The SMSF Association has stated it is “bitterly disappointed” a Senate committee reviewing the draft bill for the Division 296 tax has recommended it be passed without changes, and in doing so, overlooking industry input on the problems it will create.
SMSF Association chief executive Peter Burgess said the Senate Economics Legislation Committee’s recommendation that the bill, which will implement an additional 15 per cent tax total super balances over $3 million be passed without amendment, ignored the significant evidence presented during the SELC’s inquiry that the new tax will have a range of unintended consequences.
“The assertion in the Committee’s report that all superannuation trustees have a legislative obligation to keep sufficient liquidity and therefore the taxation of unrealised capital gains should not be a liquidity concern lacks commercial realism,” Burgess explained.
“It is completely unreasonable to expect trustees, when formulating a long-term investment strategy such as investing in real property, to forecast future tax changes, particularly a change that is such a radical departure from existing tax policy.”
The industry body added a recommendation from the Australian Greens in their dissenting report that the threshold be lowered to $2 million would amplify the current failures in the proposed bills.
“Lowering the threshold will only exacerbate the impact of taxing unrealised capital gains – it will not only widen the tax net but, for many, it would also mean a greater proportion of the unrealised capital gain is subject to this tax.”
As a result of the recommendation, the SMSF Association has requested crossbench Senators deny passage of the bill that is scheduled to be debated in the House of Representatives on Wednesday before being introduced into the Senate in the next few weeks.
“This is a fundamentally flawed tax on so many levels and we are calling on the Senate crossbench to halt the progress of this Bill and instead continue to engage with stakeholders and the industry to ensure that the resulting policy and legislation delivers the right outcomes,” Burgess argued.
