Div 296 unlikely to enter parliament in first sitting fortnight

While the first sitting day of the 48th parliament was largely ceremonial, the rest of the opening fortnight of sitting days is unlikely to deliver clarity over the proposed Division 296 tax.

Quickly becoming a hotly contested mainstream talking point following Labor’s victory in May, the tax change continues to sit in limbo, despite its path to legislation becoming far more straightforward in the Senate, with Labor no longer needing to bank on crossbench support.

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However, the Greens appear to be sticking to their guns on wanting to lower the threshold to $2 million but including indexation, while Treasurer Jim Chalmers and Labor refuse to negotiate.

SMSF Adviser understands the stand off has severely reduced any possibility of the bill re-entering parliament during July, pushing the earliest date for its introduction to the last week of August.

Speaking to the ABC on Monday night, Finance Minister Katy Gallagher said there were still discussions underway to secure support for the legislation.

“We’ve got our legislation that we’re putting in that the PM said was our priority. The Treasurer has, you know, discussions to continue with other parties. We don’t have, and we didn’t have, majority through the Senate for that piece of legislation, so there’s a little bit more to do there,” Minister Gallagher said.

She added: “We have to get the numbers, we have to get the numbers to get the bill through. We didn’t have that in the last Parliament.”

Agreeing that the Greens are the most likely path to securing its passage through the Senate, Gallagher said “the Treasurer is going to have those discussions with the Greens”, but Labor isn’t taking an “our way or the highway” mentality.

“I don’t know that it’s ever been our way or the highway, because that attitude in the Senate doesn’t seem to serve anyone very well,” she said.

“We, as always, in a minority chamber you’ve got to, you’ve got to talk with others. And you know, I know the Treasurer will be doing just that, but we need to get the numbers.”

Neither party has indicated a desire to move off its position, despite months of discussions and an increasingly retrospective start date of 1 July 2025.

In June, economic justice spokesperson senator Nick McKim said the Greens looked forward to working with the Treasurer to make sure that the proposed tax on the superannuation accounts of the wealthiest Australians is “as strong and fair as it can be”.

“Over time, Australia’s superannuation system has become less about providing a dignified retirement for working people, and more of a vehicle for wealth accumulation. This needs to change,” McKim said.

“The Greens want to ensure that very wealthy Australians pay their fair share of tax, so that governments can do more to support people who need it.”

However, Chalmers has consistently maintained that Labor’s intention is to “legislate the package that we proposed more than two years ago”.

“The unrealised capital gains calculation was recommended to us by Treasury. We provided years of opportunities for people to suggest different ways to calculate that liability, and nobody has been able to come up with one, and so that’s an important bit of perspective,” he said last month.

“Now, when it comes to the issue more broadly, this is a change which is modest. It is methodical, as I said, it’s been on the books for years now, and it makes a meaningful difference to the budget, and it helps us fund some of our other priorities.”