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 SkyNews.com.au 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.
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