Chief executive Peter Burgess says he “heard on the grapevine” that concern and opposition were rising within the Labor party ranks, members of whom were worried about political backlash.
“It doesn’t come as a surprise to us because I suspect from the beginning there has been a fair bit of media around this tax,” Burgess told SMSF Adviser.
“It’s no secret there is opposition to this tax within the Labor party ranks, but it remains to be seen whether this will be enough to convince the Treasurer not to proceed.”
The Australian Financial Review reported on Friday (5 September) that anonymous sources revealed the government had paused its plans to introduce the $3 million super tax in its current form.
It continued that while no decisions had been made, internal discussions had been held in recent weeks as the Prime Minister’s office takes an increased interest in the policy.
Burgess said he believes one of the government’s key concerns is the timing of the determinations – specifically, when those impacted by the tax would need to report.
“Though this has been talked about before, the first round of determinations will be issued in 2027 which is in the lead-up to the next federal election, and we know that is a consideration,” he said.
“The government is obviously very concerned about the taxation of unrealised capital gains, and the unintended consequences that flow from that. I think the other thing is that the government is trying to position the Labor Party as pro-aspirational, and if it is genuine about that then you can’t get a better example of a tax on aspiration than this tax. It is completely at odds with what it’s trying to achieve in terms of encouraging innovation, productivity and aspiration so, there is little wonder there is growing opposition to this tax from within the Labor party ranks.”
He continued that a tax on unrealised capital gains in a sector, which is a key contributor to venture capital and funding for start-ups, would be detrimental for the government.
Burgess added that there have also been concerns expressed by large APRA funds that would have to change their processes and reporting obligations.
“We know that one of the implications of this tax is that funds will have to re-report balances for people that have defined benefit pensions, and it’s messy, costly, and as we keep arguing, there are other ways to go about achieving what the government is trying to achieve that don’t have these unintended consequences.”
The recent Economic Reform Roundtable focusing on productivity sparked another round of concerns as the tax was increasingly seen as anti-innovation and anti-aspirational.
“It’s very hard for the government to be arguing that it stands for innovation when it’s got a tax like this on the table. I think that’s probably what the backbench and Labor Party members are pointing out – that it’s completely inconsistent with the government’s policy positioning,” Burgess said.
“The other issue here is it’s becoming increasingly difficult for the government to start this from 1 July 2025, and that’s what we’ve been trying to argue as well. Obviously, we would prefer to see this tax scratched, but if that’s not possible this delay will hopefully give industry an opportunity to sit down with government and discuss alternatives, because we haven’t been given that opportunity.”
It was not surprising, he added, to see the rumours of delay surface now, given the legislation has not yet been listed for debate.
“You must wonder why that’s the case, given that the government has been saying it believes it had a mandate for this tax, but we haven’t seen it yet. That suggests that something’s going on behind the scenes.”
“We know the government hasn’t had discussions with the Greens, although it was confident it would be able to get their support, so it seems the biggest issue now is support from with its own party.”
Geoff Wilson, founder and director of Wilson Asset Management, who has been running a campaign against the tax, said it seems the Prime Minister is listening to the Australian public.
Wilson released three research papers on the tax highlighting its impact on productivity, innovation and lastly on the fallout it would have if instituted on various postcodes regarding future voting trends.
“I sent those research papers to all participants of the roundtable and a few of them came back to me with specific questions,” he said.
“There was quite a bit of discussion about the insanity of taxing unrealised gains. In our own proposal to the round table, we indicated our main proposal was just about taxing unrealised gains because of the impact it has on productivity.”
Wilson said that there is a “glimmer of hope” that “sanity will prevail”.
“It’s an insane tax and very negative for Australia’s productivity. To me, if what we’re hearing is true, then good on Anthony Albanese for standing up for sanity.”
I think he is only now hesitating as even his union affiliated super mates are casting doubts on it (indexation but most importantly the unrealised gains)
Oh Bruno ,
what an absurd sickening narrative.
Let’s talk about tax on contributions and tax on earnings each and every year for many years and tax on death and let’s recognize that salary sacrifice actually meant what it said that is workers were prepared to spend less in order to save for their retirement and let’s not forget about the savings for the country because they have no welfare or pension benefits for all the years of their life.
I know of many young doctors who became specialists many young solicitors who became Barristers and Judges and many young men and women who battled through a system where the odd are stacked against them to became very successful in their business employing many people.
Are these the people you are talking about???
Leran some facts and some respect!
Chalmers has shown himself to be a bully but just maybe there are more intelligent members in the Parliament who can see that this is a cash grab by Chalmers to prop up an extravagant budget. Chalmers may well be a university graduate but that is where it stops.
