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Sky News AU
2 days ago
- Business
- Sky News AU
Ditch unrealised gains tax, index threshold for Coalition to consider bipartisan support on super tax, shadow treasurer Ted O'Brien and James Paterson declare
Two leading Coalition ministers have called on Labor to scrap taxing unrealised gains and index the threshold in its controversial superannuation proposal if the opposition is to consider bipartisan support for the plan. The Albanese government's proposal to double the tax rate to 30 per cent on funds in super accounts above $3 million has drawn backlash over plans to hit unrealised gains and maintain the threshold over time despite inflation pushing more Aussies into the higher bracket. It has sparked fears for small business owners, farmers who hold properties in their self-managed super funds, and startup investors, who use SMSF's as an investment vehicle. The groups are are particularly concerned about paying tax on paper gains they have not realised. Newly appointed shadow finance minister James Paterson said the two controversial components of the bill were core reasons why the Coalition continues to oppose it. 'We're going to fight this every step in the way because we think it's wrong in principle,' Mr Paterson said on Sky News' AM Agenda. 'Unless the government was willing to walk away from the two key principles in this bill, which is taxing unrealised gains and failing to index the threshold, then there's no conceivable world in which we could support it. 'We're very proud to oppose it because we think it is bad tax law.' It follows shadow treasurer Ted O'Brien telling The Australian the opposition is willing to engage with Labor on the proposed super changes if the government ditches the two controversial elements. 'We will be constructive, but (Treasurer) Jim Chalmers has to be prepared to change his direction on this,' Mr O'Brien said. 'What is being put forward really does breach a red line in taxing unrealised capital gains. 'But if Jim Chalmers is prepared to be humble for a moment and realise he's made a mistake and wishes to engage with me, my door is open.' The Coalition's call for negotiation on the super tax comes as Labor needs only the Greens' support in the senate to legislate the change. The Greens expressed support for taxing unrealised gains but urged Labor to lower the threshold to $2m but index this with inflation. Labor's plan will hit more people than the Greens' counterproposal over the long term, according to the Australian Financial Review. The Greens' lowered threshold would immediately capture an extra 16,000 taxpayers in the first year but would hit less Aussies after about 16 years. Mr Chalmers has claimed the tax would initially only hit 80,000 Australians, however, Assistant Treasurer Danile Mulino conceded about 1.2 million, or 10 per cent of taxpayers, will face the tax within 30 years. Leading fund manager and Wilson Asset Management founder Geoff Wilson supports the Greens' call, but wants the threshold indexed well above the rate of inflation. 'With the Greens indexing it to the CPI (consumer price index), the risk there is young people are going to be significantly disadvantaged again because superannuation (is something) you effectively invest in assets,' Mr Wilson told in May. 'What it would make sense for them to be looking at is growth in asset prices, which runs at probably double, if not more, than the CPI growth. 'If you want young people not to be disadvantaged, that's what you need to do.' Modelling by AMP deputy chief economist Diana Mousina shows a 22-year-old on an average income would breach the $3m threshold by the time they turn 62. She took to LinkedIn last month with a diagram showing how an Aussie earning a three per cent annual wage growth and receiving the 12 per cent super guarantee would breach the threshold. Ms Mousina also told Sky News her diagram may have even underestimated how quickly the 22-year-old's super account would hit $3m. 'Average super returns have been about nine per cent in Australia in the last 30 to 40 years and I'm using assumptions closer to six per cent,' she said. On plans to hit unrealised gains, Mr Wilson said this would impact the 'lifeblood of Australia' as people would restructure their investments away from risk. He also warned it could 'destroy innovation' and entrepreneurialism as a large amount of investment into technology start-ups comes from self-managed super funds.
