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The Coalition would reverse the proposed Division 296 tax if it won the next election, says shadow assistant treasurer Luke Howarth.
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Coalition would reverse Div 296 tax: Howarth
01 August 2024
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Speaking at the recent Financial Services Council breakfast this week, Howarth said the Coalition “just wants fairness”.
“We don't want additional taxes and people picked out because they [the government] want to spend an additional $3.15 billion a year and want to find ways to pay for it,” he said.
“[The Div 296] would be one thing that we would reverse, and Peter Dutton has mentioned that as well.”
Howarth said superannuation is a good investment vehicle for retirement purposes, and it is a “good way of reducing tax” and is not something to which he was looking at making big changes.
“The Coalition did the First Home Super Saver for young people wanting to buy their own home and implemented changes to salary sacrificing, taxing it at 15 per cent rather than paying 30 or 32.5 per cent,” he said.
“I believe in super. I don't come in with a preconceived idea that we want to change it all. With some of the legacy issues, I think there should be assurance that you're not worse off overall as well. I'm not one to abolish all of that but want to make sure that people aren't worse off.”
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Howarth continued that given the proposition of taxing unrealised gains, as is the plan in the proposed $3 million super tax legislation, it is clear the government is considering even more changes to the superannuation system.
“The analogy that I talk to people about is if you've got your own home and it's worth $600,000 and it grows to $1.2 million, and all of a sudden, you've got to pay capital gains on $600,000 before you even sell it,” he said.
“That wouldn't be fair. People wouldn't stand for it, but that's what they're [the government] doing in super, which would impact a lot of people, particularly regional people, and people with farms.”
Howarth said the Coalition has been against the proposed legislation from the beginning and said it was good to see support from independent senators starting to grow in its opposition.
“It's nice that the Teals, or some of them now, are finally on board, but the reality is that the Teals don't have the balance of power in the lower house. The Greens can legislate with the government, so the government has a majority in the House of Representatives,” he said.
“In the Senate, they basically just need the Greens to support them, and they're all in on this. They [the Greens] don't mind taxing unrealised capital gains and taxing people more. They also want to lower the threshold and make it retrospective.”
He continued that if the government can get the support of just one other senator, the legislation will pass, suggesting that it could most possibly be independent senator Lidia Thorpe.
“If they get Pocock or one other person on board, then it's passed and it'll be probably up to a Coalition government to reduce it,” he added.
Howarth suggested that constituents should start a letter-writing campaign to their elected members, stating the proposal to tax unrealised gains is “unacceptable”.
“They [constituents] should say this will impact not just me and my family's income, but also impact all of my clients and the people that I work for,” he said.
“Don't underestimate that [letter writing]. If you've got a politician doing a mobile office in a marginal seat, then let them know. Every state has 12 senators, so you can write to them, particularly Labor senators, and let them know that it's completely unacceptable.”
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