Speaking to SMSF Adviser from Canberra this morning, SMSFA CEO Peter Burgess said the fate of the bill is not yet decided and although it seems likely it will not be debated in this current sitting of parliament – the last for the year – it still may be put before senators in February when Parliament reconvenes for 2025.
“We are not totally out of the woods yet and this bill could still be tabled in the February sitting of Parliament, but for now it seems that it is not going to happen this week,” he said.
“The government has other priorities at the moment and has come to the realisation that it does not have the numbers in the Senate. We know based on our discussions with the crossbench that there have been no discussions on the bill and no attempt to make any deals.”
Burgess said the bill may become an election issue if the government calls an early election.
“Given all the criticism this proposal has attracted, you would think it would be foolish for the government to go to the election with this tax in its current form or even try and re-introduce it after the election in its current form,” he said.
“If the polls are right, we are headed for a minority government, which means the Teals will probably have more influence and power and we know the Teals do not support this tax in its current form.”
However, he added if the legislation is not passed it will impact the government’s budget as it had forecast revenue off the back of the Division 296 tax.
“We are heading into Christmas with some uncertainty still about this bill, and it is likely to be debated in February if an election is not called before then.”
“However, this delay also suggests that if it does get passed it will have to have a deferred start date as there won’t be enough time for funds to prepare. Additionally, the legacy pension regulations are hanging off Div 296, so we won’t get those reforms until this is passed.
“If it is passed in February that leaves only four months or less for funds to take action, which is not enough. And what we do know is Treasury is keen to give legacy pensions enough time to make the necessary changes so they will not get caught under the Div 296 tax. That should be enough for a deferred start date.”
The Australian Financial Review reported on Tuesday that Finance Minister Katy Gallagher said it was a “big ask” to pass the legislation as it stands, but added that it will remain government policy if Labor wins the next election.
Minister Gallagher said “Labor will not abandon” the policy and is “in negotiations to get as much of that through as we can”.
In response to ocker – funds over$100m being mandated to invest into housing etc – this may not be so easy either for those funds without time to move assets, liquidate some etc etc.
The government needs to stop moving the goal post. It is too hard to plan and anything major like Div 296 needs many years to adjust assets without potentially severe hardship for those affected.
Its a pity the the government can’t just give us some peace of mind if they are dropping this for now. It is incredibly stressful for those not knowing yet what will transpire. Decades and potentially generations of investments being screwed around at the whim of a few greedy and ego-driven people.
My advisors can’t help me until they know what they are dealing with – its just lots of possible scenarios. I am sure that this is the case for most that were to be affected by this. We are all living under a cloud and I would hazard a guess that these are the types of people that are usually not indecisive. I can’t even invest at the moment with any cash as it may be required if I have to liquidate quickly to get out of super. It is affecting my profitability in the SMSF.
I strategy worth considering if Labour keeps pushing with the unrealised gains taxation is to propose an amendment that.
In a trade off for the tax concessions granted to superannuations funds that;
All funds with total investment funds balance over $100 mill must invest a specified minimum percentage of their investments onto rental housing or renewable energy or carbon reduction investments.
1. Trades off the back of the Future fund debate.
2. This brings in the original $100 mill that the treasurer originally quoted to justify the tax. ( Although he was referring to individual balances not total fund balance. But a good segway.)
3. Such an amendment would likely get strong Greens support, but would upset the Apra and union funds who are causing the unrealised profits stupidity. More confusion, more disencension, more delay to this poor proposed legislation.