The federal government has no immediate plans to introduce the legislation for the proposed Division 296 tax, noting its assessment date in the middle of next year still gave it time to act.
Treasurer Jim Chalmers confirmed his party’s position during a recent media interview when asked if the bill for the new impost would be introduced this week – the first of a two-week sitting period ending on 4 September.
“We’re not proposing to introduce it or reintroduce it this week,” Chalmers said.
“We’ve had a whole bunch of other priorities queued up for immediately after the election that’s just been run and won, and so our focus has been in other areas, cutting student debt, making medicines cheaper, improving quality and compliance in early childhood education,” he added.
When pressed about when it was likely to be introduced, he did not provide a clear timeframe, but stated the shape of the legislation was unlikely to change from its previous iteration before parliament.
“We’ve still got time. It doesn’t begin to be calculated till the second half of next year and so we’ve got time to reintroduce that, but as I said, it’s been in the parliament before. People know where we’re coming from,” he explained.
The delay may result in the mid-year recalculation of total superannuation balances and a backdated start date creates uncertainty around the application of the tax.
Chalmers pointed out, while the Division 296 tax was part of government plans to address tax concessions in superannuation and had not changed following the recent Economic Reform Roundtable, there was no intention to remove the tax-free status of super income in retirement.
“I have been pretty clear, the change that we are proposing to superannuation, we haven’t changed our policy on that. We didn’t, at the conclusion of the roundtable, rewrite our policies in those areas,” he indicated.
“The change [to tax-free income in retirement] you are alluding to is not something that we’ve been contemplating. Obviously, people around the room at the Economic Reform Roundtable have got views about that.
“[Retirees] still deserve concessional treatment to encourage people to be in superannuation and that’s not something that we have been proposing to change.
“Even the changes that we have put on the table have still meant that the concessional tax treatment in superannuation is still very, very concessional, but a bit more sustainable.”
