‘Unfair and unjust’: Labor’s super tax a red tape headache

The Albanese Government’s super tax on unrealised gains has been panned by economists, who say it would be a “boon” for property valuers.

Labor is being urged to dump its super tax on unrealised gains as the “unprecedented” cash grab risks costly disputes over property values and will slug impacted Australians with expensive paperwork.

The Albanese Government’s plan to capture the rising value of non-cash assets like shares or property in its 30 per cent concessional tax on earnings for super balances of $3 million or more has been panned as “unfair” by economists, who say it would be a “boon” for property valuers.

The proposal means people with large super balances would get a tax bill based on the increase in value of property or shares, even though they have not been sold or converted into cash.

The Albanese Government is being urged to dump its super tax on unrealised gains. Picture: NewsWire / Martin Ollman

Economist Saul Eslake said unlike shares, calculating the value of property to auditing standards was complex and liable to dispute.

“(Valuers) are going to get all this business valuing people’s properties every 12 months,” he said.

Mr Eslake said he supported “reducing the generosity” of tax concessions for big super balances, but there were “more sensible ways” that don’t have the “undesirable effects” of Labor’s plan.

Economist Saul Eslake said unlike shares, calculating the value of property to auditing standards was complex and liable to dispute. Picture: Supplied

Self Managed Super Fund Association chief executive Peter Burgess said there was an existing requirement for annual “market value” assessments of assets, the tax would likely increase the burden of proof.

“I think what we will see is auditors wanting more evidence moving forward, and things that perhaps they’ve relied on in the past they may not be prepared to rely on in the future,” he said.

“There might be the need to get professional valuations done … so there will be an extra costs that these funds will have to incur.”

ASF Audits head of technical Shelley Banton said people with commercial property in their super in particular would have a more difficult time due to a lack of software that could help with calculations.

“There’s nothing in superannuation or auditing standards that says trustees have to go out and spend thousands, but if they don’t they have to have other evidence,” she said.

“It becomes difficult with commercial properties.”

Jim Chalmers has insisted the concessional tax increase is “modest” and argued future governments would likely raise the $3m threshold. Picture: NewsWire / Martin Ollman

Ms Banton said she believed most people would not oppose taxing high balanced funds, but the principle behind Labor’s plan was “unfair and unjust”.

“It doesn’t have any merit, or precedent anywhere in the world,” she said.

Treasurer Jim Chalmers has insisted the concessional tax increase is “modest” and argued future governments would likely raise the $3m threshold.

“In terms of the calculation of unrealised gains, that’s actually not unique in the system,” he told the Politics with Michelle Grattan podcast.

Mr Chalmers said Labor did three rounds of “substantial” consultation and “nobody could propose to us a better way of making this calculation”.

About 80,000 people — or 0.5 per cent of accounts — would be affected by the higher concessional tax, while the majority of Australians would continue to pay a 15 per cent rate.

Originally published as ‘Unfair and unjust’: Labor’s super tax a red tape headache