Wilson Asset Management (WAM) has started a petition to oppose the federal government’s Division 296 tax proposal and it has received over 10,000 signatures in its first four days of circulation.
Under the proposed changes, individuals with total super balances over $3 million will be required to pay tax on the year-on-year increase in the value of their assets above the threshold, even if the assets are not sold and no cash has been generated to fund the impost.
To give the initiative more reach, WAM is asking sector stakeholders to circulate the petition among the SMSF community. Currently, 54 per cent of supporting signatures are from SMSF trustees.
The move follows similar action the manager took over the change to the franking credit rules the Labor Party proposed in the lead-up to the 2019 federal election.
“The only time we’ve run a petition before was in 2018/19 on franking and these numbers are multiples of that,” WAM chair and chief investment officer Geoff Wilson said.
“I think it’s a really strong signal that all Australians think taxing unrealised gains is flawed and it needs to be stopped.”
According to Wilson, the aim of the petition is not only to oppose the proposed measure, but also to serve as an education tool for the general public.
“To me it is part education and part just to send a clear message to [Prime Minister Anthony] Albanese and [Treasurer Jim] Chalmers that the broader population doesn’t want this legislation,” he explained.
One of the fund manager’s objections to the policy is the breach of the social contract implicit in taxing unrealised capital gains, which is problematic for illiquid assets, such as start-up businesses, energy infrastructure and farms, that cannot easily be sold to cover the tax bill.
WAM also estimated a lack of indexation on the $3 million would mean the tax would capture 8.1 million Australians by 2053 due to the impact of bracket creep.
Key words:
Division 296 tax.