Epoch Times
7 days ago
- Business
- Epoch Times
Taxing Unrealised Gains Discourages Australians from Managing Their Money: Senator Rennick
People First Senator Gerard Rennick has said the Labor government's proposed superannuation tax will impose a heavier burden on self-managing super funds, effectively discouraging people from handling their own retirement money. This comes as Labor is pushing for the super tax bill to pass the Senate after it was approved by the House of Representatives in October 2024. If passed, the bill would lift the tax rate on earnings from super balances above $3 million (US$1.95 million) in the accumulation phase from 15 to 30 percent from July 1, 2025. During the 2022 federal election campaign, Labor leaders, including Prime Minister Anthony Albanese, who was the then-opposition leader, stated that the party had 'no intention of making any super changes.' However, after Labor won the election, the party went back on its promise by introducing the proposed tax in 2023. A controversial aspect of the bill is that it now targets 'unrealised capital gains' in super portfolios. Related Stories 5/19/2025 5/12/2025 This means superannuation members and those managing their self-managed super funds (SMSFs) will be required to pay an annual tax on increases in the value of their portfolio assets—even if those assets have not been sold. Financial experts have raised concerns about this unusual approach, which has not been adopted by any developed country so far. In a recent discussion paper ( 'Superannuants may be incentivised to realise gains more frequently to avoid accumulating large unrealised gains subject to taxation, even if it is not optimal from a long-term investment perspective,' he wrote. 'This could lead to higher portfolio turnover, increased transaction costs, and potentially lower overall returns for superannuation account holders.' Other distorted investment decisions included increasing liquidity in super funds to pay unrealised gains, and shifting to less productive assets to avoid higher taxes. Wilson Asset estimated that Labor' super tax scheme would result in economic efficiency losses of $94.5 billion. An elderly couple walk in Sydney, Australia, on June 2, Super Funds Will Face Higher Costs Rennick, who has 25 years of experience in the finance sector, pointed out another potential consequence of Labor's super tax—a significant increase in compliance costs for those who run SMSFs. As the new tax will apply to unrealised capital gains, super funds and SMSF trustees may need to regularly value their non-liquid assets, such as properties and shares. However, Rennick noted that SMSF trustees would face higher costs than larger super funds when valuing the same amount of assets. 'If you're an industry fund and there's a million people [in it], then that cost of doing it over a million people is shared,' he told The Epoch Times. '[You can have] a billion dollars inside an industry fund that needs one valuation. Or you can have 1,000 people with a million-dollar property each.' 'So the cost of compliance [for 1,000 people] is higher because you don't get the economies of scale. The cost of running a self-managed super fund is going to increase significantly.' Furthermore, the senator stated that there were risks associated with the valuation process of unlisted assets, as it could be very subjective. '[You will need to appoint] an auditor, an accountant, or a valuer. It is going to be very painful,' he said. Liberal Senator Gerard Rennick during Senate Estimates at Parliament House in Canberra, April 6, 2022. AAP Image/Mick Tsikas A More Effective Way to Raise Taxes Rennick questioned Labor's idea of taxing unrealised capital gains instead of opting for a more effective tax measure. 'If they want to raise more money, [they can] raise more money by taxing incomes in the retirement phase above a certain level,' he said. '[Currently], there's no tax on your income in superannuation once you've retired, regardless of what your income is. Why wouldn't you bring a tax in on that?' The senator gave an example: a person earning $100,000 annually from their superannuation in retirement could have the first $50,000 tax-free, with the remaining $50,000 subject to tax. According to data from the Australian Taxation Office, there are 646,168 SMSFs with 1,197,293 members as of March 2025. The total estimated value of assets held by these funds is around $1.01 trillion. Australia Has An Expenditure Problem, Not Revenue One: Director Amid the Labor's government attempt to collect more tax from working people, Wilson pointed out that Australia does not have a revenue problem. 'The federal governments already collects $700 billion in taxation revenue and is the fourth highest in the developed world for income tax to GDP,' he said. 'We do not have a revenue problem in Australia, we have a well-documented expenditure problem. 'Expenditure reform should be the focus to restore budget confidence, not the taxing of unrealised gains on superannuation.'
