New tax on unrealised super gains risks Labor’s election support, says Geoff Wilson
Labor’s proposed tax on the unrealised gains of super funds could cost it the next election, says fund manager Geoff Wilson, who mobilised investors in 2019 against a planned franking credit hit.
The federal government’s proposed tax on super funds over $3m could cost the Labor the next election, fund manager Geoff Wilson believes.
The proposed 15 per cent tax on the increase in the value of super funds above $3m, in addition to the existing 15 per cent tax on earnings, is scheduled for debate in the Senate when federal parliament resumes on February 4.
“We have received strong support from so many of our 130,000 shareholders, and stand with the SMSF Association and all Australians to oppose this unfair legislation,” Mr Wilson told The Australian.
The founder of Wilson Asset Management said the proposed tax on unrealised gains would set a “dangerous precedent” for future tax reforms and could become an issue in the upcoming election.
Mr Wilson led a successful campaign in the 2019 election against proposals by former opposition leader Bill Shorten to abolish cash refunds on franking credits, exploiting his access to retail investors.
Mr Wilson said the federal government did not understand the “unintended consequences” of the proposed legislation, which will come into force from July 1 this year if it is passed by the Senate.
“In 2019 we had to rally against the ‘retirement tax’,” he said. “Taxing unrealised profits is as illogical, and could well cost the government the upcoming federal election.
“It’s time for all Australians to stand up against an illogical and unfair taxing of profits that may never eventuate.”
In the 2022 election campaign, the Labor Party promised there would be no negative changes to the tax on superannuation in its first term of office.
The government says that the legislation will only affect about 80,000 people, and is due to come into force after the election – not breaking its election commitment.
Its passage next week could result in fund members having to scramble to sell property and assets by June 30.
The legislation has raised particular concerns for farmers and small business owners who have property in their super funds.
The legislation has passed the House of Representatives but has been opposed by crossbenchers in the Senate.
The Self Managed Super Fund Association has expressed concerns that the government could try to push the legislation through next week with some last-minute amendments.
“It’s not the right time to force this unfair legislation through before an election,” Mr Wilson said.
“It is time to take a leaf from the new US administration’s book and reduce taxes to unleash the economy and increase much-needed productivity rather than set a dangerous precedent for future tax reform that disrespects young people, treats farmers unfairly, and hurts small business owners and Australian investors.
“The Australian economy is struggling right now under the burden of higher interest rates, which have significantly slowed growth and put pressure on household budgets.
“The economy is in urgent need of policies that encourage economic growth rather than stifle it.”
Mr Wilson said he supported higher taxes on big super balances but the taxes should not be levied on unrealised gains, and any initial threshold for the higher taxes should be indexed to keep pace with inflation.
“The current proposal disadvantages the young and taxes something you may never receive,” he said.
He said the modelling data used by federal Treasury on the impact of the new tax was more than four years old. “How can senators vote on measures when the data presented is unreliable?” he said.
“The S&P 500 over this period has nearly doubled, so to argue the precise number of accounts impacted with precision is flawed.
“This tax has the potential to impact large segments of the Australian electorate ahead of the upcoming election.”
The Financial Services Council estimates more than 500,000 super balances will eventually breach the $3m cap, including those belonging to 204,000 Australians under the age of 30.
Originally published as New tax on unrealised super gains risks Labor’s election support, says Geoff Wilson
Doug’s big bling pays dividends
Former Terrace old boy Doug Tynan is receiving a few strange looks for sporting brooches and necklaces made by a French luxury fashion house. But there is a good reason.
Lawsuit levels claims of staff exploitation against Lovisa
Costume jewellery chain Lovisa’s mostly young female staff were exploited, not given proper meal and rest breaks, and even forced to pay for and wear its products each shift, a lawsuit alleges.