Around two-and-a-half years after the federal government first announced plans to place an additional 15 per cent tax on super balances above $3 million – and nearing two months since passing the supposed start date – Division 296 is still not law.
There is no word yet on whether it will be introduced when Parliament reconvenes next week, however, should the measure go ahead as planned, there will be a lot of advisers who need to wrap their head around the rules and help clients plan.
According to the latest ifa poll, 61.7 per cent of financial advisers have clients who will be caught under the tax – with 17.4 per cent of respondents saying they have lots of clients and 44.3 per cent having a few.
Collating responses from 357 financial advisers, the poll found 3.4 per cent are unsure whether any clients will be impacted at this stage, a further 9.8 per cent have some clients that are close, and 25.2 per cent stated no clients will meet the threshold.
Stagnating in the Senate ahead of the federal election as Labor failed to secure support, the landslide victory in May appeared to give the measure a green light.
A diminished crossbench has left Labor able to push through any measures they wish with just Greens support – seemingly a slam dunk given their lack of opposition to Division 296.
However, an upswing in mainstream opposition to the new tax and its inclusion of unrealised gains in the calculation has thrown a spanner in the works, while the Greens are now pushing for a modified version that would reduce the threshold to $2 million but include indexation.
Despite getting further away from the 1 July 2025 start date, which it seems is set to stay, the government left the bill off the agenda for the first sitting fortnight of Parliament at the end of July.
Regardless of whether Division 296 lands in Parliament in August or some later date, there has been little indication the government is seriously considering changing its mind on taxing unrealised gains.
During the first question time of the new Parliament, the Coalition threw a grab bag of Division 296 questions at Labor, querying everything from the impact of the tax on farmers to whether the PM would rule out taxing unrealised gains in other structures and if the Treasurer stands by previous estimates on the number of Australians set to be impacted.
However, Prime Minister Anthony Albanese highlighted the apparent futility of the opposition’s super tax focus.
Responding to deputy leader Ted O’Brien’s question on whether the government would go any further with the taxation of unrealised gains than the proposed super tax, Prime Minister Albanese offered a “big tip”, telling the shadow treasurer that the “time to run a scare campaign is just before an election, not after one”.
FSC modelling has put the number of currently working Australians who would be captured in the $3 million super tax under Labor’s proposed settings at around 500,000, assuming there is no indexation.
I suspect Labor is using too much political capital on this one – all it seems to be doing is highlighting the question “if $3M (unindexed or $2M Indexed Greens) is too much, why is Compulsory SGC going to 14%?
The Government is doing this to get revenue, however if they leave in the tax on unrealised gains there won’t be any revenue as investors will invest elsewhere in property, investment bonds or trust structures so all it will achieve is further undermining of superannuation.
Votes. That’s it.
It is TOTALLY inappropriate to have an effective date for new legislation that predates Royal Assent. This immoral and ill-conceived piece of legislation needs to be scrapped!
The muppets in Canberra should just increase GST from 10% to 15% by 1% pa over 5 years as from 1/7/26 and KEEP THEIR PAWS OFF SUPER…!!!
Not sure this new tax raises all that much in the way of $$$ for the Federal Budget – but it does appear to target SMSF where people, having complied with the Contributions Caps, have made good returns which, in the world or Super wars, is now to be punished – not to mention there Pension Cap already exists?
Yeah good idea genius, let the lowest earners of society pick up more of the tax burden through GST.
People only pay it on what they spend old mate and the rate has not changed in over 25 years…
Yes because the poorest of society spend as much proportion of their income as rich people do. Why in the world would the rate need to be increased with time, it’s a percentage!
It’s a proven regressive tax, impacting the poor much more than the rich.
Look at the rates in all other countries and we are far too low in comparison. Increasing the % gradually over 5 years allows people to adjust rather than all in one hit. Also the poorest of society are receiving benefits which all taxpayers contribute to it is called Centrelink which we can no longer afford in its current form do you get that? Simple economics proves trouble is growing given our aging population with less workers and more retirees everyday. Another reason why Albo keeps allowing in so many immigrants every month…
Sure. Let’s raise more tax to fund social services by placing more tax burden on those people who receive social services, thereby increasing the need for social services. Straight from the liberal party playbook of genius economic policy.