SMSFA still hopeful Div 296 bill may include amendments
There is still hope that the Division 296 is not a “done deal”, the head of the SMSF Association has said.
Peter Burgess, chief executive of the SMSF Association, said on the latest SMSF Adviser podcast that although there are many in the industry who believe the controversial super tax will be passed into legislation sooner rather than later, he is more optimistic that the government may take time to reconsider its position.
“I know in the lead-up to the election the government did make it very clear that this was still policy, and I think the Treasurer referred to it as unfinished business, but I understand why they held that position in the lead-up to the election,” he said.
“[The government] had included in its revenue this particular measure, and I don’t think it would have been a good idea to come out and say it was moving away from this policy position and have a budget black hole.”
Burgess continued that now the election has been held and won, the government may reconsider its position.
“There are so many things wrong with this tax, as we know. They’ve been well documented. In the lead-up to the election, we did see some very influential business leaders from across the community come out and express their concerns about this tax, about the implications of taxing unrealised capital gains,” he said.
“We know the Prime Minister prides himself on his willingness to listen, so I’m still optimistic that they will take that on board and we may actually see some changes to this legislation.”
Burgess said he is also hopeful that the original start date of 1 July 2025 will be pushed back, saying it would be unfair if it remained.
“We understand that the first test time is not until 30 June 2026, which is over 12 months away, but given the government first announced this legislation in 2023, it made it very clear back then that it wanted to give people plenty of time to review their circumstances, their superannuation affairs and make the changes they wanted to make to respond to this new tax,” he said.
”I think it would be unreasonable to say, ‘well, it took us longer than we expected to get this legislation passed and because of that, you don’t have as long in order to implement whatever changes you think you need to do’. We’ll certainly be pushing for that. If this legislation is reintroduced, we would expect to see a revised start date for this particular bill.”
Furthermore, he added that as the larger APRA-regulated funds will also have to report transactions they haven’t had to report previously, he doesn’t believe they have made the necessary changes to their systems based on the fact that it’s not yet legislation.
Asked whether there could be a compromise between the government and the Greens that could see the threshold dropped to $2 million and taxation of unrealised gains removed, Burgess said he would be surprised to see the government reduce the threshold.
“I’m sure the government has heard loud and clear the issues with taxing unrealised capital gains and if you drop the threshold to $2 million, then there’s going to be even more people impacted by that,” he said.
“We will be spending some time with the Greens, there’s no doubt about that. We will be hoping to have some meetings with them but we have to wait until we see what the makeup of their party is, if there is a change in a leader.
“But our message to the Greens will certainly be alerting them to the importance of this sector to their policy agenda. We know that the fastest growth rate in the self-managed super fund sector right now is people under the age of 45.
“There’s also research that shows that those in that age bracket have a clear preference for investing in ethical green investments. We also know that high-net-worth clients have a preference for investing in ethical green investments as well. There are some private equity funds out there, venture capitalists that specialise in this area and are reliant on self-managed super fund funding.”
He continued that taxing unrealised gains is a “killer” for start-up venture capital investments.
“The messages that we’ll be relaying to the Greens is that this sector is incredibly important to their policy agenda. It’s not just rich people that should be paying more tax. We’ll be challenging that position and making sure that they fully understand how important this sector is to not only their policy agenda but [also] to the community more broadly,” Burgess said.
