SMSFA, Superannuation, Tax

$3m super tax law expected by mid-2024

Superannuation earnings tax

The government is likely to release draft legislation for the proposed $3 million superannuation earnings tax by early September, with the bill expected to pass through parliament in mid-2024.

The SMSF Association expects the release of draft legislation for the proposed superannuation earnings tax on super balances over $3 million by early September and the bill to pass through parliament in mid-2024.

Speaking at the industry body’s Technical Summit 2023 on the Gold Coast last week, SMSF Association chief executive Peter Burgess outlined a path the super tax was expected to take through parliament, after the Labor government’s announcement of its intentions in February.

“We’re expecting to see draft legislation any day. Our best guess at this point is somewhere from now up until early September,” Burgess noted.

“That will give rise to a consultation phase. On the release of the draft legislation, the industry will be given probably four to five weeks of consultation and the ability to make submissions on the back of that draft legislation, which will take us pretty much to the end of the year.

“So our best guess at this point is we won’t see legislation introduced into parliament until early next year in relation to this $3 million tax.”

He emphasised the bill’s journey through parliament and ultimate design hinges on crossbench support, particularly with regard to two crucial provisions in the proposal.

“We do expect this bill will be spun off into a Senate committee hearing and at that point there’s a good chance the SMSF Association will be asked to give evidence at that hearing, so that will give us another opportunity to push for a fairer calculation of earnings,” he stated.

“From there we expect the bill will probably be passed in that May-June sitting. Do we expect this bill to pass? It’s very likely that it will with the support of the crossbench.

“That support will be subject to the cap being indexed and a fair calculation of earnings. So in other words, unrealised capital gains not being included in the calculation.

“We’d like to think that that’s what the crossbench will ask for. That will be the focus of our advocacy over the next nine months, focusing on the crossbench, and make sure they understand the way this tax works, making sure they understand that unrealised capital gains are a part of the calculation.

“Senator Jacqui Lambie’s vote will be critical in the final wash-up as to the support for this particular tax.”

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