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$3m super tax unlikely to pass before end of the year
The passage of the controversial $3 million super tax legislation seems unlikely before the end of the year, says the CEO of the SMSF Association.
Peter Burgess told SMSF Adviser that with the coalition yesterday reconfirming its opposition to this tax, the government appears to be “wedged between a rock and a hard place” in terms of garnering support for the legislation to pass through the Senate.
The bill is yet to be debated for a third time in the lower house after being dropped from the schedule twice.
“There is already a large backlog of bills in the Senate so once this bill is introduced, unless the government chooses to prioritise it over others, it’s looking increasingly unlikely it will be passed before the end of the calendar year,” Burgess said.
“The problem the government has is that the Senate crossbench does not support the taxation of unrealised capital gains, and without reverting to actual taxable earnings, which Treasury has so far ruled out, it is very difficult to avoid taxing unrealised capital gains.”
Based on discussions the association has already had with the crossbench, Burgess said he agrees with the shadow treasurer Angus Taylor who said there isn't a clear pathway to pass the bill.
Furthermore, he said that given recent discussions about changes to negative gearing, it is more important than ever the sector pushes back against the design of the $3 million super tax.
He said the SMSFA has previously stated taxing unrealised capital gains sets a dangerous precedent for future tax reform.
“It is not difficult to see how this approach could be applied to claw back perceived inequities in other areas of the tax system, including negative gearing. It could be one way the government tempers the tax benefits without amending the rules that underpin negative gearing,” he said.
On Monday, Taylor and shadow finance minister Jane Hume urged the government to scrap its plans to tax unrealised gains in superannuation.
In a statement sent to SMSF Adviser, Taylor said: “Labor’s changes to super are an unindexed, undemocratic wealth tax”.
“There is no pathway to pass this bill, yet it is propping up a budget where Labor’s decisions are costing $4 for every $1 of revenue,” the shadow treasurer said.
“Treasury modelling released under FOI showed that even a 20-year-old earning an average wage today will be captured by this wealth tax because of Labor’s refusal to index the measure.
“Under Labor’s plan, 2 million Australians under 25 will see taxes double on their retirement savings.”
This is an encouraging development. Essentially failing to proceed with this bill before the next election is the same as it being defeated on the floor. Fingers crossed that it just fades away. Top marks to you, Peter - whatever happens - as you have certainly been the main reason why we have progressed to this point.2- I refer to this comment in the article above: "without reverting to actual taxable earnings, which Treasury has so far ruled out, it is very difficult to avoid taxing unrealised capital gains.”
How is it difficult to avoid taxing unrealised capital gains just because Treasury needs income? It hasn't passed parliament, it doesn't have the support of the Senate (so far) and without it being passed Treasury is absolutely unable to tax unrealised capital gains.
It may be a desire of Treasury to implement these taxes, but that does not mean that it is a given.
The real issue is an over spend of tax revenue as pointed out by the Shadow Treasurer.
What irks me is that instead of spending within a budget, governments are forever dreaming up new taxes or increasing percentages of tax or not keeping thresholds within CPI or inflation limits. So, what happens is that the people (and mostly fewer, not more) are caught up in an ever increasing spiral of increased taxes completely out of sync with inflation.
Hello Treasury! Businesses are going broke on a daily basis in this country (over one thousand a week). Businesses and their owners are the life-blood of Australia, as without businesses, employees lose their jobs (oops - I forgot about the public service, forever increasing). So, the plan must be to just employ everyone in the government system? Use their personal taxes to feed back to the government and ultimately the government owns everything? When will they see that their strangle hold is taking the life out of the economy?
It is just fanciful to tax unrealised capital gains (taxing paper profits is stupid) and that is the primary why this government under Albanese with Chalmers as Treasurer cannot get this nonsensical tax through parliament. The key Senators opposed to this are not stupid and seemingly cannot be bribed for their vote, otherwise it would have passed by now.
Note to Treasury and Chalmers: stop the angst and stop the nonsense and find a better way to fund your overzealous spending which is sending this country broke.
No changes to superannuation they said in their promises in the lead up to the last election. Albanese is quoted as saying "My word is my bond". Trust these guys again? No way!2
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