Shelley Banton, head of technical for ASF Audits, told SMSF Adviser there has been a lot of discussion within the industry regarding the proposed tax, which is part of the Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023.
The bill, which is still languishing in the House of Representatives ahead of its third reading, has been indefinitely delayed following sharp criticism from industry associations and crossbench MPs who are calling for amendments to the proposed taxing of unrealised gains and the lack of indexation that form part of the draft legislation.
Banton said that although the proposed Div 296 tax on total super balances of more than $3 million won’t directly affect the audit process, there is concern that trustees will be looking at valuations and valuation methods that could help mitigate the tax impost, which may not pass the scrutiny of the Australian Taxation Office (ATO).
“The proposed Div 296 tax won’t have too much effect from an auditing perspective, but it is foreseeable that we may see those funds on either side of that $ 3 million mark focusing a lot more on market valuations,” she said.
“What we don’t want to see is trustees looking for different valuation methods each year to try and get a different outcome.”
Although earlier this year, the ATO emphasised that it would be scrutinising market valuations more closely, Banton said the regulator has always had a focus on this.
“We have seen several guidelines come out [on market valuations] that have been revised or updated over the last few years before Div 296 was on the cards, but now, with the impending Div 296 tax, there will be a lot more scrutiny,” she said.
She continued that there is discussion within the SMSF and superannuation sector around whether the government may hold an early election and whether the controversial bill will be back on the table beforehand.
“We are all trying to understand [how this tax] will work. It is an unfair, inequitable, and difficult tax and is unprecedented in terms of trying to apply it to the Australian taxation framework,” she said.
“I don’t think that anyone in the industry believes funds with higher balances shouldn’t pay their fair share of tax, but there is concern over how the government is trying to apply this tax. Is it the thin edge of wedge, and will it flow to other areas of super, or could it lead to residential properties being also taxed on unrealised gains?”
Shelly
If the tax on income is 15% – those who have higher balance will most likely have more income and will pay more tax
What you are suggesting is a marginal tax rate in super – more income will have a higher tax rate
This is a quick fix – but the government wants to tax growth – or higher valuation
At street level – no two Valuers will agree to one valuation for a commercial property and will find ways to justify their figure
And some valuations will be complex and expensive
some may suggest that It will be better to ban BUsiness use property in SMSF to avoid all confusions
At the end of the day we all know that members with higher balances are resourceful and will avoid paying more than others – lower balance members
Lastly, bring in auditors who are scared to lose their licence to pass judgement on valuations
Best is – why change for few – unless you are hell bound to lose the election !