In its submission to Treasury’s inquiry into the combined Bills, the SMSFA said the changes have been rushed and rely too heavily upon regulations.
It noted that legislative drafting errors and deficiencies in the policy design identified during the consultation process remain in the Bills tabled, despite these issues being raised with Treasury through both direct engagement and the formal consultation processes.
“Further, elements of the proposed measures are heavily reliant upon regulations. Those regulations have not been made available at any stage of the consultation process and are yet to be released for consultation,” the submission stated.
This omission, the SMSFA said, affects the ability of both the association and the Parliament to fully consider all elements of the proposed measures including how they will impact government and other defined benefit pension schemes.
The SMSFA said the draft amendments are counter to both horizontal and vertical tax equity principles and could result in a member who has a total super balance of $50 million paying no tax, despite the fund earning taxable earnings per existing tax law, while a member with a total super balance of $3.5 million, who may have no taxable income under the existing tax law, still be liable for taxation under Division 296.
The submission continued that it is “greatly concerning that the introduction of such deep inequities are being considered for inclusion in the Australian taxation system” and reiterated there is a risk that if legislated, this policy will provide a precedent and result in the broader taxation of unrealised gains from other personal investments such as rental property investments.
The SMSFA claimed that representations made by Treasury that the taxation of unrealised gains is already a feature of the country’s tax system are misleading, citing the only example within the Australian taxation system of this is the taxation of capital gains where an individual or a company ceases to be an Australian tax resident.
The SMSFA said when the government first began talking about the $3 million super tax, it said it would affect only a small number of individuals with balances exceeding $50 million and $100 million, even though those individuals had complied with the laws at the time and had “invested in good faith” encouraged by previous governments.
It said despite the originally stated objective, the proposed threshold has shifted from $100 million to $3 million, and combined with a proposal that captures unrealised capital gains, reframes the policy position from one that targets ultra-high-net-worth individuals, to one that starts to capture middle Australia, small business owners and farmers, and has very different policy intentions and outcomes.
With inflation and increasing wages, the SMSFA said the lack of indexation in the proposed bills will impact many more ordinary Australians as it does not consider home ownership status, the combined balances of a couple or the level of wealth held outside of super.
“Of deep concern is that despite being raised previously, the measure will impact some who suffer a total and permanent disability event,” it said.
The role that super savings play in providing security in retirement should not be overlooked, the submission said, and the inclusion of unrealised gains in the measurement of earnings is not representative of actual taxable earnings within the super fund.
Finally, the SMSFA stated that an alternative measurement of earnings that reduces uncertainty and the severity of including unrealised capital gains is needed as a matter of priority.
“We therefore strongly encourage the government to cease the progress of the proposed amendments and instead continue to engage with stakeholders and industry to ensure that the resulting policy and legislation delivers the right outcomes, which are fair and equitable.”
It beggars belief that this legislation has gone as far as it has through the parliament. I am glad that I am not the only person who sees this as a Socialist (or even Communist) agenda. The authorities have almost completely ignored very well-respected organisations and are just intent on getting this through basically as it was proposed in Feb last year.
There are huge issues with this, but because of the use of the word “Earnings” as opposed to “Taxable Income” they have created smoke and mirrors to blind-side the Australian people. This is not just a “mere” doubling of taxation for the “rich” – in many cases it is far worse than that, annually. And many superannuants will be paying far higher rates of tax in super than they do outside of super. I know as I will be one of them. I urge everyone to put their figures through the calculations. If you are over the threshold and have any unrealised capital earnings, you will likely be paying significantly more than a mere doubling of the current 15%. And then you still have to pay CGT. There is double taxation all over this legislation, and to bring in the so-called “Better Targeted Superannuation Concessions” is a sham when so many affected superannuants will not only not get any superannuation concession, they will actually lose their concession altogether and possibly pay more in super than outside of super.
Anyone who thinks this Government is fit for office need only look at the blatant defects in this abhorrent legislation (repeatedly raised by experts and ignored by Canberra) to see that it is not. It is hard to believe that the Albo Circus has been in power less than two years yet has broken so many promises and wrought so much damage on the aspirations of middle Australians. We are living under a (closet) Socialist regime and our children and grandchildren will pay the price.
How very true. Seldom has the name of a Bill so grossly misrepresented its content. It started with a sham consultation period. A bit over the top, I know, but it was a bit like the government deciding to build a nuclear reactor to lower electricity costs and announcing the site, design and technology but, realising that such a decision would be questioned if it did not involve a process of consultation, provided a couple of weeks for all the best minds in the sector to comment on specific items of concern namely, how big should the car park be and what colour should we paint the building. In short, the consultation was, almost totally, to fulfil a procedural obligation. That the governent paid little attention to the submissions was clearly evident when they even ignored the obvious drafting error which excluded members that died in a financial year from being subject to the tax for that year – provided they did not die on the 30th of June.