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Sky News AU
a day ago
- Business
- Sky News AU
Treasurer Jim Chalmers 'pouring cold water on investment' with Labor's proposed unrealised gains tax, Geoff Wilson warns
Treasurer Jim Chalmers is 'pouring cold water on investment' and 'penalising' Australians taking on financial risk through Labor's proposed changes to superannuation accounts above $3m, a leading fund manager has warned. Mr Chalmers on Wednesday vowed a boost to Australia's productivity and deliver major tax reform in a speech to the National Press Club. His promise drew criticism from Wilson Asset Management founder Geoff Wilson, who lambasted Labor's plans to alter how large superannuation funds are taxed - which includes targeting unrealised capital gains. "You can't say the economy lacks dynamism and innovation, then introduce a tax that penalises long-term investment and risk-taking,' Mr Wilson told 'Taxing unrealised gains in superannuation does the opposite of what's needed — it punishes prudence, discourages capital formation and undermines confidence in the rules of the game. 'The Treasurer admits we need more innovation — while taxing the very gains that fund it. 'You can't light a fire under the economy by pouring cold water on investment." A common criticism of the plan to tax unrealised gains on assets – including properties and shares – above the threshold in super funds is the impact it will have on small businesses. Many small business owners put assets in their self-managed super funds (SMSF), but under Labor's plan those above the threshold would be forced to pay tax on paper gains. Similarly, some investors use their SMSF as a low tax investment vehicle for startup businesses. Wilson Asset Management sent a note to shareholders warning if the tax were applied to a company like US$40b design platform Canva, which achieved its massive valuation after 18 funding rounds, the company would have failed. '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.' Labor's changes to super accounts $3m will also not be indexed and capture more and more Australians over time. AMP's chief economist Shane Oliver said the lack of indexing across the tax system, including under Labor's proposed super tax changes, was something the government needed to change. 'We should be looking at removing areas where, as far as possible, we're not indexing,' Mr Oliver told 'The ideal should be indexing things, not leaving more parts of the tax system unindexed and at the behest of what future governments might do.' The government insists its super change affects only the top 0.5 per cent of accounts, however, modelling from AMP deputy chief economist Diana Mousina suggests otherwise. 'An average 22-year-old today, who's earning average full-time earnings, will hit the cap when they get to about 62 years old on my analysis,' Ms Mousina told Sky News. 'So that's before they actually reach retirement.' She warned the government's failure to index the $3 million cap means growing numbers of Australians will eventually be drawn into the tax net. 'My estimates were actually, I think, understating the amount of people that will hit the cap because I used quite low return assumptions,' Ms Mousina said. She also flagged broader economic distortions that may result from the policy as people try to find a way around the taxes. 'If people know that their super is going to be hit, then inheritances will go elsewhere,' she said. 'More people will probably go to purchase a home, which has implications for home prices in the future. 'So people will find a way around this system to try and reduce their taxable income as much as possible.'
Sky News AU
07-06-2025
- Business
- Sky News AU
Labor left with ‘no choice' but to force super tax after weak GDP figures in March, shadow treasurer Ted O'Brien declares
Labor has been left with 'no choice' but to go after citizens' earnings with its proposed super tax as slow growth plagues the nation and hurts tax revenue, shadow treasurer Ted O'Brien has declared. Join to watch the full interview with Ted O'Brien on Business Weekend at 11am (AEST). The Albanese government's proposal to double the tax rate on funds in super balances above $3m and target unrealised gains could soon be legislated as the Greens' approval is all the bill needs to go through the Senate. It comes as recent GDP figures showed Australia was headed back towards per capita recession territory with growth slumping to just 0.2 per cent in the March quarter. The super tax proposal has faced fierce backlash from the Opposition, economists and leaders in the business community. Mr O'Brien is among those and tore into the Albanese government's fiscal management on Sky News' Business Weekend. 'The only reason they're doing it is they've lost all discipline on fiscal responsibility,' the shadow treasurer said. 'Debt (and) deficits (are) going out of control and they've got no ambition for the Australian economy.' He criticised Treasurer Jim Chalmers who lauded the 0.2 per cent growth, arguing the uncertainty from Donald Trump's trade war meant any growth was a decent outcome. 'We heard it last week from the Treasurer after the national accounts came out. What, 0.2 per cent growth in the quarter? Seriously? Lower than last time!' Mr O'Brien said. 'At a yearly basis it's running at less than half of the long-run average of growth and the Treasurer is happy about that. '(There is) no ambition for growth of the Australian economy and when you have no ambition and you overspend, you have no choice but to go after the earnings, the money of your own citizens. 'That's what this super tax does.' Labor's plan to tax unrealised capital gains has drawn backlash from Aussies concerned about small businesses, farmers and startups as many put assets in their self-managed super funds or use it as a low tax investment vehicle. Wilson Asset Management founder Geoff Wilson said by forcing Aussies to pay taxes on paper gains it will hinder investment in Australia. 'Both Anthony Albanese and Jim Chalmers - and probably most of the government - are gaslighting the Australian people by saying: 'Look, this will only impact a very small percentage of people that pay the additional tax',' Mr Wilson told Sky News. 'That's correct, but what it'll do is actually impact about how $4.2 trillion in superannuation is invested. 'We anticipate that the money will come out of self-managed super funds (SMSF), which is about $1.1 trillion, and billions of that will go into the housing market and push house prices up . ' He cautioned Aussies who use their SMSF as a low tax investment vehicle will be discouraged from funding projects and businesses in the Australian market. 'People won't want to take risk on their superannuation in the self-managed super funds,' Mr Wilson said. 'The angel investors and the startups and the small companies in Australia that find it hard to raise capital, particularly at this point in time - that tap's going to be turned off.'
