Treasurer Jim Chalmers has confirmed that the Australian government will not introduce its controversial superannuation tax legislation during the upcoming parliamentary session. This announcement comes as the Albanese government seeks to navigate the complexities surrounding the proposed changes, which have faced significant opposition.
Chalmers stated, “It doesn’t begin to be calculated till the second half of next year, and so we’ve got time to reintroduce that.” He reassured the public that the goal of the legislation remains to ensure a more sustainable concessional tax treatment for superannuation. Despite this assertion, concerns over the impact of the proposed tax changes continue to grow.
The Self-Managed Superannuation Association (SMSA) chief executive, Peter Burgess, expressed worries that the uncertainty stemming from the delay is undermining confidence in the superannuation system. “I am surprised that the government hasn’t picked up on the fact that this is causing a lot of uncertainty, a lot of concern,” he said. Burgess cautioned clients against taking any premature action regarding their superannuation until the legislation is finalized, as adjustments could be complicated once funds are withdrawn.
The proposed tax changes include applying a 30% tax rate to earnings exceeding $3 million in super funds, with unrealized capital gains also subject to this new threshold. This approach has raised alarms among stakeholders, particularly regarding rural properties held within family enterprises. The legislation does not include provisions for indexing to inflation or wage growth, further stoking discontent.
Originally announced in 2022, these changes passed the lower house but were stalled in the Senate due to considerable pushback. If not tabled next week, the legislation cannot be reintroduced until both houses return from their recess between October 27 and November 6, 2023. In the event of further delays, the next opportunity would be during a four-day sitting from November 24 before parliament adjourns until February 2024.
Burgess remarked on the potential for superannuation account holders to receive only “a very short period” to adjust their affairs once the legislation is enacted. He noted that the retrospective application of the tax, starting from July 1, 2025, adds to the confusion. “In my 30 years of experience, I have never seen a tax of this significance backdated like that,” he stated.
While the government has faced substantial resistance, the current Senate composition may facilitate the passage of the legislation with the Greens party’s in-principle support. The Greens have advocated for a reduction of the threshold to $2 million, while the opposition Coalition aims to scrap the proposal entirely.
Despite the challenges ahead, the government has the option to expedite the legislative process through a guillotine motion, which would require the support of the Greens to limit debate time and push for a vote. In the past, this tactic has drawn criticism from opposition senators but has proven effective in advancing urgent legislation.
As discussions continue, stakeholders remain cautious, with Burgess indicating that if no guillotine motion is employed, the legislation’s passage could be delayed until November. The uncertainty surrounding the proposal underscores the need for clear communication from the government to restore confidence in the superannuation system.
