A group of four industry bodies has called for the next government to permanently rule out any impost on unrealised investment gains in any part of the tax system.
The call for certainty regarding taxation of investment gains was made by the SMSF Association, National Farmers’ Federation, Council of Small Business Organisations Australia and Family Business Association following attempts by the current government to introduce the Division 296 impost on superannuation earnings.
“Let’s be clear: taxing someone on paper gains they haven’t received a cent from is not reform – it’s confiscation,” the four organisations stated.
“It punishes aspiration, destroys liquidity and turns volatile market movements into tax bills.”
The group highlighted the negative impact of taxing paper gains could be seen during the recent fluctuations in investment markets.
“It shows just how easy it is for a paper gain in one period to be wiped out in the next, leaving the investor with a tax bill for an investment gain they never received,” it added.
“With Australia’s debt projected to soar beyond $1.2 trillion, there are growing fears that other investments, including the family home, investment properties, private trusts, farms or financial instruments, could be next.”
The group repeated its previous calls for the Division 296 measure to be scrapped, noting both major parties had stated they would make no changes to negative gearing, but had not made a similar commitment on the taxing of unrealised capital gains.
“Division 296 isn’t just a bad policy – it’s a dangerous precedent. Once taxing unrealised gains becomes embedded in superannuation, it opens the door to expansion across the entire tax system,” it said.
The bodies reiterated the risk was heightened by the likelihood of a hung parliament, which could lead to the government’s reliance on the Greens or independent MPs, who were pushing for more stringent versions of the tax.
“The Greens, for instance, want to lower the threshold, dragging in thousands more Australians, including those who’ve simply had their superannuation grow over time,” the group stated.