The SMSF Association has repeated its call for the Albanese government to address critical flaws contained in the calculation methodology of the proposed Division 296 tax in response to reports of panic selling across the $1 trillion SMSF sector.
Specifically, the industry body has again singled out the taxing of unrealised capital gains included in the measure as requiring change due to the adverse effect it is already having on SMSF trustees and will have on the greater Australian economy.
“No one disputes Treasury’s desire for a fair and equitable superannuation system, but to claim this tax only affects a minority and serves the national interest is short-sighted. It ignores the broader ripple effects,” SMSF Association chief executive Peter Burgess noted.
“The government’s narrow focus is blind to the vital connections between superannuants, small business owners, primary producers and angel investors.
“This oversight is already destabilising the SMSF sector and threatens to disrupt the delicate balance of our economic ecosystem.”
To this end, Burgess singled out the healthcare, IT, ag-tech, artificial intelligence and biomedical research sectors as ones the Division 296 tax will adversely impact with regard to a significant source of their funding.
“To be taxed on an unrealised capital gain, potentially years from being realised if at all, will dry up this critical source of capital,” he explained.
Further, he criticised the oversight in Treasury’s impact analysis of the proposed tax as to the effect it will have on the unlisted and private equities that account for around $150 billion or 14 per cent of SMSF holdings.
“To say this void will simply be filled by others is misguided and commercially unrealistic,” he indicated.
He pointed out the measure contradicts the recommendation from the Productivity Commission’s 2018 inquiry report, “Superannuation: Assessing Efficiency and Competitiveness”, for greater competition in the super industry to drive better outcomes for Australians and the critical role SMSFs play in achieving this objective.
“The Productivity Commission has been clear – competition drives better outcomes in superannuation. This tax does the opposite. It punishes SMSFs, stifles innovation and consolidates market power in the hands of large superannuation funds,” he said.
“If the government is serious about fostering competition, aspiration and fairness, it needs to rethink this policy.”
