The bitter reality of Chalmers’ aspiration tax

Let’s be clear, Jim Chalmers’ reform is tax on ambition, on responsible planning, and on businesses that support jobs and local economies, writes Luke Achterstraat.

Federal Treasurer Jim Chalmers holds a press conference at Parliament House in Canberra. Picture: NewsWire / Martin Ollman

Treasurer Jim Chalmers remains committed to legislation that will double the tax rate on super balances of more than $3m (from 15 per cent to 30 per cent) and, most alarmingly, apply that higher rate to unrealised gains.

Let’s call this what it is – an aspiration tax. A tax on ambition, on responsible planning, and on businesses that support jobs and local economies.

And while the Treasurer insists this reform targets the ultra-wealthy, the reality is starkly different.

This policy will hit family and small business owners, including farmers and tradespeople, many of whom have done exactly what governments have long encouraged – invested in their own businesses and assets through self-managed super funds (SMSFs) to build financial security for retirement, without relying on the age pension.

This is not a tax on cash. It’s a tax on the hypothetical increase in the value of assets such as business premises, shares or farmland that may never be sold and don’t generate income.

Jim Chalmers’ tax reforms will hurt small business owners. Picture: NewsWire / Martin Ollman

Under this regime, someone could be forced to pay tens of thousands of dollars in tax on an asset they have no intention of selling and which may well decline in value the next year.

It’s like taxing someone for owning a house because property prices went up and sending the bill before they’ve sold it.

This sets a dangerous precedent. Once you start taxing unrealised earnings, no asset class is safe. Homes, trusts, investments and everything else could be fair game. Every Australian should be worried.

The proposal also risks undermining the succession plans of thousands of
family-owned businesses. For many, a self-managed super fund has provided a practical and strategic way to transition assets, such as the family business or property, to the next generation.

For example, the older generation retains the asset in their SMSF and leases it to their children, providing stability, continuity and a reliable income stream in retirement.

This model has worked for decades, but the proposed tax could shatter it. Families may be forced to sell long-held assets or increase rents significantly, not because of market forces, but to meet an unfair tax burden.

That’s not sensible planning. That’s financial sabotage.

Luke Achterstraat is CEO of the Council of Small Business Organisations Australia