax reform in the upcoming federal budget.

"We're disappointed that Labor has watered down its original proposal, but we strongly support the increase to the low-income super tax offset, two-thirds of which will benefit women's retirement savings," Greens senator Nick McKim said.

"We are going to support the bill as a downpayment on genuine, progressive tax reform in this budget."

LIVE UPDATES: Australia to send high-tech military plane and missiles to Middle East

Superannuation changes to start July 1

With the laws set to pass the Senate, the superannuation changes will come into effect at the start of the next financial year.

From July 1, the LISTO threshold will be raised to offset the tax paid on superannuation for anyone earning less than $45,000 a year, up from $37,000, effectively ensuring super is still tax-effective for Australians on low incomes.

Raising the threshold to the top of the second income tax bracket will cover an additional 1.3 million workers.

According to the Association of Superannuation Funds of Australia (ASFA), that change will deliver someone on $44,000 a year close to an extra $50,000 in their super balance by the time they retire.

READ MORE: Five Iranian footballers granted asylum by Australia after escape

The other change impacts ultra-wealthy Australians by increasing the tax rate on superannuation earnings for accounts worth more than $3 million.

This will impact the top 0.3 per cent of super account holders – a total of about 90,000 people.

Instead of the current flat concessional tax rate of 15 per cent, from July 1, the tax rate on earnings for super accounts with a balance of between $3 million and $10 million will rise to 30 per cent, and to 40 per cent for accounts worth more than $10 million.

The increased tax rates won't apply to an account's entire earnings – only to the proportion of the balance over each of the new thresholds.

NATIONAL: 'Hard not to panic': Australian farmers hit first as fuel supplies dry up

Greens push for wider tax changes in budget

By describing their backing as a down payment on progressive reform, the Greens have only raised speculation further that the May 12 federal government will contain some of the most substantial changes to the tax system in decades.

"This budget is a once-in-a-generation opportunity for ambitious tax reform, and we are opening the door for Labor to walk through," McKim said.

Exactly what will be unveiled remains a mystery, but the government has done little, if anything, to quash rumours of the controversial capital gains tax discount being pared back for investment properties – something McKim alluded to.

"The current tax system has turbo-charged the housing crisis, wealth inequality and a deepening intergenerational divide," he said. 

"We are demanding bold reform that responds to these challenges and makes our society fairer for young people and working people.

EXCLUSIVE: Andy paid his parking fine, only to be slapped with another $130 fine

"There is a massive Labor majority in the House of Representatives, the opposition is a rabble, and the numbers are there in the Senate as long as Labor shows courage. 

"The only limit is Labor's level of ambition."

Treasurer Jim Chalmers has frequently spoken of the government's desire to address intergenerational inequality.

Last night, The Australian reported Treasury has conducted modelling on limiting negative gearing to two investment properties, while there have also been rumours of tax incentives for electric vehicles and home batteries being scaled back to cut down on federal spending levels.

Last Friday, Chalmers hosted a roundtable discussion with a group of leading private economists, which he said would help inform the decisions made in the budget.

NEVER MISS A STORY: Get your breaking news and exclusive stories first by following us across all platforms.

• Download the 9NEWS App here via Apple and Google Play
• Make 9News your preferred source on Google by ticking this box here
• Sign up to our breaking newsletter here