POWERED BY MOMENTUM MEDIA
Amendment efforts continue after lower house passes $3m cap bill
While the government has rejected a proposal from teal independents to index the $3 million cap, the bill has passed the lower house, however, professionals indicate that the push for amendments is far from over.
Legislation increasing the tax rate on earnings from superannuation balances exceeding $3 million from 15 per cent to 30 per cent has passed the lower house without amendment.
The bill’s future hinges on the support of the Greens and the Senate crossbench, with Labor relying on their backing to push it through.
The Greens had previously advocated for reducing the threshold for the heightened tax to $2 million.
The SMSF Association is now urging the Senate to reject the bill, which it describes as a deeply flawed measure that will have significant unintended consequences for individuals and businesses alike.
The association’s CEO, Peter Burgess, expressed disappointment at the government’s decision to move forward with the bill on Thursday.
“The fate of this bill now rests in the hands of the Senate crossbench, and we are urging them to listen to the concerns raised by a growing number of constituents,” Burgess said in a statement.
Another particularly contentious aspect of the new tax is that it will be applied to unrealised capital gains. Burgess warned that taxing unrealised capital gains without any indexation will significantly harm the venture and start-up sectors, which depend heavily on the SMSF sector for funding.
“At a time when we need to lift economic growth, these sectors are a critical driver of productivity, and we should be focusing on measures that encourage this growth rather than stifling it,” he said.
“The decision to tax unrealised capital gains sets a dangerous precedent for tax change in this country, overturning nearly 40 years of a tax practice that delineated between income and capital gains tax, with the latter only payable on the realisation of an asset. And indexing tax thresholds is a long-established principle.”
While the amendment to index the cap was rejected in the lower house, the lack of indexation, along with the reasoning and implications of taxing unrealised capital gains, is anticipated to spark intense debate in the Senate.
“We have always maintained there are other ways of clawing back the superannuation tax concessions for individuals with large superannuation balances and taxing unrealised capital gains is not the answer,” Burgess said.
“The fact that the government is proceeding with this legislation means they are confident they have the support of the Senate, and we urge the Senate – and especially the crossbench – to listen to these legitimate grievances and vote down this legislation.”
AUTHOR
Maja Garaca Djurdjevic
Recommended for you
Super funds had a “tremendous month” in November, according to new data.
Australia faces a decade of deficits, with the sum of deficits over the next four years expected to overshoot forecasts by $21.8 billion.
APRA has raised an alarm about gaps in how superannuation trustees are managing the risks associated with unlisted assets, after releasing the findings of its latest review.
Compared to how funds were allocated to March this year, industry super funds have slightly decreased their allocation to infrastructure in the six months to September – dropping from 11 per cent to 10.6 per cent, according to the latest APRA data.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Spire Oaktree Opportunities XI Second Close
61.07 3 y p.a(%)
2
Spire Oaktree Opportunities XI First Close USD
59.21 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.73 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
30.15 3 y p.a(%)
5
DomaCom 4/27 Crombie Avenue Bundall QLD 4217 Australia
26.71 3 y p.a(%)
