24-04-2025
CSL chairman Brian McNamee hits out at Labor's unrealised capital gains tax proposal
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Labor's plan for an unrealised capital gains tax on superannuation accounts has been denounced by CSL chairman Brian McNamee and veteran UBS dealmaker Brett Paton, who say it will cost jobs, cause a drought in funding for new businesses and could be a 'Trojan horse' for government to tax other assets such as residential property.
Labor wants to slap a 30 per cent tax on unrealised capital gains made in superannuation accounts worth $3m or more without any indexation.
The Greens are willing to back Labor but want the threshold to be lowered to $2m, which would leave 100,000 superannuants from day one paying the tax and eventually as many as 1.8 million Australians paying it if it remained unindexed.
In the most stunning intervention by a business leader in the election campaign so far, Dr McNamee said the Albanese government did 'not understand the consequences' of the 'frightening, shocking' unrealised capital gains tax policy that Jim Chalmers was championing.
'I am deeply troubled about what it will do and how it could make Australia a less attractive place to invest,' Dr McNamee told The Australian.
'It's a frightening, shocking precedent and yet there are some people who would want to see it on other assets too,' he said.
The Australian reported this week that up to $25bn could be withdrawn from the self-managed super pool to avoid paying the tax on unrealised gains.
Financial advisers have been fielding calls from clients about shifting money out before Labor's planned July 1 start date.
'I don't think the policymakers truly understand the consequences,' Dr McNamee said.
'Start-ups need people to give them capital and the self-managed superannuation funds are a big part of that,' he said.
'The last thing we need to do is make it harder for start-ups. That's where the new jobs in the economy come from.'
Dr McNamee was made chairman of Australia's third largest company, having been chief executive for 23 years, and is regarded as a leader in raising up small technology and drug companies.
'The problem with UCGT is that every time you raise capital for a company, it can take place at a higher valuation and every time that happens you would get taxed, but the trouble is the company could still fail, it could go to zero and yet you have paid all this tax on what wasn't even there and there is no refund,' he said.
Experts in raising money for companies say an unrealised capital gains tax would be a disaster.
Mr Paton, the former UBS and Citi dealmaker who with his team assisted in raising more than $200bn in capital for companies, said Labor's new tax was a 'wrecking ball' for small and medium-sized business capital.
Brett Paton.
He said Labor risked the pool of savings created for emerging industries in Australia, which had been augmented by former Labor treasurer and prime minister Paul Keating and supported by Liberal treasurer Peter Costello.
'The big industry super funds who manage a large part of this do not have the flexibility and mobility to back early start-up ventures because their mandates usually dictate a minimum investment size of about $50m and a shareholding constraint of less than 10 per cent of a company – so that's a $500m company which is hardly a start-up,' Mr Paton said. 'What we need is a pool of capital that can take small licks in early stage companies who often need just $5-$10m to keep growing and that pool exists in the larger SMSF community.
'The wrecking ball of Labor's division 296 tax on unrealised gains is that in the world of backing entrepreneurs who create jobs, opportunities and taxes down the track, the massive pool of funds that can embrace risk capital will become barren.
'My prediction, after 25 years in raising capital, is that this is a game stopper for entrepreneurial spirit in Australia unless Treasury finds a way for big industry funds to fill the space of providing long term risk capital for small early-stage companies.'
Anthony Albanese on the campaign trail in Western Australia. Picture: Mark Stewart/NewsWire
Mr Paton, who is now chairman of Escala Partners, said that if such a tax were implemented it would make it tempting for government to apply it across other assets such as property.
'This tax is a Trojan horse which could extend itself to the second home or negative gearing,' Mr Paton said.
Investment managers across Australia – including regional areas where people with illiquid assets such as farms and warehouses would also have to pay unrealised gains – are raising the idea that Labor's new tax would eventually be used on the family home.
Clime Investment Management founder John Abernethy said such a tax was 'absolutely, totally outrageous'.
'They are clearly testing to see how far it will go,' Mr Abernethy said. 'This is a Trojan horse that current generations under a so defined $3m limit may commit future generations to significant consequences.
'This is just the beginning. Superannuation accounts over $3m would only be worth tens of billions but if you extend unrealised capital gains tax even at a small rate on residential property you've got a pool of $11 trillion there to tax the unrealised gains.'
'If $3m is the suggested trigger point, then how many residences valued above $3m today and into the future, without indexing, would be caught? Remembering that residential home ownership is a key plank of retirement policy.
'They really should have put this to the people like they did with the voice referendum. They should ask whether having unrealised capital gains tax on assets is fair.'
Other investment managers such as Geoff Wilson, the architect of the Coalition's successful attack on Labor's franking-credits policy at the 2019 election, have been stunned by the lack of campaigning by the Coalition on the issue.
The Coalition is against the unrealised capital gains tax while some teal members of parliament are open to some aspects of Labor's policy.
In the US, former Democrat president Joe Biden wanted to impose a 25 per cent minimum tax on unrealised capital gains accrued by wealthy Americans but it was shot down by his own party and billionaire entrepreneurs such as Mark Cuban in the lead-up to the November election.
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