Yahoo
25-05-2025
- Business
- Yahoo
$3 million super change sparks property warning as 'panic' selling begins: 'Forced to sell'
Australians are expected to sell off their investment properties to avoid the looming tax on superannuation savings worth more than $3 million. Financial advisers have told Yahoo Finance there is a 'tangible sense of unease' amongst their clients, with some wealthy retirees beginning to 'panic' sell due to the upcoming change. The controversial superannuation tax will double the existing tax rate from 15 to 30 per cent for earnings on super balances above $3 million, including unrealised capital gains. The changes are scheduled to come into effect on July 1, following the passing of legislation. Ray White head of research Vanessa Rader said this marked the first time unrealised gains would be subject to taxation in the superannuation environment, presenting 'unique challenges' for residential property investments within self-managed super funds (SMSFs). RELATED Retirement warning as controversial $3 million superannuation tax change looms: 'Be proactive' Most in-demand tradie jobs paying nearly $3,200 per week amid crisis: 'Shining a light' Major backflip from world's most cashless country as Australia mulls money law 'When a property experiences significant capital appreciation on paper, the resulting tax liability would require cash payment even though no actual sale has occurred,' she said. 'Unlike shareholders who can sell a portion of their holdings to cover tax obligations, property is indivisible, creating potential liquidity crises for SMSF trustees.' Rader gave the example of an SMSF with a $2.5 million residential investment property that appreciated to $3.5 million. This would trigger tax obligations on the unrealised portion of the gain above the $3 million threshold. 'Without adequate cash reserves, trustees might be forced to sell the entire property or seek alternative funding sources to meet these obligations,' she said. Residential properties held within SMSFs already have strict rules around them. For example, they can't be rented or occupied by fund members or their relatives. This, combined with the super tax changes, may 'significantly reduce' the attractiveness of residential property as an SMSF investment vehicle and drive people out of the market. 'This could lead to broader market implications such as potential listing supply increases and a shrinking pool of rental properties if SMSF trustees reconsider their investment strategies or restructure their portfolios before the implementation date,' Rader said. The tax change could drive structural shifts in residential property investment patterns, including a reduction in SMSF residential property holdings, particularly for those approaching the $3 million threshold.' Rader said investors could turn to commercial properties that might deliver stronger income yields relative to capital growth, move assets to structures outside of super, or focus on tax-exempt primary residences. 'In the long term, this policy could impact residential property valuations in specific market segments,' she said. 'Properties typically favoured by SMSF investors are often in the middle to upper price brackets in metropolitan areas, and might experience pricing adjustments as demand from this investor class diminishes.' Mintwell financial adviser Josef Jindra said he was seeing a 'tangible sense of unease' amongst clients, particularly those who had spent years diligently building up their super balances. 'For my clients approaching or exceeding the $3 million mark, we're having in-depth conversations about tailored strategies,' he told Yahoo Finance. 'This may include planning withdrawal strategies to stay below the threshold, diversifying investment holdings outside of superannuation to enhance flexibility, and reducing exposure to the higher tax rate.' Melbourne-based tax adviser Noel Beharis echoed this, saying there was a 'significant amount of panic' among SMSF members. 'For members of retirement age who can cash out their superannuation benefits, they have started the process of selling down assets and transferring the assets out of the fund to vehicles that will hold that wealth going forward,' he told The Australian Financial Review. The Treasury estimates the changes will only impact 80,000 people, or 0.5 per cent of the population. However, the Financial Services Council projects that more than 500,000 people who are working today will be impacted by the tax over their lifetime. Research by AMP deputy chief economist Diana Mousina found that at least half of Gen Z would hit the $3 million mark by the time they retire due to wage inflation and compound while retrieving data Sign in to access your portfolio Error while retrieving data
Sky News AU
19-05-2025
- Business
- Sky News AU
Startup investors 'delaying deals' over Labor's proposed superannuation tax, Stone & Chalk CEO Chris Kirk warns
Investors and venture capitalist are delaying deals and pulling back from startups due to uncertainty over Labor's proposed super tax changes, a leader in startup sector has warned. The Albanese government's controversial plan to double the tax rate on funds in super accounts above $3 million and go after unrealised capital gains could soon be passed as approval from the Greens is likely to be the only barrier for the legislation under the new parliament. Labor's tax will force Aussies to pay taxes on assets in their super – such as a farm, property or shares - as they increase in value despite not reaping the material gains. The ramifications this could have for self-managed super funds (SMSF), which are used to invest in startups, has sparked concerns from the CEO of Stone & Chalk Chris Kirk who said investors were shying away due to Labor's proposed tax. 'We've seen countless examples, unfortunately, right across the startup ecosystem right now of particularly high net worth angel investors and investors that are currently invested in tax-friendly structures to invest in the startup community… pulling back or delaying deals because of the uncertainty,' Mr Kirk told He warned that investment into startups could be put on hold or 'disappear completely' from the venture capital ecosystem as investors are offput by the threat Labor's tax on unrealised gains poses to the startup sector. This comes as the investment timeline for a startup can be about 10 to 15 years and the risk rates for these businesses is 'incredibly high'. 