Division 296 deliberately deceptive

A senior financial services industry executive has labelled the Division 296 tax as political deception, seeing there has been no honest indication of who the impost will really affect.

Financial Services Council (FSC) chief executive Blake Briggs was blunt in his criticism of the measure, describing it as an act of “political trickery at its crudest” because the government continues to claim the Division 296 tax will only apply to people with a total super balance over $3 million.

“[It is targeting] rich [baby] boomers right because after all who could object to that?” Briggs asked attendees at an industry function held in Sydney last week.

“But the incidence of the tax, who it will actually impact, is young Australians as a result of the deliberate decision not to index the $3 million threshold.

“Of the 500,000 working Australians who will be impacted by this tax during their lifetime, 400,000 are in their 30s or younger.

“It is disingenuous to say this tax targets older and wealthy Australians as its reality when in reality it is designed to target younger middle-income Australians.”

Further, he suggested the proposed policy has been formulated to establish a structural saving in the budget that future governments will find “impossible” to unwind.

In addition, he criticised the government’s actions as being indicative of the flawed discussions over the structure of Australia’s taxation system at a macro level and recognised the efforts of other industry stakeholders in opposing the new tax.

“The Treasurer’s $3 million tax on super is symbolic of everything that is wrong with the tax debate in Australia. The proposal breaches fundamental tax principles by taxing unrealised capital gains,” he said.

“And I should give credit to my colleague here, Peter Burgess, [chief executive of] the SMSF Association, who has relentlessly demonstrated the fundamental issue and unfairness inherent in taxing unrealised gains.”

According to Briggs, the constant tinkering with the taxation of retirement savings is detrimental for all Australians and he called for a better approach to tax reform in the country.

“If we continue to treat superannuation consumers as mugs and repeatedly tinker with superannuation tax settings, and let’s not forget the ‘grab bag’ of tax changes under [former prime minister] Scott Morrison or the repeated lowering of the [contributions caps] and increases in taxes by [former treasurer] Wayne Swan, that Australians’ confidence that their superannuation is secure will continually be undermined,” he noted.

“The FSC recognises that a genuine evidence-based and economy-wide tax reform presents the most significant opportunity for a step change in the broader economy to help create space for a mature debate around tax reform. We agree all options should be on the table, including superannuation.”

February 3, 2025
Darin Tyson-Chan
smsmagazine.com.au

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