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The institute is “deeply disappointed” that the proposed $3 million super balance tax has remained largely unchanged since it was introduced.
IFPA calls for sweeping changes to Division 296 tax
26 February 2024
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7 minute read
The Institute of Financial Professionals Australia has urged the government to make seven key amendments to its proposed Division 296 tax on superannuation balances above $3 million.
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The institute stated in a recent submission that it does not support the proposed tax and stressed that Division 296 should not be legislated in its current form.
The IFPA has urged the government to remove unrealised capital gains from the calculation of earnings and use actual taxable income and earnings as a measure of earnings.
IFPA head of superannuation and financial services Natasha Panagis said there is nothing equitable or fair about taxing individuals on unrealised gains from assets that they have not sold.
“It is one thing to increase taxes on large member balances but choosing a method that is fundamentally flawed and a first for the Australian tax system is not the right solution,” she stated.
The IFPA also said that losses should not be a carried forward measure and that members should instead receive a refund of the tax they have already paid to offset any current tax liability.
It has also called for the $3 million threshold to be indexed and for members to be allowed to remove the excess if they have not met a condition of release.
Ms Panagis said it was extremely disappointing that the Division 296 legislation has remained largely unchanged from when it was first announced in early 2023 despite the level of consultation that has occurred in the industry.
“IFPA appreciates that the superannuation system must be sustainable, however, if the policy intent is to reduce the tax concessions afforded to members with large balances, other options must be considered by the government to fix the Division 296 tax measure.”
“Rather than applying another piecemeal change to the superannuation system, we propose the government conducts a holistic review of the superannuation tax concessions so we end up with a system that is fair and equitable for everyone.
“After all, continual changes to superannuation not only targets retirement savings but promotes instability and uncertainty in the sector, which in turn may discourage investment.”
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