Greens in discussions with Labor over Div 296 tax

Greens economic justice spokesperson, Senator Nick McKim, said the Greens looked forward to discussions with the Treasurer in relation to Labor’s proposed Division 296 tax.

In a press conference on Wednesday, Treasurer Jim Chalmers said he would discuss the superannuation tax policy with the Greens ahead of Parliament returning next month, with the Greens holding the balance of power in the Senate.

Chalmers said that Labor still intends to pass its $3 million superannuation policy as previously proposed, but acknowledged that Labor does not have the numbers in the Senate to pass the legislation on its own.

“My preference and my intention is to legislate the package that we proposed more than two years ago,” said Chalmers.

The Greens previously put forward their own policy recommendations that include lowering the proposed $3 million threshold for the tax to $2 million and applying indexation to the threshold.

In a statement issued this week, McKim said that the Greens looked forward to working with the Treasurer to make sure that the proposed tax on the superannuation accounts of the wealthiest Australians is “as strong and fair as it can be”.

“Over time Australia’s superannuation system has become less about providing a dignified retirement for working people, and more of a vehicle for wealth accumulation. This needs to change,” McKim said.

“The Greens want to ensure that very wealthy Australians pay their fair share of tax, so that governments can do more to support people who need it.”

McKim said the Greens had yet to see the details of the legislation or regulations that the Treasurer will look to introduce next month.

A deal with the Coalition on the policy now looks very unlikely after Chalmers contradicted comments by the Prime Minister earlier this week regarding the possibility of negotiating with the Coalition.

Earlier this week, Prime Minister Anthony Albanese said he welcomed the opportunity to work with the Coalition on changing tax rates on superannuation earnings in exchange for dropping the unrealised gains tax component of the deal.

However, the Treasurer said on Wednesday that Labor intended to proceed with its plans to tax unrealised capital gains.

“The unrealised capital gains calculation was recommended to us by Treasury. We provided years of opportunities for people to suggest different ways to calculate that liability, and nobody has been able to come up with one, and so that’s an important bit of perspective,” he said.

“Now, when it comes to the issue more broadly, this is a change which is modest. It is methodical, as I said, it’s been on the books for years now, and it makes a meaningful difference to the budget, and it helps us fund some of our other priorities.”

Shadow minister for finance, James Paterson, said it was “unsurprising” the Treasurer preferred to make a deal with the Greens over the Coalition in order to pass the policy.

“The Labor Party would have had to compromise so fundamentally on what they proposed that in order to even sit down and talk with us, I didn’t think they were likely to do so,” Paterson told Sky News on Thursday.

“Frankly I’m not surprised that Jim Chalmers would prefer to do deals with the Greens who are going to be much more accommodating, who are in favour of higher taxes, who are not worried about breaching these tax law principles, who are happy to participate in this grab raid on people’s superannuation savings.”

Institute of Public Accountants senior tax adviser, Tony Greco, disputed Chalmers’ comments that no alternative calculation had been put forward.

“We learnt very early in the consultation process that the method proposed was supported by APRA funds as being the best option administratively to implement,” said Greco.

“I do not believe due consideration was given to alternative models as Treasury was fixated on pushing ahead with its proposed methodology.”

Greco said that the new tax will impact the SMSF sector significantly more than APRA funds.

“SMSFs can perform calculations on a member balance so alternative methodologies to reduce the concessionary benefits for members with high balances are viable,” he said.

“The proposed methodology does not accord with good principles of taxation. The Senate inquiry did not engage in alternatives and was comfortable with the methodology on the basis that it impacted only a small portion of the population and less so on whether it adhered to good taxation principles.”

Greco said that voluntary compliance with tax laws is generally maintained when taxes are levied fairly.

“In the case of this proposal, we are already seeing behavioural changes due to the perceived unfairness as taxpayers come to terms with implications of this measure coming to fruition on 1 July 2025,” he said.