Media Releases

14 August 2024

Independent MPs are calling for urgent amendments to the Better Targeted Super Bill, particularly regarding the proposed taxation of unrealised gains, while warning that the prolonged delay is causing even more uncertainty for Australians. The crossbench has consistently opposed the egregious proposal to tax unrealised capital gains, highlighting the negative impact this would have on small businesses, start-ups, farmers, and self-managed super fund members.

Member for North Sydney, Kylea Tink, introduced amendments highlighting that including unrealised capital gains in superannuation earnings would add complexity, increase costs, and create unintended consequences. The amendments call on the government to adopt a simpler method, such as using a deemed rate of return to reduce uncertainty and mitigate these issues.

The Member for Wentworth Allegra Spender will also introduce an amendment to allow the deferral of payment for taxpayers who might otherwise be forced to sell their illiquid assets.
Independent MPs say the government must listen to the concerns of the community and the crossbench, and revise the legislation to ensure a fairer, simpler system. Meanwhile, they
highlight that the ongoing delay is only exacerbating the uncertainty for millions of Australians and needs to be addressed.

Kylea Tink Member for North Sydney said: “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. 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. Leaving this legislation in limbo creates even more uncertainty. The Better Targeted Super legislation was introduced months ago, what is the Minister doing?”

Zali Steggall Member for Warringah said: “The government is on notice. If it doesn’t move these amendments, it is recklessly ignoring serious concerns about the impact of taxing
unrealised gains. Taxing people on something that hasn't actually been realised—and may begone the following year—is problematic. This approach is part of a worrying trend from the
government of pushing through poor legislation that may have serious long-term consequences for Australians. Such moves have the potential to undermine confidence in the superannuation system, eroding the stability and certainty that Australians rely on when investing in their retirement.”

Kate Chaney Member for Curtin said: “The purpose of this legislation can be achieved without taking on the ridiculous impracticality of taxing unrealised gains, which goes against a
longstanding principle of tax law. Apart from putting people in absurd situations, this could also incentivise a shift from long-term to short-term assets to reduce liquidity risk in the future. Failing to recognise this will reflect very poorly on this government’s financial nous and willingness to listen to genuine and practical concerns.

Zoe Daniel Member for Goldstein said: “The government’s planned changes to superannuation laws that would see unrealised gains taxed could turn retirement into a nightmare for as many as 50,000 Australians who are 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. 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. 

Dr Helen Haines, Member for Indi said: “I am concerned about the unintended consequences for a very specific group of people who hold their family farms in self-managed super funds. 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. Indexing the $3 million threshold and excluding agricultural land assets would ensure our superannuation system fulfils its objective of providing for people in retirement.”

Dr Monique Ryan Member for Kooyong said: “This would be a first for any OECD country. Taxing unrealised gains could cause immediate and severe liquidity problems for small
businesses and farmers. It could put a massive brake on new companies’ ability to invest in new technologies. At a time when small businesses around Australia are struggling to make ends meet in a cost-of-living crisis, the Albanese government is asking them to pay tax on gains they don’t yet have."

Dr Sophie Scamps Member for Mackellar said: “The plan to tax unrealised, or paper, gains from assets that have not been sold is unprecedented and could result in undue financial
burden on thousands of small businesses including farmers that use this structure.”

Allegra Spender Member for Wentworth said: “We need to have appropriate tax on super, but taxing unrealised gains is just 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. 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.”