Despite the prospect of the government getting the required number of Senate crossbenchers to vote in favour of the controversial tax change seeming unlikely, the Treasurer has refused to back down on Division 296.
Speaking on Sky News, Chalmers described the $3 million super tax as an effort to turn “very, very generous concessions for people with big super balances into slightly less generous concessions”.
“We remain committed to it,” the Treasurer said.
“The Senate has expressed a view on that on a couple of occasions, and we’ll keep working to implement it, because this is one of the ways that we fund the cost of living help or strengthening Medicare or the things that we want to see in our budget, in the most responsible way.
“We know that our political opponents are digging in for people who’ve got more than $3 million in super. They’re digging in for long lunches and bosses. We’re for cost of living help and strengthening Medicare, and we’ve got to pay for it somehow.”
Pushed on the concerns that stakeholders have raised and how realistic it is that the legislation passes the Senate, Chalmers insisted the government “did a heaps of consultation, and this was the best way to go about it”.
“Secondly, there are other parts of the superannuation system where unrealised gains are calculated. And thirdly, when it comes to some of the issues raised by farmers and others, it’s already the law that people are supposed to maintain an element of liquidity to be able to meet their tax obligations,” he said.
“And so we know that people have got a view about it, we engage respectfully with the Senate, we would like to pass those tax changes so that we can pay for our efforts to strengthen Medicare and provide cost of living help because we think that’s the most responsible way to go about it.”
Responding to the Treasurer’s comments, SMSF Association chief executive Peter Burgess said the claims relating to consultation with the industry were simply misleading.
“What the Treasurer described as ‘consultation’ was not genuine engagement but a procedural formality,” Burgess said.
“It started with a fixed proposal to tax unrealised gains and not index the cap, and there was no deviation from these positions – despite compelling evidence of its potential deleterious impact on the wider economy.
“The absence of significant adjustments or receptivity to alternative views indicates that the consultation was merely a process to endorse a pre-decided policy position instead of a genuine effort to consider other views.”
Indeed, the government was criticised when the draft legislation consultation was originally announced in October 2023 because it provided just two weeks for stakeholders to provide their views.
Chalmers’ assertion that the $3 million super tax would not be the only part of the superannuation system where unrealised gains were calculated also came under fire as conflating two distinct approaches.
“In some parts of the superannuation system deemed income rates are applied which differ fundamentally from taxing unrealised capital gains,” Burgess explained.
“By drawing a parallel between these distinct approaches, the statement confuses the public about prevailing financial practices within the system and how capital gains are conventionally treated and taxed, thus undermining trust in the system’s fairness and transparency.”
Responding to the Treasurer’s final claim around SMSFs being required to maintain liquidity in their funds to meet their tax obligations, Burgess said this is also “ambiguous”.
“While it is standard for laws to require liquidity to meet existing tax liabilities, the new policy introduces a liquidity demand far beyond what anyone could anticipate or plan for,” he said.
“By imposing taxes on unrealised gains, the policy compels asset holders to ensure liquidity levels that might necessitate the premature sale of assets – a requirement out of step with traditional practices where taxes are only imposed upon the realisation of a capital gain.
“The abrupt and severe nature of these demands can disrupt financial planning across various sectors, placing undue strain on individuals and businesses unprepared for such drastic measures.”
Speaking with SMSF Adviser on Wednesday night, shadow treasurer Angus Taylor affirmed recent comments from Jane Hume that a Coalition government would repeal the tax should it pass before the election.
“We are implacably opposed to that policy. Taxing unrealised capital gains, having the thresholds unindexed, this is bad policy,” Taylor told SMSF Adviser.
“For Australians who have self-managed super funds to have to sell their assets to pay tax is just wrong. It’s completely unacceptable. We are not only opposed to it, we intend to repeal it.”
It wasn’ consultation process it was totally what was said in the article. A sham with a foregone conclusion. Like sir Humphrey Appleby said in yes minister. Never hold an enquiry unless you already know the answer.
