The consultation processes for new superannuation bills, such as for the proposed Division 296 tax, are no longer as comprehensive as they once were and fail to consider the perspectives of key stakeholders, according to an SMSF lawyer.
“Back in the good old days, through the professional bodies, [we would] sit down and consult with government. Real consultation did take place back then,” DBA Lawyers principal Dan Butler said during a webinar hosted by the legal firm late last week.
“While the professional bodies are invited to these consultations, the real feeling I pick up is that a lot of what is [contributed] is just water off a duck’s back. So we don’t have the same sort of consultation process that we did back then.
“I can recall in mid-2007, when we had those other major changes [to superannuation], we’d sit down with Treasury officials, have very good dialogue and work line by line through the legislation.
“We worked very cooperatively with Treasury, government and when needed the ATO and we would pick up certain devils in the detail. Even then we didn’t pick up all of the devil in the detail.
“So this is the trouble with rushing things through [and] not really treating consultation seriously; we do not get the best result.”
To illustrate his point, Butler highlighted ongoing issues with the proposed tax on individuals with superannuation balances over $3 million and questioned the value of a process that appears to overlook the concerns of affected parties, resulting in poorly designed legislation.
“There will be casualties in this process of rushing things through. Not addressing positions about taxing unrealised gains without giving a refund and [the fact that the cap] isn’t indexed will [have an impact],” he noted.
“In a University of Adelaide report they said [to the] government if you weren’t so greedy for the money now, you’d be better off in the long run by not taxing unrealised gains.
“[We have] a very reputable body saying the government is a little bit too edgy on taxing blue sky and the Tax Institute is also very unsettled with a precedent being developed where if we tax super funds on unrealised gains, what will be next.
“In respect of those with illiquid assets, such as property or bulky investments or farmers who have farmland, the attitude is ‘tough luck, you should have an appropriate investment strategy that builds in liquidity’, so there’s not a lot of empathy there for taxpayers.”