SMSFA encouraged by talk of a deal over super tax

As was reported on Wednesday in mainstream news media, Prime Minister Anthony Albanese said he welcomes 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.

On Tuesday, shadow treasurer Ted O’Brien said the opposition would be open to discussions on alternative super tax reform if the government walked away from its plans to tax unrealised capital gains.

“There’s no doubt in opposition, we will be constructive where we can, but critical where we must, and when it comes to this super tax at the moment, I see no choice but to be absolutely critical,” O’Brien said.

“I can’t pre-empt the final decision that ultimately will come through the party room, but what I can say is that there are aspects of this policy that Labor has put forward which are absolutely egregious, in particular, the unrealised capital gains and secondly, the lack of indexation.”

Debate over the proposed legislation has heated up over the past few weeks, with the financial sectors, business and corporate sectors, and the Coalition upping their campaigns in an effort to force the government to rethink the current draft legislation and make amendments to the Division 296 policy.

With the Greens holding the balance of power, the government needs its support to pass the legislation, which is likely to be one of the first pieces of law to be presented to Parliament when it resumes sitting next month.

The Greens have put forward their own recommendations, including lowering the threshold from $3 million to $2 million and introducing indexation; however, the party has indicated it is not averse to the inclusion of taxing unrealised capital gains.

The Prime Minister has made no secret of the fact that he does not like being pushed to concoct deals with the Greens in order to see legislation through.

The Australian newspaper on Wednesday said that Albanese had said he would consider amending the $3 million super tax legislation and striking a deal with the Coalition if it meant sidelining the Greens.

Peter Burgess, SMSFA CEO, told Accounting Times’ sister brand SMSF Adviser that the association is actively trying to lock in meetings with the government, the Coalition and the Greens, and intends to renew its push for indexation and the use of actual taxable earnings.

“The only way of removing unrealised capital gains from the calculation of earnings is to use actual taxable earnings,” he said.

“We understand some of the limitations of some of the large super funds in this regard and the argument for super sector neutrality, but sector neutrality has not always been a consideration, with the recent changes to the non-arms length income rules being a standout example.”