Jim Chalmers said on the ABC Insiders program on Sunday that as the necessary calculations for the new policy wouldn’t begin until mid-2026, he was in no rush to reintroduce the legislation.
“We are not proposing to introduce it or reintroduce it this week … we still have time,” he said.
“It doesn’t begin to be calculated until the second half of next year and so we’ve got time to reintroduce that, but as I said, it’s been in the Parliament before, people know where we’re coming from. Our goal here is to continue to make sure there is concessional tax treatment for superannuation, but make sure that that is a bit more sustainable.”
He added that he had no plans to alter concessional tax measures for retirees on their super balances, stating they [retirees] “still deserve concessional treatment to encourage people to be in superannuation, and that’s not something that we have been proposing to change”.
“I proposed what is a pretty modest change, but a meaningful change which makes the system a bit more sustainable,” he said in regard to the Division 296 tax.
However, the continued delay in the finalisation of the bill is leaving many in the sector frustrated and anxious.
Peter Burgess, CEO of the SMSF Association, said it was important to remember when the government first announced the measure, it acknowledged the need to provide at least a 12-month period from the time the legislation was passed to enable those impacted to assess the impact and then make the necessary changes to their superannuation arrangements.
“We now face the prospect of this tax being backdated by four months or even longer and while the government may argue it announced this tax over two years ago, it’s unreasonable to expect anyone to act on legislation before it becomes law,” Burgess told ifa sister brand SMSF Adviser.
“From its flawed design, all the unintended consequences and its retrospective application, this tax is unprecedented on so many levels. We continue to urge the government to scrap this tax and assess changes to the super tax concessions within the broader context of tax reform.
“It’s also disappointing that off the back of the economic roundtable, the government now appears to be proceeding with this measure, which clearly has adverse implications for economic growth, under the guise of intergenerational equity.”
Aaron Dunn, CEO of Smarter SMSF, said after watching the Treasurer on the ABC program, it is still not clear “in respect to when these laws would start”.
“Whilst he indicated that there’s plenty of time before these laws start, there’s clearly not if they have a 1 July 2025 start date for the TSB calculation,” he said.
“You’d like to hope that he’s conceded that a delay in the laws is inevitable and that they still have some work to do to get the numbers in the Senate.”
Nicholas Ali, head of technical for Neo Super, said the Treasurer’s announcement goes to show that the government is being “disingenuous” about the legislation.
“On the one hand, Treasurer Chalmers states the backlash against Div 296 by professional bodies doesn’t augur well for more substantive tax reforms because the change is modest and methodical, yet on the other hand he states he is in no hurry to introduce the Div 296 legislation back into Parliament as it is not set to start until mid-next year,” Ali said.
“If it was so well-designed and methodical, why has it not been passed as legislation? And surely the Treasurer knows the effective start date for the legislation is not the middle of next year but the beginning of this financial year, 1 July 2025, with the first assessments being next financial year (after 30 June 2026).”
Ali continued that the Treasurer’s comments show “incontrovertibly” the government does not care about delays or the impact the legislative uncertainty has on those affected by the tax, because there is a very political downside to the amendments.
“The government (wrongly) thinks there has been sufficient debate on the issue, it is well-designed and fair, they have a mandate for the changes and those affected have had plenty of time to prepare for it,” he added.
David Busoli, principal for SMSF Alliance, said the Treasurer is correct in saying that the calculation of the tax does not need to be done until the end of this financial year.
“This is so if it is legislated to begin from 1 July 2025 as he has continually stated it would be,” Busoli said.
“As far as he is concerned, the sector has plenty of time to prepare as he has been firm on the terms and timing from the outset and, frankly, he’s not wrong if there is no change to the way the earnings are calculated as this was always going to be done by the ATO.”
Taxing unrealised capital gains is how it begins, soon, stocks and crypto. This government is broke and is out capital raising to fix its budget gaps – they over promised welfare, now are looking to our youth to pay their promises. The AUD is losing value fast with government debasement and inflation, therefore most middle class will creep into the $3m aud limit by their preservation age. It’s not too late to voice your opposition.
Dear Jim,
How are people meant to effectively and fairly manage their Super balances and tax affairs on dreadful legislation when it has not even passed parliament, yet you want to then back date the start of it.
For what should have been an easy win on taxing these very large super balances, because you have pandered to the Industry Super Fund puppet masters of the ALP, you have these ridiculous PROPOSED Taxes on Unrealised Capital Gains.
Sorry Jim, just because it is on the books of parliament, IT HAS NOT PASSED PARLIMENT BECUASE OF ITS DISGUCTING APPROACH.
YOU CANNOT EXPECT PEOPLE TO CHANGE THEIR SUPER AFFAIRS BASED ON A POSSIBLE CHANGE IN THE LAW.
If you do get the current proposed law passed, it is terrible to back date a start and not give people correct due process to be able to alter their situations on changing rules.