Representatives from the SMSF Association last week raised their concerns with Chalmers directly over the draft legislation that was released in October.
The reworked legislation no longer has the taxing of unrealised capital gains and has included indexation of the threshold. It has also introduced a second threshold at $10 million, which would also be indexed, above which the earnings tax rate would be 40 per cent.
Importantly, the implementation of the tax would be delayed by one year to July 2026, and the tax would also apply to defined benefit pensions to ensure commensurate treatment.
However, there have been questions raised over the calculations required to determine the tax that would be applied on realised gains of individual members.
Aaron Dunn, CEO of Smarter SMSF, said in a recent update that although there were fact sheets explaining the revisions to the proposed Division 296 tax, they were lacking detailed information regarding how CGT will apply and whether there may be a reset.
Dunn added that there is now a need to understand how the disposal of an asset will impact the fund’s taxation.
SMSFA chair, Scott Hay-Bartlem and CEO Peter Burgess travelled to Canberra for face-to-face meetings with Treasurer Chalmers as well as Assistant Treasurer Daniel Mulino and their policy advisers to discuss a range of topics.
Burgess said he and Hay-Bartlem expressed their thanks over the recently announced changes to the proposed Div 296 legislation but also voiced their concerns over the use of realised earnings, pointing out that it brings “its own set of challenges” and issues and if not designed carefully will also have unintended consequences.
“We raised our concerns about the complexities and the costs, which will ultimately be borne by all superannuation fund members,” Burgess said.
“Unfortunately, the Treasurer is not prepared to consider simpler, more cost-effective alternatives.”
Burgess added Chalmers noted that Treasury is conducting targeted consultations on these changes through a technical working group, and that the SMSFA has been invited to attend.
“I confirmed our participation in this working group and our commitment to working through the issues with Treasury,” he said.
“The Treasurer thanked the association for our ongoing contribution to the design of this tax.”
Furthermore, Burgess said that during an earlier discussion with Treasury he was advised draft legislation for the revised Div 296 approach is expected to be released before Christmas, paving the way for the legislation to be introduced into Parliament early next year.
“With the release of this draft legislation fast approaching, our national conference being held in Adelaide early next year will be a must for members wanting the latest analysis of the proposed changes, the impacts and the best client strategies,” he said.
“Registrations for next year’s conference in February are already at record levels, and with our line-up of expert speakers to step you through the changes, there is no better way to get across all the details of this new draft legislation.”
Of course, Chalmers will say that. Believe nothing that comes from Chalmers. He said also that there was “no alternative” to the original Div 296 proposal… for over 2.5 years.
The newest proposal is fraught with issues too. The whole thing is farcical. But these are desperate measures by a desperate government. I shudder to think how history with remember this Albanese/Chalmers government, together with Gallagher when it comes to looking back at how they shaped the nation’s fortunes. It is a very bad state of affairs….