SMSFA says proposed super legislation will hit farmers, small businesses the most Small business owners and farmers with land or business premises owned by their SMSF are the big losers in the draft legislation on the Better Targeted Superannuation Concession, claims the SMSFA.
. SMSFA CEO Peter Burgess said research shows these two business communities are most likely to be adversely affected by the legislation’s proposal to tax unrealised capital gains.The SMSFA’s 17-page submission to Treasury cites many unintended consequences and anomalies in the draft bill, most of which can be traced to including unrealised capital gains in measuring earnings.“These unintended consequences are exactly the reasons why we don’t tax unrealised capital gains, and why no other country in the world taxes unrealised capital gains – it involves taxing individuals on funds they haven’t received or may never receive,” Mr Burgess said. “It has the potential to impose significant financial stress on individuals. Certainly, this is how it will play out in the SMSF sector, with many small business operators and farmers expected to bear the brunt of the Division 296 tax.”In its submission, the SMSFA said it rejects the notion that any liquidity stress caused by the new tax measure is a failing by SMSF trustees to properly formulate the fund’s investment strategy.“In our view it is completely unreasonable to expect trustees to envisage future tax changes when formulating the fund’s investment strategy – particularly of the magnitude of the Division 296 tax,” it stated.Mr Burgess added that to ensure this measure achieves its stated objectives, it is imperative that the measure of “earnings” mirrors the traditional measure of taxable earnings as closely as possible.The SMSFA said the two-week consultation period for the draft exposure legislation was too short stating the changes proposed are significant, complex and in need of detailed review.Additionally, it claimed other measures such as how the Division 296 tax will be applied to defined benefit funds and the proposal to remove the link between a member’s total superannuation balance and the transfer balance cap, are heavily reliant upon regulations not yet released.“This affects our ability to properly consider all aspects of the proposed measures,” it said.The submission also calls for the $3 million threshold to be indexed to the Consumer Price Index in $100,000 increments.The SMSFA is urging the government to put the proposed bill on hold while it further engages with stakeholders to ensure that the resulting policy and legislation deliver an outcome that is equitable across the superannuation system.
Keeli Cambourne |
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