Shadow treasurer Angus Taylor has strongly criticised the proposed policy to introduce the Division 296 tax on total super balances above $3 million and accused the government of discouraging aspiration among the Australian public.
“The new tax is a shocker. [It represents] a doubling of taxation on Australians’ retirement savings. A regime that proposes a different approach for a farmer or a small business owner, a judge or a politician, including might I say the Prime Minister himself, and the secretary of Treasury,” Taylor told attendees at the SMSF Association National Conference 2024 in Brisbane last week.
“For those lucky enough to have a defined benefit scheme, they will enjoy deferred payments and rates of tax set entirely by regulation, not legislation.
“For everyone else, they face an unindexed annual tax on unrealised capital gains. So let me be clear about what this means, of course you know only too well, Labor’s Division 296 tax is an unindexed wealth tax.”
According to Taylor, Treasury’s case studies have shown the measure will double the taxes on retirement savings of a 21-year-old today earning an average wage.
“It is a tax on aspiration and sadly it was the first sign of many tax policies that weren’t taken to an election that are now standing as broken promises on taxation, flaunting well-established principles of tax reform and when bundled across the economy will make Australians worse off,” he said.
“And we know it will primarily hurt people who utilise self-managed super fund structures.”
He labelled the new tax as one element of a strategic attack on the SMSF sector.
“Combined with other changes, [such as] the response to the Quality of Advice Review [and] the changes to the NALE (non-arm’s-length expenditure] provisions, it is part of a broader attack on self-managed superannuation and a regulatory approach that favours one form of superannuation over another,” he said.
He indicated this is the wrong approach to Australia’s superannuation system due to its compulsory nature. To this end, he emphasised it is imperative to uphold the right for individuals to freely choose the type of retirement vehicle most appropriate for their situation.
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