The federal government is facing a shrinking window in which to progress its plans to introduce its proposed Division 296 tax on superannuation balances over $3 million with two sitting days of parliament remaining for the year.
The Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023, which will introduce the tax, is currently before the Senate awaiting a second reading, but is caught up in a log jam of other proposed legislation, including the bill that will introduce an objective for super.
At present, the Senate, which will not sit again until 4 February next year, has 38 bills to debate, the majority of which are at the second reading stage and require further debate and a vote for them to pass through parliament to receive royal assent to become law.
The government does not have sufficient numbers in the upper house to pass these bills where it needs 39 votes to do so, but only holds 25 seats and would need the support of all 11 Greens senators and at least three of 10 crossbenchers.
To date, a number of the crossbench senators have expressed concerns about the need for changes to be made to the bill to address the taxing of unrealised gains, which has been an issue of major concern for the SMSF sector.
The Institute of Financial Professionals Australia (IFPA) noted while the government is pushing to address its legislative backlog, the Division 296 tax bill has been excluded from its priority list for 2024 “making it unlikely to pass before the federal election and casting doubt on whether this tax measure will ever proceed”.
Upon its return in February, the Senate will sit for seven days that month and a further three days in March, and then for 11 days in May, however, there is speculation an election will have been held before that time.
“Even if parliament returns for its planned two-week session in February, the bill faces slim prospects without major revisions, given strong opposition from Senate parties and crossbenchers,” IFPA added.
“Its shelving would signal the end of a contentious proposal, particularly the controversial plan to tax unrealised gains.”
