The federal government’s inability to pass the Division 296 bill before the election is a win for the SMSF sector resulting from its efforts to rally opposition to the new tax, according to the SMSF Association.
“The failure of the government to enact this legislation before calling the election is a testament to the efforts of the industry and, in particular, your association, which has worked tirelessly to garner the support of independent parliamentarians to oppose this deeply flawed tax,” the association told members today.
The industry body noted the Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023 had officially lapsed when the election was called for 3 May, having not passed through the Senate, and its return was contingent on a number of changing factors.
“A re-elected Albanese government will need to reintroduce this legislation and start the parliamentary process again – potentially with a more hostile lower house,” it stated.
“It also means we no longer need to rely on an elected coalition government to repeal this legislation.”
It added the government’s decision to retain the tax and its budgeted revenue as an “announced but unenacted measure” meant it would take its plans of taxing unrealised capital gains, and an unindexed tax threshold, to the election.
“We will continue to urge the Albanese government to consult with industry on a more equitable and workable solution, and to raise awareness in the community about the intended consequences of taxing unrealised capital gains and the dangerous precedent this sets for future tax reform, particularly in the face of a growing budget deficit,” it said.
With the caretaker period now in force, the association has been advised by the ATO that work on the Division 296 project has ceased for the time being and the regulator will reconsider any progress on this issue after an election result is announced and the government’s legislative priority for this measure is understood.
In other news, the SMSF Association also noted the ATO general interest charge (GIC) and shortfall interest charge (SIC) will no longer be tax deductible following the approval of a new law introducing the changes.
In a separate note to members, it pointed out the Treasury Laws Amendment (Tax Incentives and Integrity) Act 2025 received royal assent on 27 March and removed the tax deductibility for the two charges from 1 July 2025.
“This change increases the cost of non-compliance and late payments and key areas impacted included employers paying super guarantee late, SMSFs with late or amended returns and members incorrectly claiming super deductions,” it said.
“We are disappointed to see this measure passed in its current form, despite strong opposition from us and the accounting bodies during consultation, exposure draft and Senate inquiry stages. The only avenue available to taxpayers will be to apply to the ATO to request for the remission of any GIC or SIC amounts payable.”