The SMSF Association has confirmed the validity of recent media reports the government has currently paused the progression of the proposed Division 296 tax and suggested if the ALP goes ahead with the policy, it will not be in the form set out in the original bill designed to introduce the measure.
“[The reported pausing of the legislation] is consistent with what we’ve been hearing coming out of Canberra now for a few weeks. There is growing discontent within the Labor Party about this tax. The backbenchers are not happy with this tax and we’re also hearing the Prime Minister has some concerns about this tax as well,” SMSF Association chief executive Peter Burgess told delegates at the ASF Audits Technical Seminar 2025 held in Melbourne on Friday.
“[However], we don’t know if the Treasurer will amend this tax or scrap this tax, but it is looking increasingly likely that if we do see this legislation reintroduced, it won’t look the same as it has in the past.”
Burgess suggested one amendment that is likely be made if the Division 296 tax bill is reintroduced to parliament is allowing the $3 million threshold to be indexed.
“It won’t solve the problem, of course, of taxing unrealised capital gains, but indexation will certainly help the Treasurer, you would think, to shore up support for this legislation within his own party, in the broader community and the Greens. So we think there is a good chance they will index [the threshold],” he said.
According to Burgess, allowing the $3 million limit to be indexed will not have to impact the Treasurer’s four-year forward estimates as to how much government revenue the tax will raise – an issue that has provided a barrier to any discussions regarding changes to the legislation.
“They can [include] indexation in a way which does not affect their four-year forward estimates by just making sure that the first round of indexation occurs outside that four-year period,” he explained.
“So agree to index it in increments of $700,000 or something like that so the first lot doesn’t happen until outside that four-year period.
“I’d be amazed if Treasury has not put that option in front of the Treasurer so far.”
