In a joint statement, the SMSFA, the Council of Small Business Organisations Australia (COSBOA), National Farmers’ Federation, and the Family Business Association have said plans to tax paper gains are tantamount to “confiscation” and “punish aspiration, destroys liquidity, and turns volatile market movements into tax bills”.
“The absurdity of taxing paper gains is laid bare with the recent turmoil in investment markets. It shows just how easy it is for a paper gain in one period to be wiped out in the next, leaving the investor with a tax bill for an investment gain they never received,” the statement read.
“While both major parties have ruled out changes to negative gearing – recognising the political and economic damage such a policy would cause – no such commitment has been made on taxing unrealised capital gains.”
It continued that as the Division 296 is still a threat, if it is passed it will set a “dangerous precedent”.
“Once taxing unrealised gains becomes embedded in superannuation, it opens the door to expansion across the entire tax system. Once you cross the line and start taxing gains that haven’t been realised, the entire tax system is up for grabs.”
With a hung parliament also on the cards, the risk is heightened as the government will have to rely on the Greens, who have announced they want to lower the $3 million super threshold on which Div 296 would be triggered to $2 million. The Greens have also called for a limit on the ability of SMSFs to borrow to invest in property.
“International precedent is damning. Attempts to introduce similar taxes in the United States were scrapped after facing fierce economic and legal backlash. Experts agree such taxes are unworkable, unfair, and damaging to investment, innovation, and long-term growth,” the statement read.
“Australia has a proud history of rewarding effort, enterprise, and prudent investment. A tax on unrealised gains turns that on its head. It punishes people not for what they’ve earned, but for what they might earn – and that’s a road no country should go down.”
Shadow treasurer Angus Taylor strongly reiterated the Coalition’s opposition to the $3 million super tax in Momentum Media’s Election 2025 event last week.
He said the Coalition has not softened its stance on the Division 296 tax on assets above $3 million within super, confirming he is “100 per cent dead against it”.
“I can absolutely assure you it will not go into place if I am the Treasurer of this nation, if we have a Dutton-led national government, we are dead against it.”
“I mean taxing unrealised capital gains, give me a break. They are unrealised, that’s the point. So, how do you pay tax on an unrealised gain? You realise it. Well, these are small businesses. I mean, seriously, it wasn’t thought through. It wasn’t thought through.”
He said Div 296 “will not be part of our costings.”
We deserve an answer on whether or not Chalmers and the Labor party intend to try to get this through if they win this time around. Last time though they said that there would be no change to superannuation and also no increases in taxation. This Division 296 showed both statements up as lies. Not to mention the increase in personal taxes for many with the changed Stage 3 tax cut legislation which had already passed parliament prior to Labor forming government. That was another blatant lie which they even still advertise and spruik about in their debates and advertisements to the Australian people. It truly beggars belief how blatant they are with their lies. I am sorry to bring this up here, but these lies are undeniable.
But back to Div 296. In the Treasurers’ debate held recently, Chalmers was asked point blank if he still intended to bring it in (he had previously stated that for him it was “unfinished business”) but he just stared at Taylor and refused to answer. Media have asked him since the election was called and he makes no comment.
My previous local MP is on a razor thin margin for what has always been a very safe Labor seat. Over the years, the Labor vote has dwindled to now be a marginal seat. I was hoping to be part of history in seeing Labor unseated as we get nothing from anyone because it is such a strong Labor seat. Sadly, boundaries have changed and I will be under a new Labor MP. I have written to him asking if this is still part of the Labor party policy – I am awaiting a reply but because its so close to election, I probably won’t get a reply in time. Perhaps we have to pressure the Labor MPs individually for them to pressure from within, as the party always votes in a block (or did until Payman had to follow her conscience).
I saw this in the AFR this morning: ““Let’s be clear: taxing someone on paper gains they haven’t received a cent from is not reform – it’s confiscation,” the industry coalition said in a joint statement.” Hear! Hear!
Thank you again for keeping up the fight.
“Demand..”.?
I’m sure Messrs Bandt, Chalmers and Albanese will immediately take heed of the demand.
Not.
But, they remain in the ALP costings – forward estimates. The most recent showbag of give-aways means that there will be more demands on the already pressed Budget. It is a very good point re current market volatility. My suggestion would be for the coalition of industry groups named here to pull together the data to show, how, in practice the taxing of paper gains can work in practice. Even if limited to ASX movements. A start point of even 12 months ago mocking up Div 296 and then bring-forward to the current which are likely to reveal Div 296 carried forward losses and see where the extrapolation takes the usage of those losses. If you throw in the sequencing risk for retirees, it could be they had a big Div 296 tax when times were good and now have unusable losses. Crazy stuff. I think the lifecycle taxing identification posed yesterday by Naz also needs greater amplification. Super is not taxed at 15%. It is taxed on the way in, whilst there and, often at death. Higher income earners pay 30% for entry tax. It seems that Treasury may have thought that Div 293 works well, lets add to the Tax Act and try for an additional 15% somewhere else on the system rather than just thinking through the potential to design some form of exit taxing that exited before Peter Costello had a brain lapse and removed it 18 odd years back. Super doesn’t need a new tax, just work with the system so that the Treasury aim of “sector neutrality” can be achieved.