“The government’s narrow focus is blind to the vital connections between superannuants, small business owners, primary producers, and angel investors. This oversight is already destabilising the SMSF sector and threatens to disrupt the delicate balance of our economic ecosystem.”

Burgess also pointed to the findings of the Productivity Commission's 2018 inquiry report, Superannuation: Assessing Efficiency and Competitiveness, which emphasised the need for greater competition in the superannuation sector to drive better outcomes for members and the important role played by the SMSF sector.

“The government is actively undermining competition by hitting SMSFs — one of the few genuinely competitive parts of the superannuation market — with a tax designed to accommodate large superannuation funds,” he said.

He emphasised that a defining feature of Australia’s superannuation system is its flexibility and said business owners and primary producers have long held their business premises or farmland in SMSFs — around $100 billion worth.

He noted the sector has also been a cornerstone for employment, investment, and innovation.

“That cash flow is the lifeblood of small businesses and primary producers. We estimate around 17,000 SMSFs own business premises — mostly family businesses and primary producers — who will be hit hard by this tax,” Burgess said.

“Industry research estimates that if this tax had been in place during the 2023 financial year, the average additional tax payable by these superannuants would have been $50,000. That’s not a modest impost for a family business or a primary producer.”

He also warned that early-stage funding projects in healthcare, IT, ag-tech, AI, and biomedical research would pay a heavy price.

“To be taxed on an unrealised capital gain — potentially years from being realised, if at all — will dry up this critical source of capital,” he said.

Burgess criticised Treasury’s impact analysis for ignoring the hit to private and unlisted equities, which make up 14 per cent of SMSF assets — about $150 billion.

“To say this void will simply be filled by others is misguided and commercially unrealistic,” he said.

“The Productivity Commission has been clear: competition drives better outcomes in superannuation. This tax does the opposite. It punishes SMSFs, stifles innovation, and consolidates market power in the hands of large superannuation funds. If the government is serious about fostering competition, aspiration and fairness, it needs to rethink this policy.”