The Senate committee reviewing the draft bill for the Division 296 tax has recommended it be passed unchanged while a dissenting report from opposition senators on the committee called for the bills to be scrapped.
The Senate Economic Legislation Committee (SELC) made the recommendation in a report released on Friday after it reviewed the Superannuation (Better Targeted superannuation Concessions) Imposition Bill 2023, of which schedules 1 to 3 relate to the proposed tax.
Addressing those schedules the SELC stated: “The committee strongly supports the reforms to superannuation tax concessions that will ensure they are fairer, more sustainable, and better targeted.”
In making its recommendation the committee acknowledged the input of a number of superannuation, taxation and financial advice bodies which raised concerns about the lack of indexation of the $3 million threshold and the taxation of unrealised capital gains which would occur under the measure.
However, the SELC said the approach taken in the bill addressed those concerns.
“The committee notes views of inquiry participants that the $3 million threshold should be indexed, but believes it is appropriate for the Parliament to be responsible for setting this threshold, which is a common feature of the tax system.”
“The committee understands views shared by inquiry participants about the taxation of unrealised capital gains but believes on the balance of evidence that the approach taken in the bill is designed to be applied consistently across all superannuation funds in a sector-neutral way, making it the most appropriate way to reduce compliance burden and costs to funds and their members.”
These issues, as well as the opposition’s claims the new tax broke an election promise by the government of new changes to superannuation, lead to the Liberal Party senators on the committee filing a dissenting report that called for bill to be scrapped.
A further dissenting report was included from the Australian Greens who agreed the bill should be passed but the threshold lowered to $2 million and indexed to inflation.
“Not only is the legislation narrowly applied to not even cover all of the highest one-hundredth of asset owners in the country, it fails to address the multitude of ways that the current superannuation system delivers for high income and high wealth individuals at the expense of everyday working Australians,” Greens senator Nick McKim said in the report.
The draft Division 296 tax bill was referred to the SELC on 7 December last year with an initial reporting date of 19 April 2024 but in late February this was extended to 10 May.
The SELC for this review was comprised of Labor Party senators Jess Walsh (chair), Deborah O’Neill and Jana Stewart ALP, Liberal Party senators Andrew Bragg (deputy chair) and Dean Smith, Australian Greens senator Nick McKim, and independent senator David Pocock.
