SMSF Association Media Release
The SMSF Association refutes claims made this morning by Federal Treasurer Jim Chalmers that the Government’s proposed new tax on superannuation balances exceeding $3m followed extensive industry consultation, and that taxing unrealised capital gains occurs in elsewhere in the superannuation system.
Association CEO Peter Burgess said the claim made by the Treasurer that there “were heaps of consultation” with the industry was simply misleading.
“What the Treasurer described as ‘consultation’ was not genuine engagement but a procedural formality.
“It started with a fixed proposal to tax unrealised gains and not index the cap, and there was no deviation from these positions – despite compelling evidence of its potential deleterious impact on the wider economy.
“The absence of significant adjustments or receptivity to alternative views indicates that the consultation was merely a process to endorse a pre-decided policy position instead of a genuine effort to consider other views.”
Burgess said the Treasurer was also playing hard and fast with the truth when he claimed there were other parts of the superannuation system where unrealised gains were calculated.
“In some parts of the superannuation system deemed income rates are applied which differ fundamentally from taxing unrealised capital gains.
“By drawing a parallel between these distinct approaches, the statement confuses the public about prevailing financial practices within the system and how capital gains are conventionally treated and taxed, thus undermining trust in the system’s fairness and transparency.”
Burgess said another claim by the Treasurer that it’s law for SMSFs to maintain an element of liquidity in their funds to be able to meet their tax obligations is also ambiguous – at best.
“While it is standard for laws to require liquidity to meet existing tax liabilities, the new policy introduces a liquidity demand far beyond what anyone could anticipate or plan for.
“By imposing taxes on unrealised gains, the policy compels asset holders to ensure liquidity levels that might necessitate the premature sale of assets – a requirement out of step with traditional practices where taxes are only imposed upon the realisation of a capital gain.
“The abrupt and severe nature of these demands can disrupt financial planning across various sectors, placing undue strain on individuals and businesses unprepared for such drastic measures”.