Around two-and-a-half years after the federal government first announced plans to place an additional 15 per cent tax on super balances above $3 million, and nearing two months since passing the supposed start date, Division 296 is still not law.
There is no word yet on whether it will be introduced when parliament reconvenes next week, however, should the measure go ahead as planned, many advisers will need to wrap their heads around the rules and help clients plan.
According to the latest ifa poll, 61.7 per cent of financial advisers have clients who will be caught under the tax, with 17.4 per cent of respondents saying they have lots of clients and 44.3 per cent having a few.
Collating responses from 357 financial advisers, the poll found 3.4 per cent are unsure whether any clients will be impacted at this stage, a further 9.8 per cent have some clients that are close, and 25.2 per cent stated no clients will meet the threshold.
Stagnating in the Senate ahead of the federal election as Labor failed to secure support, the landslide victory in May appeared to give the measure a green light.
A diminished crossbench has left Labor able to push through any measures it wishes with the support of the Greens – seemingly a slam dunk given their lack of opposition to Division 296.
However, an upswing in mainstream opposition to the new tax and its inclusion of unrealised gains in the calculation has thrown a spanner in the works, while the Greens are now pushing for a modified version that would reduce the threshold to $2 million but include indexation.
Despite getting further away from the 1 July 2025 start date, which it seems is set to stay, the government left the bill off the agenda for the first sitting fortnight of parliament at the end of July.
Regardless of whether Division 296 lands in parliament in August or some later date, there has been little indication that the government is seriously considering changing its mind on taxing unrealised gains.
During the first question time of the new Parliament, the Coalition threw a grab bag of Division 296 questions at Labor, querying everything from the impact of the tax on farmers to whether the PM would rule out taxing unrealised gains in other structures and if the Treasurer stands by previous estimates on the number of Australians set to be impacted.
However, Prime Minister Anthony Albanese highlighted the apparent futility of the opposition’s super tax focus.
Responding to deputy leader Ted O’Brien’s question on whether the government would go any further with the taxation of unrealised gains than the proposed super tax, Prime Minister Albanese offered a “big tip”, telling the shadow treasurer that the “time to run a scare campaign is just before an election, not after one”.
FSC modelling has put the number of currently working Australians who would be captured by the $3 million super tax under Labor’s proposed settings at around 500,000, assuming no indexation.
