Superannuation, Tax

No new detail on $3m soft cap

$3 million super tax

There has been almost no new detail included in the 2023 federal budget regarding the proposed new tax on total super balances above $3 million.

SMSF sector stakeholders have expressed their surprise at the lack of detail included in the 2023 federal budget regarding the proposed additional tax on total super balances above $3 million even though there was a slight shift in the associated revenue calculations.

SMSF Association head of policy and advocacy Tracey Scotchbrook acknowledged there was a small change to the forecast income the government would generate from the measure, with the budget papers indicating the figure is now $2.3 billion as opposed to expected receipts of $2 billion declared in the original policy announcement.

“The dial has shifted and the actual dollar amount has gone up that would seem to perhaps be indicative of the fact they’ve run some numbers now around the defined benefit schemes,” Scotchbrook told selfmanagedsuper.

“How much of that represents defined benefit funds or whether or not they’ve made any changes to the model because they’re potentially no longer going to tax unrealised capital gains, we just don’t have that level of detail.”

SMSF technical and education manager at Smarter SMSF Tim Miller noted the government is pursuing the measure, but with no additional detail included in this budget he questioned the procedure it had put in place for the policy.

“Why was there such an urgency to have such a short consultation process period if there wasn’t going to be any sort of immediate budget announcement?” Miller said.

“I know they want to push ahead with draft legislation early in the 2023/24 financial year, but I would have thought a slightly longer consultation period would have been warranted given tonight’s developments.”

In addition, Scotchbrook observed the topic of general transfer balance cap indexation was not addressed in the budget, which she described as a positive outcome.

“Restricting the indexation was one of the things we were concerned about given that it is due to kick in from 1 July 2023,” she said.

“But thankfully they’ve allowed that to happen, so that’s a positive.”

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