The creation and unity of JAWG should have been cause for concern and consideration. But no.
This bubbling government which is all talk and no substance or brains has yes minister and vested interests all over them.
As Kym says I don’t think anyone opposes the tax yet chalmers resorts back to divisive rhetoric regarding Medicare.
Bring in the tax, just do it fairly.
If the union funds can’t or won’t afford the IT spend to go to member income then allow the trustee to elect the methodology like the segregated/non segregated method.
Seriously how many union fund accounts (other than union bosses) are over $3m anyway??
Such a massive stretch of the truth by Chalmers.
But to sum up, Labor is now so desperate to spend our superannuation savings that it is determined to pass a tax on PAPER profits (yes, correct), with little to no opportunity of ever recouping any overpaid new tax amounting to well in excess of personal rates of income tax.
Truly, has it come to this?
Hands off Chalmers. This is not your money to waste but ours to fund our retirement, accumulated from our blood, sweat and tears over decades of our working life.
Are you really that desperate? If so, God help all of us that it has come to this.
This rings of communism.
Liar! Liar! Liar! And you know it, Chalmers!
Firstly – “did a heaps of consultation, and this was the best way to go about it” – rushed consultation windows that were largely ignored by Treasury and yourself (including feedback by well-respected organisations) especially on the most egregious issues.
“Secondly, there are other parts of the superannuation system where unrealised gains are calculated.” This is a very, very long stretch of the truth for entirely unrelated types of “capital” gains.
And thirdly, when it comes to some of the issues raised by farmers and others, it’s already the law that people are supposed to maintain an element of liquidity to be able to meet their tax obligations” – No one could have anticipated EVER have to pay in some case upwards of 70% tax on PAPER profits, potentially more, annually, with no reimbursement for overpaid taxes, potentially EVER! I personally will be forced to sell income-producing assets far sooner than planned over the life-time of my SMSF, as the liquidity that I have (over 10%) will rapidly evaporate, especially once I start drawing down a pension from my fund.
Clearly Chalmers, you know the serious issues and clearly you do not care. This is worse than lying.
Not only deliberately being deceitful but showing a gross disdain and disregard for hard-working, aspirational Australians who you are very happy and willing to punish for their sacrifice and tax contributions, far in excess already I will add, of most Australian tax payers.
Shame on you Chalmers.
Tip for the government – spend less on the war in Ukraine and focus a bit more on issues in your own back yard. And maybe give the $50 billion submarines a miss as well.
Shouldn’t you have included no funds for UNWRA as well?
It was only after the APRA Fund sector was consulted that the rest of us had a chance. But as Peter said, it was a process, not designed to deliver an outcome. Just box ticking. Treasury wanted the design to be sector neutral, (albeit that is akin to the square hole and round box argument) so didn’t want to adjust the formula. That is OK, theoretically, it is a reasonable approach however, there needed to be the addition of Regulations for SMSFs to report taxable income per member. The defined benefit schemes were afforded regulations which will see them incurring Actuarial assessment fees YOY and it wouldn’t have been too much of a stretch for SMSFs to have the option to report differently at their own expense. The jewel in the crown (APRA Funds) would have been happy – the fundamental formula remained and their workload and tech spend wasn’t too impacted. SMSFs are accounted for like a family trust which involves the preparation of financials YOY. The member reports identify all the elements that make of the 30 June balance so data extraction is not too difficult. I have not once heard the Assistant Minister acknowledge the sector is not railing against the tax, just the calculation methodology. He needs to get across this issue and resolve it satisfactorily instead of using emotive, political language in media interviews. He has never demonstrated competency in this portfolio.
If the Treasurer is being accurately quoted in context here (and I assume he is), these comments are just … breathtakingly outrageous. On what planet do you say it’s reasonable to expect people can maintain liquidity to pay tax on unrealised gains? And how does being against this tax mean you’re automatically “digging in for people who have more than $3m in super” or “long lunches and bosses”.