The draft schedule, released Friday, does not include the controversial legislation that contains the $3 million super tax.
SMSF Association CEO, Peter Burgess, told SMSF Adviser that if the bill is not passed before the end of this calendar year, the government would have another looming problem: the short amount of time super fund members would have to restructure their super interests.
“This will be particularly important for members with legacy pensions as we don’t expect the legacy pension amnesty regulations to be tabled until after the Better Targeted Super Concessions Bill has been passed,” Burgess said.
“Allocations from fund reserves, which typically occur when a legacy pension is commuted, will be counted as earnings for Division 296 tax, so it’s critically important these members are given sufficient time to consider their options, and take the appropriate action, before this proposed tax takes effect.”
There has been growing opposition to the bill, which was passed through the lower house last month.
On 9 October, Member for North Sydney Kylea Tink introduced an amendment calling for the $3 million cap to be indexed, which was defeated 52-9.
“The lack of indexation is out of step with current accepted tax principles, with most other elements of our super system being indexed from contribution limits to the transfer balance cap and lump sum benefits,” Tink said.
“Leaving the cap at $3 million without indexing it will mean people in my generation will have an entirely different and relatively higher threshold to that of my children, with the real value of the threshold likely falling to $2 million due to inflation by around 2040.”
Aaron Dunn, Smarter SMSF CEO, said the government needs 39 seats to pass the bill in its current form in the Senate, and currently only has 25, so would need the support of the Greens to give them 11 seats and three of the six independents, which include Jacqui Lambie, One Nation and the United Australia Party.
He said it was these crossbenchers whom the SMSFA and other industry bodies had been lobbying.
“Most in the minor parties would side with the Opposition and it then becomes a discussion and debate with the independent senators on whether they agree with the bill in its current form,” Dunn said.
Burgess added that without amendments being made, there is no clear pathway for the bill to be passed.
“We are continuing to liaise with the senate crossbench to ensure all the unintended consequences and unfairness of taxing unrealised capital gains is well understood,” Burgess said.
Surely it would be possible to set up a “group letter” to Greens and Independents and circulate it via FaceBook and Advertising for people to add their name as as set out in the Electoral Roll to avoid false names and multiple entries. Unfortunately I am an “IT Dinosaur” and lack the knowledge “How To”!!
Wells said Kym. It is the taxation of paper profits that is the most egregious part of this tax, concocted only to help the APRA funds. And to not ever refund this is pure theft. Can you imagine though… the government would have spent it and would have a massive black hole to pay it back? This could easily occur following a crash. Stupid, stupid, stupid.
And Peter, thank you for keeping up the good fight! Those words are not early enough but thank you none-the-less.
Rather than get any concessions on the design of this new law, what I think the focus should be is in driving for specific Regulations to accommodate SMSFs. The defined benefit interests were given Regulations so it isn’t beyond the pale that another “sector” in this industry could have specific considerations. The only sector currently accommodated is the APRA fund members and they have the least member cohort impacted. Focusing in on the lack of indexation is missing the main issue which is the the taxing of unrealised gains. The taxing of paper gains is set to (significantly) impact current members probably as soon as the 2nd year in and thereafter. Indexation is an issue, but that battle could be fought in the future. I know that once implemented, the lack of indexation is hard to shift but if you had to choose on what is the main ask here – it has to be the removal of the taxing of unrealised gains. As Voltaire reminded us “don’t let perfect be the enemy of the good”.
Perhaps divide and conquer would be a better approach. If some of the independents are convinced to oppose the bill due to lack of indexation and others convinced to oppose the unrealised gains the government will never be able to amend the bill to get the act passed.