Peter Burgess, SMSF Association CEO, told SMSF Adviser that as the government has already budgeted in its forward estimates that the proposed tax would bring in more than $2 billion in its first year of operation, it would more than likely proceed with its original timeframe.
“There is still every chance that the bill will go through, so we have to be prepared for that,” he said.
The government had originally planned for the bill to be passed by 30 June this year, which would have allowed more than 12 months for those who may be affected by the Division 296 tax to prepare.
However, the third reading of the bill in the House of Representatives has been delayed again following a growing chorus of concern from industry bodies and crossbench politicians over the proposal to tax unrealised gains.
“We were expecting the bill to be listed for debate during this current fortnight [of Parliament sitting] but there is still no sign of it. It seems the government may have other bills that it feels are a higher priority at the moment,” Burgess said.
“It also seems the government does not have the support of the crossbench. We have now spoken to nine of the crossbench MPs and none of them support the bill in its current form.”
Last week, eight independent MPs released a joint statement calling for urgent amendments to the bill, stating that the continued delay in action on the legislation is causing “even more uncertainty for Australians”.
Burgess this week met with advisers to former Labor-turned-independent senator Fatima Payman, who also indicated she will not support the bill in its current form.
The government needs the support of at least three crossbench MPs for the bill to be passed.
Burgess said the government could now be looking at two options to proceed the bill through Parliament – withdraw schedules 1-3 in the current draft which are causing concern so the bill can proceed without them, or “essentially start again”.
Together, Schedules 1 to 3 to the bill are designed to reduce the tax concessions available to individuals with a total superannuation balance exceeding $3 million.
“Removing those schedules and starting again would be difficult as the government has already budgeted for the revenue in the forward estimates and it would leave a hole [in the budget],” Burgess said.
“The more likely outcome is to negotiate. The Greens will more than likely support the bill given that it is all about clawing back concessions, but the government may well negotiate.”
Burgess said the crossbench are in agreement that the taxing of unrealised gains is the main issue, but they are also concerned with the lack of indexation.
He continued that the further delay is causing concern for the sector, as it is making it difficult for those who may be affected by the bill to implement changes to their investments.
“If it is passed in its current form, some members will have to make changes to their investments, such as selling properties or assets and that takes time to work through,” he said.
“If the government wants to expedite the passage of this bill it is going to have to have conversations around these issues. It is not ideal to have this kind of uncertainty. We believe this legislation has been rushed. We want appropriate consultation with industry to get it right.”
SMSF Adviser contacted Treasury for comment regarding the implementation date of the legislation. A spokesperson said the inquiry has been forwarded to the “minister’s office”.
It is tough to persuade dogmatic zealots to change course, even when a proposal is as obviously and badly flawed as this one. You are to be congratulated for your persistence, Peter. One can only hope the cross bench has enough common sense to block this Bill’s path. If not, then with an election next year, the obvious solution is to send the ALP dullards packing (and also any cross benchers who support it, including the Greens, who support the ALP on all of their mad socialist adventures and are basically a loopy sub-branch of the ALP).
I have no particular enthusiasm for a Dutton Government, but with Morrison finally gone it is the least bad option available, and is less likely to share much of Canberra’s persistent hostility to self-funded retirees. The ALP won’t change. Their Union masters running the industry funds will continue to push them to attack SMSFs.
Thanks Peter – you have worked very hard on this, together with a strong Team behind you, I am sure.
This proposal may very well have been rushed and I suspect it was what the government felt it had the numbers to pass it regardless of its many significant flaws.
I am in business, and a formula like this would not have been made public for debate. It is too obviously full of holes.
I have had our lawyers sitting on this now for months after they have fully reviewed our affairs, so we are ready to act quickly. That is about all we can do until we know where this will finish. Given how unfair we perceive this to be personally, we will ensure that as much as possible is out of our SMSF.
This government is not truthful and is ruining this country with its spending spree and this legislation is a clear example of the flagrant misuse of authority by the treasurer and his treasury. And they want the SMSF to fund this spending spree into the future. It is simply theft.
Anyhow, thanks again to you and your team.