Farmers and small business combine to lobby against super legislation
The federal government’s proposed tax increase on super funds of more than $3m could send some small businesses to the wall, the Council of Small Business Organisations Australia fears.
The federal government’s proposed tax increase on superannuation funds of more than $3m could send some small businesses to the wall, Council of Small Business Organisations Australia chief executive Luke Achterstraat says.
Mr Achterstraat told The Australian the proposed legislation to double the tax on super funds worth more than $3m, from 15 per cent to 30 per cent – with the tax applied to unrealised gains – could push some small businesses into insolvency.
He said the tax could force small business people who owned property in their super fund to pay the higher tax if the value of their property went up across the year – even if they did not get any income from it.
If they did not have the funds to pay the tax, it could push them into insolvency.
Alternatively, they could be forced into an unwanted fire sale of their property to avoid the legislation, which is set to come into force from July 1 next year.
“There is already a lot of anxiety about the tax among small businesses,” Mr Achterstraat said.
“The new legislation could put extra financial burden on thousands of small businesses.”
He said farmers, who often held their property assets in their super fund, could find themselves in the same situation.
The concerns have led COSBOA and the National Farmers Federation to unite to oppose the tax. The two organisations are calling on the federal government to look at changes to the legislation to ease the impact of the proposed tax.
“We are open to anything that helps,” Mr Achterstraat said.
“This could include carve-outs, lifting the $3m threshold or other changes to reduce the impact of taxation on unrealised gains.”
Mr Achterstraat said the proposed legislation, with its tax on unrealised gains, was a “radical departure from existing policy on superannuation”. It was coming when small businesses were having to deal with increasing costs and many already were being forced into insolvency.
The federal government announced the proposed tax increase in super funds early last year and now is factoring in the higher expected tax revenue into its forward budget estimates.
But increasing concern about its application, particularly on unrealised gains in super funds, has led to the legislation being stalled in parliament.
The enabling legislation is still in second reading stages in the House of Representatives.
Mr Achterstraat said the fact that the starting date for the legislation was now less than a year away was adding to concern by small business people who were having to plan ahead on how to arrange their affairs to respond to the new tax.
NFF president David Jochinke called on the government to consider proposed amendments to the legislation that he said “would allow it to achieve its overall aim without causing undue hardship to small businesses”.
“Farmers and small business owners are united in our view that this bill will have unintended consequences on the operations and succession planning of these small businesses across the country, in particular for those who hold a self-managed superannuation fund to structure their business,” he said.
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