'Investors are looking at a portfolio of 20 companies for one to make it,' Mr Kirk said. These businesses can see their valuation balloon from between $1 million and $5 million to upwards of $100m. This can compound the risk of investing in startups when there is already such a low success rate. 'In an environment where (investors) potentially are up for paying tax on a significant paper gain, and then that business ultimately (is) unsuccessful and (has) been marked down to zero, it's just incredibly problematic and means… that money is just going to be put on hold or disappear completely from the venture ecosystem,' Mr Kirk said. The Stone & Chalk CEO predicted about 20 per cent of the capital invested into early-stage startups come from the SMSF industry. He said that changes to taxing superannuation that thwarts Aussies from SMSFs could have knock-on effects to Australia's competitiveness if it hurts the startup space. 'It will impact all of the critical capability areas that the government is targeting to grow from the sovereign capability area,' Mr Kirk said. 'These are things like space, like robotics, like agriculture, like artificial intelligence and for businesses in Australia that are already struggling to keep up with global counterparts, it just makes the Australian environment markedly less attractive.' Similar criticisms of Labor's proposed super tax changes came from Wilson Asset Management founder Geoff Wilson who said the move would destroy innovation and entrepreneurialism. He recalled a discussion with an investor who expressed grave concerns about what the proposed legislation could mean for Australia's tech industry. 'I was talking to someone that works in a technology hub recently and he said 50-60 per cent of the money that comes into those small technology companies comes from our self-managed super funds,' Mr Wilson said. 'So even though Mr Albanese is correct in terms of the tax only affects a very small number of people in terms of paying extra tax, it actually affects every Australian in terms (of the fact) the $4.2 trillion is not going to be productively invested. 'I actually think it's a disaster.' Mr Wilson's fund sent a note to shareholders where they used the example of major Australian tech startup Canva, now valued at US$40 billion, as an Aussie innovation that would be under threat from the tax on unrealised gains. Canva achieved this high valuation after 18 funding rounds, but if the unrealised gains were taxed the founders would have struggled to build a strong future, according to the note. 'Under taxing of unrealised gains every funding round would require tax to be paid on a hypothetical valuation,' the report reads. 'Most startups operate with negative cashflow and when capital is raised it is to fund growth, not to provide liquidity to investors. 'Therefore, there is no liquidity to pay tax on an unrealised gain. If this tax is implemented, the Australian Venture Capital industry will be permanently and negatively impacted. Startups will move offshore.'
Miami Herald
19-05-2025
- Business
- Miami Herald
Liberty Personal Loans Help Borrowers Fund Their Dream Weddings
As Australian couples look for smart finance options for their big day, Liberty offers flexible personal loan solutions to keep wedding plans moving forward. MELBOURNE, AUSTRALIA / ACCESS Newswire / May 18, 2025 / According to a Moneysmart survey, 60% of couples are using loans to help fund their wedding celebrations. With the average wedding costing $36,000, it's not surprising many Australians are seeking flexible lending solutions to cover the upfront expenses. Leading lender Liberty offers personal loans to help borrowers access the funds they need for a wide range of purposes, including managing wedding-related costs. According to Communications Manager, Bernadine Pantarotto, personal loans can provide flexible, fast funding ahead of life's special moments. "From venues to catering, photography and more, the upfront expenses associated with a wedding can add up quickly," said Ms Pantarotto. Liberty offers personal loan solutions up to $80,000 with a convenient online application to help make securing funding as simple as possible. "With fixed repayments, Liberty personal loans can give borrowers the predictability and confidence they need to plan their dream celebration." Personal loans could also be a handy option for debt consolidation, unexpected expenses, moving houses, medical bills and even pursuing a new hobby. Same-day funding upon approval may also be available to help streamline the process and provide quick access to funds. "Our tailored rates and fast turnaround times can help borrowers secure the lending they need to bring their vision to life without delay," said Ms Pantarotto. For over 27 years, Liberty has proudly offered flexible solutions to support borrowers from all backgrounds, including those with variable incomes or less-than-perfect credit histories. "We believe people are more than just their credit score, which is why we take the time to look at each borrower's individual circumstances," Ms Pantarotto said. As well as personal loans, Liberty offers innovative lending solutions across home, car, business, commercial, and SMSF loans. "We are proud to have helped over 900,000 customers with our tailored lending solutions," Ms Pantarotto said. About LibertyAs one of Australia's leading non-bank lenders, Liberty offers innovative solutions to support customers with greater choice. Over more than 27 years, this free-thinking approach to loan solutions has seen more than 900,000 customers across a wide range of home, car, business and personal loans, as well as SMSF lending and insurance. Liberty remains the only non-bank lender with an investment-grade credit rating offering custom and prime solutions to help more people get financial. Approved applicants only. Lending criteria apply. Fees and charges are payable. Liberty Financial Pty Ltd ACN 077 248 983 and Secure Funding Pty Ltd ABN 25 081 982 87 2 Australian Credit Licence 388133, together trading as Liberty Financial. ContactLaura Orchard Media Coordinator P: +61 3 8635 8888 E: mediaenquiries@ SOURCE: Liberty
