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The decision by the Senate Economics Legislation Committee to proceed with the bill without amendment will result in many unintended consequences, the SMSF Association has warned.
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SMSFA urges Senate crossbench to halt ‘flawed’ super tax bill
13 May 2024
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The SMSF Association said it is “bitterly disappointed” with the recommendation by the Senate Economics Legislation Committee for the Better Targeted Superannuation Concessions Bill to be passed without amendment.
The bill implements an additional tax on superannuation balances above $3 million and is scheduled to be debated in the Lower House on Wednesday.
SMSF Association chief executive Peter Burgess said the recommendation to proceed with the bill without amendment ignores the considerable and unequivocal weight of evidence presented during the inquiry that this new tax will have many unintended consequences.
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“The assertion in the Committee’s report that all superannuation trustees have a legislative obligation to keep sufficient liquidity and therefore the taxation of unrealised capital gains should not be a liquidity concern lacks commercial realism.
“It is completely unreasonable to expect trustees, when formulating a long-term investment strategy such as investing in real property, to forecast future tax changes, particularly a change that is such a radical departure from existing tax policy.”
The association has also raised concerns by the recommendation in the Australian Green’s dissenting report that the threshold be lowered to $2 million.
“Lowering the threshold will only exacerbate the impact of taxing unrealised capital gains – it will not only widen the tax net but, for many, it would also mean a greater proportion of the unrealised capital gain is subject to this tax,” said Burgess.
Burgess said the tax measure was “fundamentally flawed” on many levels with the association calling on the Senate crossbench to halt the progress of this Bill and instead continue to engage with stakeholders and the industry.
Aaron Dunn, CEO of Smarter SMSF, said he believes superannuation will become a centrepiece in the next election following the “blinkered” approach the Economics Legislative Committee took in regards to the bill.
“The question now is that as the bill was put on hold until this report was tabled and it has to be read and make its passage through both houses to receive assent, will there be sufficient time before 30 June in the parliamentary sitting calendar to have it become law to provide 12 months for people to make the changes they need off the back of it?”
Dunn said there will be ongoing problems with the bill as more unintended consequences come to light due to the very short consultation period that was allowed.
“It seems to have been pushed through with blinkers on and the government ran towards the finish line without thinking about what ongoing issues may look like,” he said.
“We have been talking about these for the past 15 months, but it seems it has fallen on deaf ears. The committee heard all the submissions but was obviously not concerned with the issues raised. It is disappointing and if it does become law it will certainly become a policy-based issue coming into the next election.”
He added that the list of people who will be impacted by the legislation will continue to grow including those on defined benefit schemes, millennials and women.
“There will be a lot of people aggrieved by this, but it appears from this report the government is intent on seeing this through,” he said.
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