He has no runs on the” board of real life.”
Most would agree that taxing unrealised gains is “insane”, but still something needs to be done to reign in the “fat cats” abusing superannuation tax concessions that Div 296 is aimed at.
Super tax concessions come at a cost to all taxpayers. If your multi millions were invested outside of super, you would pay tax at personal rates up to 47%, which would be well spent on hospitals roads and bridges. Thats what the “fat cats” just cannot seem to grasp. They think not paying tax doesn’t affect anyone and paying tax only affects them.
Much of the contributions that went into your super were tax deductible. That tax concession cost the community up to 32 cents in every dollar (47%-15%).
We are happy that you can fund an independent retirement with our 32 cents, but it’s not open ended or to be abused.
A couple can retire on $4M, invested tax free, and draw a tax free pension. You can’t get a deal like that anywhere in the World.
The rest of us taxpayers should only fund a reasonable retirement for you, not an extravagant “fat cat” retirement lifestyle of the rich and famous!
Bruno, whenever I hear the term “fat cats” applied to self funded retirees, I know I’m not going to hear about taxpayers being spared having to provide a pension to someone.
As I built a super balance over the years I have paid millions and millions and millions of dollars in tax. But it just never seems to be enough apparently.
Perhaps I could suggest, respectfully, that the fact that 1 in 6 six year old boys are on the NDIS is a bigger financial issue for the nation than “fat cat” retirees will ever be.
I could make a long list of such issues, but space prohibits.
The biggest ‘cost’ to the budget is the interest payment on borrowings for a government that spends more than it collects…basic negligence, but we know they dont care because they will be gone before it catches up to them. Just keep importing grateful people and buying votes with money from more careful people
Yes, there has to be a (hard) limit on what can be held in super (in total, not just pension mode). The real question is what is that limit
Davo, I’ll go along with that so long as a change of that magnitude is grandfathered – as with the introduction of CGT in 1987.
To do otherwise is to expose law-abiding citizens to the paramount power of retrospective legislation – a power that should be reserved for the most demonstrable cases of loophole exploitation.
Hey Bruno – rest assured that your 32 cents in the dollar is not funding our independent retirement. We will have funded it ourselves with the taxes that we paid ourselves. We already pay more than half of all tax revenue, you see. Most other people pay no net tax.
BTW – most of us will continue to pay significant taxes until and even after we die. Its because of the fact that we are living off our investments after tax.
The inter-generational equity argument is just a smokescreen for Labor to help itself to the savings of previous generations who set aside part of their earnings in superannuation to fund their retirement. Wasps always attack the honeypot!
The worst aspect of the so-called reforms is taxing unrealised capital gains. Under current taxation law, accumulated equity accumulated over the lifetime of an investment is taxed at the point of sale, and not before.
This process means that the government can tax accumulated wealth with impunity, especially as they lack the financial acumen to actually index applicable thresholds, a process in which they are remarkably successful whenever when it goes the other way and they can generate more income e.g fuel tax excise adjusted every six months. The gross hypocrisy is breathtaking.
It is also abhorrent that the Albanese government and Chalmers in particular are framing this as a solution to intergenerational equity. That smacks of elder abuse considering that life savings were accrued over 40 years with a social contract from the government that these savings would be used by the owners to support them for upwards of 30 or 40 years without in many of these specific cases of the 80000, the government needing to further support these people in what should be their golden years.
Chalmers’ ensuing discussions on this (the conversation that he wanted to be had way back on February 2023) has had a deleterious effect on, in many cases, elderly people fretting about what was being introduced. Against all past government promises, this was a direct hit to an enclave of people that paid higher than current taxes for much of their working years, worked much longer hours (not the current 38 classified full-time hours), with far fewer entitlements (2 weeks annual leave, one week sick leave, no maternity or paternal or stress leave, no child care relief, etc etc), but the promise that their savings would be theirs for their own retirement.
Instead, the government has been intent on demoralising a small minority group of people that they targeted as weak protesters and insignificant (remember, Chalmers called us a “sliver” of people), non-Labor voters. Worse than that Chalmers engaged in not just a class warfare (which is bad enough given that he is supposed to be a leader), but a belligerent attempt to pit young Australians against a small defenceless group of ageing parents and grandparents.
And throughout this, Albanese mostly stood on the sidelines and allowed this to take place.
Shame on the Labor party and shame on their supporters of this dreadful and unfair, measure.
It is about time that Labor members started voicing their concern, not just for fear of losing their vote at the next election, but to stand up against this style of bullying tactics that we have been subjected to. And in many cases we have felt the need already to make deleterious decisions about our life’s savings, not to mention having cash funds essentially sitting in limbo, earning very little in these last 2.5 years.