A senior SMSF stakeholder has suggested the government’s budget proposal to impose a minimum 30 per cent tax on net capital gains could compromise the effectiveness of the carry-forward provisions for the unused portion of an individual’s concessional contributions cap.
The superannuation laws allow individuals with a total super balance that is below $500,000 to carry forward any unused portion of their concessional contributions cap for a rolling period of five years. The measure means super members with total benefits under this qualification threshold can contribute significantly more money into their fund than the single-year concessional cap, currently $30,000, will permit.
However, SMSF Alliance principal David Busoli believes the changes to the capital gains tax (CGT) system handed down in the 2026 federal budget will significantly restrict the likelihood of taxpayers taking advantage of the carry-forward facility relating to concessional contributions.
“[The carry-forward rule] has been useful in reducing the tax payable on realised gains to, in many cases, zero,” Busoli noted.
“[However], the budget intends that a 30 per cent minimum tax on net capital gains will kick in for individuals, trusts and partnerships from 1 July 2027 on that portion of the assessable capital gain that has accrued from that date.
“Treasury was unusually candid about the reason why: the 30 per cent minimum tax on capital gains means there’s less or no benefit in selling assets in years when your income is low.
“The strategy will still exist, but its effect will be significantly diluted for the very group it was most useful for – retirees and lower-income earners crystallising a large gain in a low-income year.
“For top-bracket clients, the per-dollar effectiveness of the contribution deduction itself barely changes, though the underlying gain will probably be larger with the CGT calculation method changing from discount to [inflation-based] indexed.”
He recognised the new CGT rules are yet to be passed by parliament, but predicted there is little chance they will not receive approval.
Darin Tyson-Chan
Editor
Darin is the founder and publisher of Benchmark Media, an independent publishing house whose mastheads include financialobserver, selfmanagedsuper and smstrusteenews. He has been covering the financial services space for over a decade and in this time he has worked for a variety of trade publications. Darin has also written for the Money section published in The Sydney Morning Herald and The Age.
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