Chartered Accountants ANZ (CA ANZ) is calling on Senators to vote against legislation which could see individuals with more than $3 million in superannuation assets forced to borrow money or sell assets to pay tax bills.
CA ANZ CEO Ainslie van Onselen said the Bill seeks to tax unrealised gains, which would be a first for the Australian tax system, setting a precedent for the future.
"The government will fail to protect Australian farmers, mum-and-dad investors and small business owners with this harmful legislation," Ms van Onselen said.
"Hard-working Australians could be forced to take out a loan or sell their hard-earned assets just to pay a tax on a gain that is a profit on paper only.
The Treasury Laws Amendment (Better Targeted Superannuation Concessions) Bill 2023 will double the super earnings tax from 15 per cent to 30 per cent for superannuation accounts with more than $3 million - unfairly penalising Australians who have been advised and constantly encouraged to keep their assets in their super fund.
Imagine a farmer whose self-managed super fund owns their $2 million farm. The farmer has not made any super contributions or withdrawn any money from the fund during the year. The value of the farm doubles over a year to $4 million even though trading conditions have been tough. The tax owed on this is $37,500.
"How can the government expect anyone to have an extra $37,500 sitting in the bank for an unexpected tax bill when the nation is in the grips of a cost-of-living crisis and persistent inflation?" Ms van Onselen said.
"If the government intends to tax unrealised gains, then for consistency, it should also provide a tax refund for unrealised losses."
The $3 million cap contained in the Bill is not indexed, which means more and more taxpayers will be caught by this imposition as years progress.
"There remains uncertainty and complexity as to how this policy will impact defined benefit schemes, prevalent among public sector workers, and the constitutionality of this policy as it relates to judicial pensions," Ms van Onselen said.
"CA ANZ believes this tax will be very expensive for individuals, superannuation funds, tax agents, financial advisors and the ATO to administer, and will raise little, if any, net revenue when all these costs are considered."
