The Coalition threw a grab bag of Division 296 questions at the Labor government during the first question time of the new Parliament, querying everything from the impact of the tax on farmers to whether the PM would rule out taxing unrealised gains in other structures and if the Treasurer stands by previous estimates on the amount of Australians set to be impacted.
However, Prime Minister Anthony Albanese highlighted the apparent futility of the opposition’s super tax focus.
Responding to Deputy Leader Ted O’Brien’s question on whether the government would go any further with the taxation of unrealised gains than the proposed super tax, Albanese offered a “big tip”, telling the shadow treasurer that the “time to run a scare campaign is just before an election, not after one”.
While the PM didn’t directly answer the question or unequivocally rule out imposing a similar tax on assets held in different structures, the response is a clear indication Labor doesn’t view the public discourse on Div 296 as damaging.
Taking a different line of attack, returned member for Goldstein Tim Wilson probed Treasurer Jim Chalmers on the number of Australians that would be hit with a bill thanks to “Labor’s unfair super tax on unrealised capital gains”, asking if he stood by initial estimates of 80,000 people being impacted.
“I didn’t describe it the way that the honourable member has said. That’s the first point,” said Chalmers of the estimate he gave in February 2023,” Chalmers said.
“Second point is that when we announced the policy, the expectation was that there would be about 0.5 per cent of people in the superannuation system impacted by what is a very modest change in terms of the impact on individuals.”
FSC modelling has put the number of currently working Australians that would be captured in the $3 million super tax under Labor’s proposed settings would be around 500,000, assuming there is no indexation.
Sticking to the message he has been rolling out since the election victory in May, the Treasurer stressed even those being slugged with the extra tax would still receive “very generous tax concessions in superannuation, but it will be slightly less generous”.
“For example, someone with $3 million, instead of getting a $14,000 tax break, they’ll get a $13,000 tax break for their investment. So, it continues to be concessional,” he said.
Farmers should be diversified
Div 296 questions were not, however, limited to the Liberal cohort of the Coalition, with Nationals leader David Littleproud calling for new Assistant Treasurer Daniel Mulino to “clarify” how the unrealised gains tax would operate for a farmer who holds their farm in an SMSF but has had a “failed season with no income”.
Reiterating another core message that Labor has pushed in relation to Div 296, Mulino stressed that superannuation exists in Australia for the purpose of “providing dignity and certainty in retirement”.
“It is going to be a reform that applies only to balances of $3 million or more, balances which are well above what is needed for people to achieve dignity and certainty in retirement,” Mulino said.
Answering Littleproud’s question more directly, the Financial Services Minister said farmers have the same obligations for their SMSFs as every other super fund.
“It is important that all superannuation funds have a design so as to take account of diversification requirements and liquidity requirements. That is an obligation under the current law on all superannuation funds. So, that is something very important to bear in mind,” Mulino said.
“It is important also to bear in mind that if an SMSF has a farm or a business within the fund, that it should be receiving commercial arm’s length payment from that business or from that farm.”
However, the Nationals had more farm-related questions for Mulino, with the party’s deputy leader Kevin Hogan seeking a number for how many farmers and small and family businesses the tax would impact.
“What I can confirm is that the total number of members who will be affected, as the Treasurer has confirmed, is roughly in the order of 80,000,” Mulino said.
“I think when it comes to drilling down into smaller categories than that, it is difficult to ascribe a particular number to a particular type of business, but what I can say is the overall number of funds affected by this is in the order of half a per cent across both defined contribution and defined benefit across the entire category of all members, and that is a very small fraction.”
According to Australian National University research released earlier this month, there are around 2,368 farmers that fall under the large superannuation balance holders cohort, making up just 2.7 per cent of the group.
Ultimately, the Coalition throwing out a greatest hits of criticisms during question time isn’t going to keep the $3 million super tax from being legislated.
That’s all down to how willing the Greens are to negotiate in the Senate.
This is a straight out LIE from our Treasurer and our government.
Chalmers states in parliament (under parliamentary privilege) “For example, someone with $3 million, instead of getting a $14,000 tax break, they’ll get a $13,000 tax break for their investment. So, it continues to be concessional”.
So if they are collecting just $1000 extra from the 80,000 sliver of people that he calls us, that adds up to only $80,000. But why then are they saying that it will collect a “modest” $2b from those 80,000, as the start mibd you? That’s more like $25,000 a year each in the first year alone. Where does he get off blatantly lying like that?
Can someone please explain?
I’m just a teeny bit confused…
Does “dignified” mean that Mr Albanese will have his pension adjusted down to represent a $3M super balance with a deemed derived income.?
Does “certainty” mean that we, the normal people, will enjoy a government guarantee on our super like politicians and bureaucrats do.?
Don’t worry, purely rhetorical questions, no answers needed.
When you design a new tax like Division 296 on the back of a napkin at a boozy Canberra lunch, it’s likely to have some holes in it.
The Treasurer has a PHD in political science and is a career politician. It’s no wonder the poor bloke didn’t know he was taxing unrealised gains. He’s not an accountant.
I have had politicians as SMSF clients and they are babes in the woods when it comes to taxation and even mathematics. That’s not necessarily a slight, because as taxpayers we pay handsomely for Treasury experts to advise them properly. The bureaucrats have dropped the ball on this one, big time.
It was no doubt an easy way out to levy a tax on super balances. Large funds supply all that data quarterly, and SMSFs once a year. Im sure IT boffins in Treasury/ATO with no tax expertise were overly influential.
But the Government is so far down the rabbit hole on this one, they seem unable to see a way back, without major embarrassment.
The goal here is that you superannuate yourself to a level of income in retirement of the average person, not the level of your income to which you are accustomed. Super tax concessions are funded by all of us as taxpayers.
We already have reasonableness caps on pensions. Why not a reasonable cap on accumulation then no contributions permitted or SGC required after reaching those goals, and leave it at that?
Chalmers states in parliament (under parliamentary privilege) “For example, someone with $3 million, instead of getting a $14,000 tax break, they’ll get a $13,000 tax break for their investment. So, it continues to be concessional”. WHAT AN ABSOLUTE LIE to the people of Australia.
This proposal will have affected both myself and my partner to the tune of more than 3 to 5 times what we presently pay of 15%, depending on the unrealised gains for that year. The only reason we are in this situation is because of constantly increasing capital gains, beyond anything we had envisioned when we first invested in commercial properties – very lumpy assets but with good rental income, CPI linked, envisioned to be a “pension” for us both when we were ready to retire.
This man just continues to lie to our faces. He has no integrity. And too many unassuming and trusting Australian voters just take these people at their word. It is so very wrong.
Where is Fact Checker on this? Fact Checker twisted the truth with the past taxing of unrealised capital gains in Australia and had it broadcast by news agencies that Liberal MPs had lied to the public. Seriously, Labor has these people in their pockets too.