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Members of the crossbench are calling on the government to replace the taxation of unrealised gains with a simpler calculation method for the $3 million superannuation tax.
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Independent MPs demand urgent changes to $3m super tax reforms
15 August 2024
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Eight independent MPs have united to oppose the "egregious proposal" to tax unrealised capital gains as part of the government's Better Targeted Superannuation Concessions and Other Measures bill.
The bill, currently before the House of Representatives, imposes additional tax on superannuation earnings on balances exceeding $3 million.
Member for North Sydney, Kylea Tink has introduced amendments to the Better Targeted Super Bill to replace the current calculation proposed in the reforms with a simplified measurement such as a deemed rate of return.
Independent MPs have urged the government to listen to the concerns of the community and the crossbench and revise the legislation in a joint statement issued on Wednesday from independent members Kylea Tink, Kate Chaney, Zoe Daniel, Dr Helen Haines, Dr Monique Ryan, Dr Sophie Scamps, Allegra Spender and Zali Steggall.
Tink warned the government that including unrealised capital gains in superannuation earnings would add complexity, increase costs, and create unintended consequences.
“As it stands, this legislation is being poorly executed and will create a dangerous precedent within our taxation system. The taxation of unrealised capital gains means people will be taxed on money they may never see," she said.
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"This is deeply problematic and must be addressed. The lack of indexation on the large balance threshold amount means, over time, this measure will impact many more ordinary Australians, who have done nothing more than they are required to do under law in terms of meeting their superannuation payments."
Member for Wentworth Allegra Spender said while it is necessary to have appropriate tax on super, taxing unrealised gains is bad policy.
"People shouldn’t be taxed on paper profits they may never see. I’m really concerned about the impact on the startup and innovation sector, in particular, which is an area we need to see grow, rather than diminish," said Spender.
"It appears this is a policy fudge to accommodate technical limitations in large APRA-regulated funds, when the overwhelming majority of these high balances are in self-managed super funds that could easily calculate their actual earnings and associated tax."
Spender has also introduced an amendment to allow the deferral of payment for taxpayers who might otherwise be forced to sell their illiquid assets.
Member for Goldstein, Zoe Daniel said the the current design for the new tax could be a potential nightmare for the many Australians self-managing their super.
"Self-managed super fund members who hold illiquid assets such as property will be required to pay tax before realising those gains, and many may not have the funds to pay the tax," said Daniel.
"It is a looming nightmare for people such as farmers who are asset rich, but cash poor, a nightmare that can be avoided by amending this legislation.”
Member for Indi Dr Helen Haines agreed that the legislation in its current form would have unintended consequences for those who hold their family farms in SMSFs.
"This includes the family farms from Indi that I represent. If this tax on superannuation above $3 million goes ahead as currently drafted, these farming families may not receive the lease payments or rental yields to meet the annual tax bill on their land assets without selling the land itself," she said.
"Indexing the $3 million threshold and excluding agricultural land assets would ensure our superannuation system fulfils its objective of providing for people in retirement.”
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