The SMSF Association has flagged the government appears confident the Division 296 tax bill will find support in the Senate, but has called on its members to reject the legislation, which passed through the lower house yesterday.
Association chief executive Peter Burgess said the industry body was “disappointed but not surprised” the government used its majority to pass the Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023 in the House of Representatives without any amendments.
“Despite all the evidence about unintended consequences that have been presented to the government since this tax proposal was first mooted in early 2023, it seems determined to press ahead with the taxation of unrealised capital gains that will be disastrous for thousands of primary producers and small and family businesses who will be impacted by this tax,” Burgess explained.
“The fact that the government is proceeding with this legislation means they are confident they have the support of the Senate, and we urge the Senate, and especially the crossbench, to listen to these legitimate grievances and vote down this legislation.
“In all likelihood, the fate of this bill now rests in the hands of the Senate crossbench and we are urging them to listen to the concerns raised by a growing number of constituents.”
He noted the government would need the support of all 11 Greens senators and at least three crossbenchers to pass the bill.
The association acknowledged the support of independent members in the lower house whose calls to amend the bill were rejected on three occasions in parliament yesterday after they pushed for changes to address the taxing of unrealised gains, the lack of indexation of the $3 million threshold and for longer timeframes to pay any tax derived from illiquid assets.
In proposing the amendments, independent teal member Kylea Tink pointed out the government had rejected any changes to taxing unrealised gains from the outset.
“From the minute this legislation was tabled, this really egregious change in taxation policy in this country was flagged with alarm by many key stakeholders,” Tink said.
“Yet it’s extraordinary the government hasn’t been prepared to negotiate in this space and to recognise not only the potentially immediate damage to our superannuation system, but also the potential damage to Australians’ confidence, when they hold assets, that the government isn’t going to adopt this as a standard practice across everything we hold.”
Fellow teal Allegra Spender noted the government did not have to tax unrealised gains as 80 per cent of those affected by the proposed tax, that is, those in SMSFs, could calculate actual earnings each year.
“The 20 per cent who are in major funds would have to pay tax on unrealised gains, then it would be up to the funds to provide the right tax information so that, in the future, people perhaps would not have to pay tax on unrealised gains,” Spender said.
“Just because APRA (Australian Prudential Regulation Authority) funds can’t calculate gains that are realised funds versus unrealised funds, why should self-managed super funds be penalised for the technical incapacity of the other funds? I don’t think that’s a fair change.”
