Speaking on Sky News, David Pearl said he was not shocked by the government’s plan to push through the controversial $3 million super tax legislation as soon as possible.
With Parliament due to return on 22 July, the tax bill is likely to be one of the first pieces of legislation tabled and only needs support from the Greens to now pass the Senate.
New Greens leader Larissa Waters indicated that the party would support the tax, although it would be seeking to lower the threshold from $3 million to $2 million.
Waters stated in an interview with The Australian newspaper that she sees “no difficulty” with the taxing of unrealised capital gains but would like to see the threshold lowered to capture more than the 0.5 per cent of taxpayers the government claims would be impacted by the $3 million threshold.
Pearl, however, said he believes the government has “misread” the election result and that its win was due to a combination of factors, including voters’ reluctance to “toss out” one-term governments, the “Trump effect” and a poorly run opposition campaign.
“I’m surprised that Jim Chalmers and Anthony Albanese haven’t stood up and said they have an electoral mandate to impose this unprecedented assault on Australian taxpayers,” he said.
He continued that although the government has stated that taxing unrealised capital gains is already in practice, he said it is very different from what it is proposing in the superannuation system.
“We tax unrealised land values through land tax and rates, but as I’ve already explained, those taxes typically are 1 to 2 per cent, and land values don’t change in a volatile way,” Pearl said.
“This is a new departure for our income tax system. I think that’s the big thing about this, and it will undoubtedly cause a lot of harm. I think the principle is the objection, because a taxpayer shouldn’t have to go into debt or sell assets simply to meet a tax liability, and that’s what this unrealised capital gains tax will do to them.”
He explained that an SMSF invested in an illiquid asset, such as a business or a farm, won’t be able to sell a percentage of that asset in order to meet its tax liability.
“When they get the bill from the ATO, they’ll either have to sell other assets or go into debt. I think that’s the difficulty,” Pearl said.
“Those with investments in industry or retail funds are in a different position. They can make withdrawals from those funds fairly easily. So, it’s really an assault on those with self-managed super funds, which account for $1 trillion of our $4 trillion stock of super with investments in unlisted or illiquid assets.”
This is a tax by a government which has no credentials or understanding of how business or taxation works and they are supported by the Greens who have no credibility whatsoever.
The Labor Government is a party of failed Labor lawyers, Union hacks and academics who have never earned a living in the real world.
Unfortunately, Australia has to suffer these fools for at least another four years at least.
This tax is a horrible idea.
Its a tax to be paid on inflation.
Business and family home is next.
Please do not forget several factors: 1. Albanese went to the electorate in 2022 saying no change to super. LIE 2. The taxing of unrealised gains has been proposed by several foreign governments, only to be reversed when the stupidity of their proposals were clearer; 3. The gains will also be taxed AGAIN in the super fund when the asset is actually sold! This is only motivated by the politics of envy! 4. The super funds are the most heavily regulated part of the tax system – every dollar of members accounts has been legally placed there. The amount of contributions, where the assets are invested have all been done legally. But it’s all ok because (according to the treasurer – Dim Jim- it will only affect a “sliver” of the taxpaying population!!! Oh, and BTW, it won’t affect the politicians and many senior public servants on defined benefits schemes because we don’t know how to calculate the lump sum value. Sounds eminently fair to me!
The wealth gap can be closed in other ways.
1. Reduce waste
2. Educate the population of the benefits of financial planning, saving, and being self reliant
Stealing life savings from others is not on, and that’s what this tax on paper profits amounts to.
Since when did we sink so low. It sounds like the pitch forks are coming all because the government can’t control itself wuth spending and also because it is actually encouraging this class warfare.
The languauge being used by our politicisns is also alarming. It is disrespectful, especially when those most affected have in the main done nothing wrong except follow government advice and incentives alongvthe way.
So wrong on so many levels.
We have gone too far with this nanny state and the writing seems to be on the wall.
Matthew, no one has a problem with the tax increase, it is the unprecedented and dangerous imposition of a taxation methodology which is totally unacceptable and which has been condemned by anyone who has a modicum of understanding of taxation and accounting principles in a ‘non communist’ society.
Hi Max
Yes I do understand the taxation methodology – I’m an Accountant , Tax Agent & Superannuation Specialist & disagree with your statement.
The primary purpose of superannuation is to provide income in retirement, and for the super funds to be used for that purpose. The taxation concessions on ‘super’ encourage for that to occur to relieve future costs of the Aged Pension from government.
The concessions are funded by the Government, but the tax concessions enjoyed in super shouldn’t be unlimited. Div 296 help puts a cap on the benefits.
We live in a society that largely agrees with a progressive income tax system, this change will help reduce the capital that is exempt from the progressive tax system.
People always have the option take funds out of super – they won’t have to pay any Div 296 tax then.
They only have that option if they’ve met a condition of release though. If they have not met that condition of release then they’re stuck for now.
I’m also an accountant and superannuation specialist, I agree with the tax in principle, however not with the taxing of unrealised gains.
While the cap is not indexed, there’s nothing stopping the Government lifting the cap in future years if required.
The problem is not the increased tax, the problem is the taxing of unrealised capital gains and the groups that are exempt from the tax. All Australians should be taxed equally, not given exemptions.
