The recent speculation surrounding the potential postponement of the Division 296 tax has elicited no surprise from the Self-Managed Superannuation Fund (SMSF) Association.
Peter Burgess, the Chief Executive, conveyed that he had “heard through informal channels” about increasing concerns and opposition within the Labor party, with several members expressing apprehension about possible political repercussions. “It is no surprise to us, as there has been considerable media coverage regarding this tax since its inception,” Burgess shared in an interview with SMSF Adviser.
While it is well known that there is dissent regarding this tax within the Labor party, the pivotal question remains: will this opposition be sufficient to deter the Treasurer from moving forward with its implementation?
According to a report from the Australian Financial Review on September 5, anonymous sources indicated that the government has paused its initiative to introduce the $3 million super tax in its current format. While no final decisions have been made, internal discussions have reportedly intensified in recent weeks, particularly as the Prime Minister’s office has begun to take a more active interest in the policy.
Burgess articulated that one of the government’s principal concerns involves the timing of the tax implementation—specifically, the timeline for affected individuals to report. “Although this topic has been previously addressed, the first round of determinations is scheduled to be issued in 2027, which coincides with the lead-up to the next federal election—this is undoubtedly a factor of consideration,” he explained.
He further elaborated, “The government is understandably concerned regarding the taxation of unrealised capital gains and the potential repercussions that may arise from it. Additionally, the government is endeavoring to position the Labor Party as pro-aspirational; if this is indeed a sincere goal, it is difficult to reconcile with a tax that fundamentally targets aspiration. This tax fundamentally contradicts the objectives of fostering innovation, productivity, and aspiration, which clarifies the growing opposition within Labor ranks.”
Moreover, Burgess emphasized that imposing a tax on unrealised capital gains in a sector vital for venture capital and start-up financing could have detrimental effects on the government’s initiatives. He noted that large APRA funds have also expressed concerns regarding necessary adjustments to their operating protocols and reporting responsibilities.
“The ramifications of this tax include the requirement for funds to re-report balances for individuals possessing defined benefit pensions, a process that is both complex and costly. We maintain that there are alternatives available to achieve the government’s objectives without inducing such unintended consequences,” he argued.
The recent Economic Reform Roundtable, which concentrated on enhancing productivity, has reinvigorated concerns, casting the tax in an increasingly negative light regarding innovation and aspiration. “It is challenging for the government to champion innovation while simultaneously presenting a tax such as this,” Burgess remarked. “It appears that members of the backbench and the Labor Party are highlighting this inconsistency with the government’s policy objectives.”
He also pointed out the escalating difficulty associated with implementing this tax starting from July 1, 2025. “While our preferred outcome is for this tax to be completely abandoned, if that is not achievable, this delay should ideally provide the industry an opportunity to engage in meaningful dialogue with the government regarding potential alternatives—a conversation we have not yet had the chance to pursue.”
It is entirely reasonable to speculate that rumors of delay have surfaced at this juncture, especially considering that the legislation has yet to be slated for debate. “One must question the rationale behind this, particularly given the government’s assertion of having a mandate for the tax, yet we have yet to see the proposed legislation. This discrepancy suggests there are indeed underlying issues at play.”
Additionally, it has come to light that the government has not engaged in any discussions with the Greens, despite confidence in garnering their support. This situation indicates that the primary challenge currently resides within the government’s own ranks.
Geoff Wilson, founder and director of Wilson Asset Management, who has actively campaigned against the tax, expressed optimism that the Prime Minister is indeed attentive to the Australian public’s concerns. Wilson has circulated three research papers examining the tax’s impact on productivity, innovation, and potential repercussions on voting trends across various demographics. “I distributed these research papers to all participants of the roundtable, and several followed up with specific inquiries,” he noted. “There was considerable dialogue regarding the irrationality of taxing unrealised gains. In our contributions to the roundtable, we emphasized that our principal argument revolved around taxing unrealised gains due to its adverse effects on productivity.”
Wilson remarked on the emerging “glimmer of hope” that “sanity will prevail.” He declared, “This tax is not only detrimental but is also exceptionally harmful to Australia’s productivity. If what we’re hearing holds true, then I commend Anthony Albanese for advocating for rationality in this matter.