The government’s stance on the operation and application of the proposed Division 296 tax is not sufficient reason to backdate its commencement date, especially if amendments are made to legislation as its proceeds through parliament, an SMSF specialist has stated.
Accurium head of SMSF education Mark Ellem noted with the intended start date for the new impost of 1 July 2025 having passed and a bill for the tax likely facing parliamentary delays, it would, under current government plans, become a retrospective law and these timeframes undermined any haste to implement it.
“The government’s position rests on the assertion that, as the Division 296 measure has been in the public domain for over two years, including a lapsed bill prior to the 2025 federal election, its retrospective application is justifiable,” Ellem said in a post on his firm’s website.
“However, the principle at stake is broader: retrospective legislation, even where foreshadowed and subject to consultation, creates legal and commercial uncertainty.
“Critically, there remains the strong possibility that amendments may be introduced when the bill is eventually presented.
“This means the final legislative form and its practical impact could change and then be applied to, and potentially impacting, actions taken before there was a settled law.
“Such uncertainty, especially in tax and superannuation where compliance and planning horizons are long, is universally regarded as undesirable by practitioners, regulators and, ultimately, the community.”
According to Ellem adopting a retrospective approach, even if it only affected the initial 80,000 people claimed by the government, would likely create a wider impact by further undermining confidence in the compulsory retirement savings system.
“For superannuation, the principle of prospectivity underpins confidence, not just for the so-called ‘top end of town’, but for all Australians who participate in a system designed to operate transparently and under clear rules,” he pointed out.
“Each instance where retrospective changes are made risks setting a precedent. This, in turn, saps confidence in the long-term stability of the superannuation system, undermining the willingness of millions of Australians to engage in long-term savings decisions under the expectation of certainty and fairness.”
He suggested a further poor precedent would be set if the government prioritised the revenue it would gain from a 1 July 2025 start date over sound superannuation policy and indicated compromise options were under discussion, and a 1 July 2026 start date would base future changes in law that is settled and prospective.
“The superannuation system’s integrity and the confidence of the broader public should not be collateral damage in the pursuit of revenue or legislative timelines,” he concluded.
