The SMSF Association has provided an update on the current status of the bill tabled to introduce the Division 296 tax and reiterated it does not think legislation for the proposed policy will receive the crossbench support it needs in the Senate.
In particular, the association warned its members to be aware of the different strategies the government might have to pursue in order to have the bill passed by the Senate.
“It is important to differentiate between attempts at horse-trading to secure crossbench support and substantive amendments presented as addressing their concerns,” it explained.
With regard to any possible horse-trading, the industry body cast doubt on whether this course of action would be effective.
“We still believe the government does not have the necessary Senate crossbench support to pass this bill. And with an election fast approaching, doing a ‘deal’ with the crossbench seems unlikely,” it said.
It was also sceptical as to whether the bill would be amended to provide passage through the upper house given this year’s imminent federal election.
“At this stage it is unclear whether the government will propose amendments and risk further political capital on a policy with so many unintended consequences and which sets a dangerous precedent for future tax reform,” it stated.
“Aside from allowing the use of actual taxable earnings (which appears unlikely), given the design of this tax, there is no ‘quick fix’ to the issue of taxing unrealised capital gains. Any amendments proposed are only likely to delay or marginalise the impact of taxing unrealised capital gains and will come with considerable complexity and cost.”
The Senate is scheduled to vote on the legislation again when it reconvenes on 4 February and the SMSF Association confirmed its efforts to defeat the Division 296 tax bill will continue.
“We need to remain vigilant, doing what we can to ensure the Senate crossbench remains opposed to this tax. We will be in Canberra on February 4 to convey our concerns about ‘last-minute’ amendments and to remind the crossbench once again of the far-reaching implications of this legislation,” it said.
Last week, SMSF Association chief executive Peter Burgess refuted the Treasurer’s claims about some of the more contentious issues contained in the bill.
