Plans to continue pushing through the proposed Division 296 tax are unreasonable and completely ignore valid reasons for it to be modified, according to the Tax Institute, which has highlighted its alternative model against government claims no other options have been presented.
Tax Institute head of tax and legal Julie Abdalla said the proposed impost had been widely criticised by practitioners, who recognised it ran counter to good tax law and its plans to tax unrealised gains was not equitable.
“It’s unconscionable that Treasury is pushing this policy through with blatant disregard for the legal and equitable concerns raised by stakeholders,” Abdalla said.
“It is particularly dishonest and disappointing to hear the Treasurer [Jim Chalmers] publicly state that no better solutions have been proffered, when many highly intelligent people and superannuation experts have presented various reasonable and workable alternatives.”
She noted the first release of the details of the Division 296 tax was on 3 October 2023 and the consultation period closed only 15 days later on 18 October, and at that time the institute provided a number of recommendations despite the short timeframe.
“In this submission, we raised many concerns with the proposed bill, including that the consultation period of just 12 working days was grossly inadequate and did not allow stakeholders sufficient time to comprehensively consider the complex draft legislation and make a fully informed submission,” she said.
“Recently, the Treasurer indicated that no one offered any alternative to taxing unrealised gains despite ample consultation. This is blatantly not true.”
As part of its submission, the institute called for the indexation of the $3 million threshold, introduction of a loss carry-back mechanism to allow superannuants to recognise unrealised losses where they cannot use losses carried forward, allowing the payment of the Division 296 tax to be deferred until the gain on any relevant asset is realised by the super fund and excluding amounts withdrawn to pay a superannuation tax liability from being added back into the total super balance and being subject to the impost.
Abdalla said all these had not been picked up by Treasury at the time or following a further submission to the Senate Economics Legislation Committee on 26 February 2024 during its inquiry into the bills presented before the previous parliament.
