Crossbench senators have been called upon to reject the bill that will introduce the proposed superannuation earnings tax applied to individual balances over $3 million, with the SMSF Association (SMSFA) highlighting the tax on unrealised gains represented a fundamental shift in taxation policy.
The Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023 was introduced into parliament yesterday and was read for a first time, with a second reading moved at the time of publication.
A second reading without amendments would progress the bill to the Senate, which has eight crossbench senators, who if they voted with the 31 opposition senators, would be able to vote down the progress of the bill, which is likely to be supported by 26 government and 11 Greens senators in the upper house.
Association chief executive Peter Burgess said the taxing of unrealised gains contained within the bill was “a tax on market movements and changes in asset values, not income, [setting] an alarming precedent as it represents a fundamental change in how tax policy is implemented in Australia”.
“As the legislation is currently drafted, a person with a high superannuation balance, whose interest has received taxable income in a year, will not be subject to this tax if their total superannuation balance (TSB) movement does not trigger this tax,” Burgess said.
“Conversely, a person who has a one-off spike in asset values, putting them over the threshold, will be subject to this tax, with no tax refund or adjustment available where the value causes them to be below the threshold the following year.”
He added the SMSFA remained concerned about the lack of indexation of the $3 million cap and many of the issues raised during the draft bill consultation phase were not reflected in the bill now before parliament.
“For example, while the decision to exclude people who pass away during a financial year is welcomed, an outcome of the drafting, which has not been corrected in the legislation before parliament, is that a person who dies on 30 June of a financial year will not be excluded from this tax,” he said.
“From the association’s perspective, these are fatal flaws in the legislation, highlighting the need for a more careful and considered approach on this policy issue.”''