You shouldn’t take from the rich to give to the poor just because someone has been more successful than another – the work ethic is not being instilled in may of our young.
[i]”All Australians should be taxed equally, not given exemptions”[/i]
But they are not, Ian. 2% of taxpayers contribute one quarter of all tax collected, while 40% of taxpayers don’t pay any tax at all. It seems the ones calling for more tax to be paid, are the ones receiving all the current concessions.
And this is why the attack on superannuation is illogical, because it is the most equitably taxed vehicle in the whole system. Every taxpayer has the opportunity to contribute exactly the same amounts (up to the caps), and take a tax deduction for it; every member pays the same 15% rate of tax regardless of balance; balances become tax-free for all members once they start a pension; and withdrawals are tax-free for everyone over 60.
The fact that some are better placed to take advantage of these opportunities doesn’t make the concessions inequitable or unfair. That’s just life.
You can’t get a tax break if you don’t pay any tax in the first place.
The government did not get a mandate as they received only 34.6% or thereabouts of the vote.
On principal, I refuse to pay this tax as it is outrageous on so many counts. I am moving my assets but I am fortunately just retired and ready to get my life savings put of super. This is terrible for the industry though. I will be able to look after myself which is why I dived into superannuation and an smsf, saving hard for 40 years.
I am over the class wars that started with Swan. Seeing comments online (other sites) from the general community wanting access to our funds, I feel that I have no other choice. We have such an entitlement philosophy now. It is wrong on so many levels.
Wastage needs to be reined in, I believe, and people need to be re-programmed to look after themselves and stop with the mentality of constantly needing, even demanding handouts.
BTW Germany is going back to nuclear power. Their electricity costs are now the highest in all of Europe and the experiment of 10p% tenewables has failed.
And the BDIS is another rort for so many. Pity the ones that actually need it, and for whom it was created.
I refuse to have my savings pay for other people’s personal bills, as well as holidays, toys and luxuries for rorters of NDIS, which is what I amreading on other sites.
So sad.
Would you mind saying where you are moving your assets to? I have inherited some funds, which currently remain in the (non interest-bearing) estate bank account – I am the executor and the other beneficiaries have been paid out) because I don’t know what to do with the funds. Mid-50’s with a family and low balance to pay on the mortgage. Can only see a bleak future for my children living in Australia (worse, I live in Melbourne) but husband and young adult children not interested in moving elsewhere.
With regards to moving assets to outside superannuation system: my advice would be to keep the minimum in super (which would be either your TBC limit or $3m where you pay 15% tax on assets of approx 1/3 of your taxable income in the super fund).
From 1st July 2018, using our own figures as examples for analysis between my partner and myself we would have paid 36.1% tax overall (that;s the 15% on taxable income plus Div 296 tax), plus of course the CGT considerations with regards to the timing of any sale to be factored in down the line.
I love the idea of far less interference and rules etc wth a company structure involved, even if the saving is only 6% overall. Also, it is better to have funds pulled out of super anyhow before you pass on.
Also, with time as our funds grows significantly (mostly through growth – lucky/unlucky for us if this gets through), the tax rate overall is also growing. The worst year was over 52% of taxable income in the fund. We have experienced only one year in the last 6 years where the tax rate on taxable income was less than 30%.
Don’t want to say too much because of course, this can all be used against us. If they can dream this nonsense up, what else can they dream up.
The pitch forks are coming. My savings are not going to be sitting ducks in a super fund. Sad days indeed as super funds were previous a great form of asset protection but this is lost too already. There is always someone around (including govt) that wants something for nothing and they are prepared to do whatever they need to do.
Check timing of sale for proportioning purposes.
It looks like this is coming through, so a sale in 2026FY but as early as possible in the FY may suit best. I feel like Treasury has been on top of this from Day 1 whilst we all flounder around. It was coming in one way or the other by the look of things.
Taylor asked Chalmers in their debate in the run up to the election about Div 296. Chalmers said not a word and there was a pregnant silence before, stupidly, Taylor continued. Other than Chalmers saying at another time that this was “unfinished business”, I do not believe that it was discussed in public by him. At least the media kept it quiet if
he did. Labor wanted us all to believe that it was dead and buried.
You have to do what is right for you. Don’t blame anyone for decisions that you make. Be informed. I am not a financial planner or advisor. Seek out expert advise.
David Pearl on Sky News – Give me a break – what rubbish – there is no outrage! 99.5% of the population has absolutely no problem with a tax increase, on super account balances over $3million of 15% for super (or I bet even $2million)
We(Australians) need to focus on real broad based tax reforms in Australia, to relieve the bulk of the burden that is paid by low and average paid workers in Australia, and rein in the excessive tax concessions received by the wealthiest in the Country. To help close the wealth gap between the richest & poorest in our Country.
[i]”to relieve the bulk of the burden that is paid by low and average paid workers”[/i]
Give me a break! One quarter of all tax paid in this country is contributed by around 2% of taxpayers, and over 60% of tax is paid by less than 20% of taxpayers. More than 40% of taxpayers in this country don’t pay any tax at all.
Who is bearing the bulk of the taxation burden??