The likelihood the Division 296 tax will take effect retrospectively from 1 July is dependent on large superannuation funds having prepared for its implementation, but an SMSF legal expert has noted none have spent any money doing so.
DBA Lawyers director Dan Butler said the length of time the bill for the proposed tax spent in parliament and the recent election meant the proposed start date would be difficult to apply.
“The start date is a big assumption because will super funds have the systems in place to actually accommodate this law?” Butler told attendees of a briefing held by his firm last week.
“The difficulty with all of the deferment and uncertainty around this monster Treasury and the government are intending to build is who wants to commit to changing systems when there is so much uncertainty?
“The large funds will need at least 12 months’ notice to get their digital service providers involved to get the changes made and who wants to waste money, so they are not going to commit to changes until they know this is a dead certainty.”
Butler pointed out any spending on changing systems to net the limited number of people who will initially pay the Division 296 tax will be shared by all members of Australian Prudential Regulation Authority-regulated funds, with those institutions holding back currently.
“Everyone’s costs will go up among the 17 to 18 million superannuants when there’s only 80,000 supposedly affected,” he added.
“The government likes to say – and its an incredible trick here – that just a few people are affected and it’s not a big problem, but the costs are inflicted on everyone.
“I’ve heard some quotes from the large funds of the ginormous costs on their IT systems and if you are a large fund, would you want to spend a brass razoo until you know this is a law and what that law is before you even investigate spending money on a system.
“Will the system be ready by 1 July 2025 or the law be retroactive, but not retrospective? The government will say it’s not retrospective, rather that it’s retroactive because you’ve been on notice for the past two years.”
