The passage of the new Division 296 bill through parliament is still uncertain despite the federal government holding a strong position in parliament, and further delays in its progress may open the door to changes, according to SMSF Association chief executive Peter Burgess.
“This may sound like a very big statement, given the government had such a big result in the election and have a perceived mandate to pass the legislation, but I don’t think the passage of it is any clearer or any more certain today than it was at the start of this year,” Burgess told attendees of the association’s Technical Summit 2025 in Sydney today.
He pointed out both houses of parliament will only sit together for four days in late August and then for a further four days in early September, with the next joint sitting taking place eight weeks later in late October.
“What we know about this tax is the government is determined to proceed with it and they are determined to proceed with a 1 July 2025 start date,” he added.
“If that is the plan, you would think things are going to have to come to a head in the August sitting and if they don’t pass this legislation in the first week of September, then the earliest they can pass this legislation is October.
“It’s inconceivable in my view for any government to introduce a new tax like this and backdate it by four months. So if they don’t get it through in August, they will be forced to defer, and if they have to defer, that means they’re going to have to adjust their budget estimates.
“Now we know the Treasurer [Jim Chalmers] is loath to adjust those, particularly if he has to adjust the revenue down, so they are going to be pushing to get this legislation through in those sitting days because if they have to backdate, then we’ve got a lot of problems with that.
“We face the prospect of your clients’ total super balance changing mid-year, midway through a financial year, and the total super balance is very important when it comes to calculating things like contributions and how much they can contribute during the course of the year.
“If we get to the point where this legislation is not passed in August or September, then I think we are in with a chance to negotiate with the government on some of the design features of this tax.
“Our strategy right now is to continue to alert the government to the technicalities of backdating this tax and we will do that because we want to force them to defer.
“A deferral opens the door for negotiations on some of the key design features of the tax and then we have a chance of addressing the taxation of unrealised capital gains.”
