The SMSF Association is “very happy and very relieved” the federal government has decided not to tax unrealised capital gains as part of its proposed Division 296 impost on total super balances above $3 million.
Further, the association expressed its pleasure Treasurer Jim Chalmers has now decided to index the $3 million threshold, a move for which the industry body had also been lobbying.
“They were the two most egregious elements of this tax we have been fighting hard against over the last two years and we’re very happy to see it yesterday,” SMSF Association chief executive Peter Burgess told selfmanagedsuper.
Details as to the tax calculation methodology will be finalised after a period of consultation with industry and it is expected the definition of earnings applicable will be more closely aligned with actual taxable income.
“So, in other words, they’re going to base it on taxable earnings, which is the way our tax system works in this country. We only tax people on amounts they receive. We don’t tax them on unearned income,” Burgess explained.
He indicated there may also be a cost-base reset involved, meaning the tax would only be calculated on the capital gains after the implementation date of 1 July 2026.
“They haven’t made any commitment that’s what’s going to happen. What they’ve said is that they’re going to consult on the merits of resetting cost bases,” he noted.
“This is the government being collaborative and listening to what we’ve been saying, and it’s great that it is working with us on these types of things as to whether or not it’s viable to reset cost bases.”
Given the targeted start date of 1 July 2026 is less than 12 months away, he is predicting a fairly simple calculation of taxable earnings will be applied.
“You would expect that, given that they’re saying this will apply from 1 July 2026, that whatever method they agree on, it’s not going to require substantial system changes because the large funds need a long lead when things change like this,” he said.