Sky News AU
05-06-2025
- Business
- Sky News AU
Labor is 'gaslighting the Australian people' on unrealised capital gains tax proposal, Geoff Wilson warns
Labor is 'gaslighting the Australian people' by claiming its proposed super tax will impact a small sliver of the population, a leading fund manager has warned as the government and the Greens close in on a deal. The Albanese government's controversial plan to double the tax rate on funds in super accounts above $3m and hit unrealised gains could soon be legislated. Labor has claimed the tax will hit just 80,000 super accounts, however, Wilson Asset Management founder Geoff Wilson, who has launched a petition opposing the plan, said by forcing Aussies to pay taxes on paper gains it will hinder investment in Australia. 'Both Anthony Albanese and Jim Chalmers - and probably most of the government - are gaslighting the Australian people by saying: 'Look, this will only impact a very small percentage of people that pay the additional tax',' Mr Wilson told Sky News. 'That's correct, but what it'll do is actually impact about how $4.2 trillion in superannuation is invested. 'We anticipate that the money will come out of self-managed super funds (SMSF), which is about $1.1 trillion, and billions of that will go into the housing market and push house prices up . ' He cautioned Aussies who use their SMSF as a low tax investment vehicle will be discouraged from funding projects and businesses in the Australian market. 'People won't want to take risk on their superannuation in in the self-managed super funds,' Mr Wilson said. 'The angel investors and the startups and the small companies in Australia that find it hard to raise capital, particularly at this point in time - that tap's going to be turned off.' He pointed to the taxing of unrealised gains in Norway that drove investment out of the country despite initial expectations it would bring in millions. 'It was only for the ultra-wealthy, they thought they were going to raise $150 million,' Mr Wilson said. 'Instead of raising that, they were minus half a billion.' He also noted the capital gains tax hike in the United Kingdom which resulted in the government taking in 10 per cent less capital gains tax revenue. 'People change their behaviour,' Mr Wilson said. 'We've done economic models, we think it'll be negative to the tune of $94.5 billion on the Australian economy.' Alongside taxing unrealised gains, Labor's super tax has drawn criticism for its failure to index the $3m threshold over time. The Greens want Labor to lower the threshold to $2m and index it to the rate of inflation. New analysis from the Financial Services Council shows that under Labor's plan more than half a million Aussies currently in the workforce will be captured by the tax. Of those impacted, more than 200,000 are currently under 30, while 135,000 are between 30 and 34 and 65,000 are between 35 and 39. The number of impacted taxpayers greatly drops off for Australians 40 and over. The Greens' proposal would hit more than 200,000 Aussies currently in the workforce and is more evenly spread across the age ranges. Financial Services Council CEO Blake Briggs urged Labor to listen to feedback from consumers, industries and economists on how the tax will impact future generations. 'The superannuation industry recognises the government has the capacity to force the new tax through the Parliament with the support of the Greens, but encourages the two parties to take a more constructive and consultative approach,' Mr Briggs said. 'The Financial Services Council encourages the Government to consult on options that would not unfairly target future generations of Australian superannuation consumers and undermine confidence in our retirement system by introducing a new, contentious tax on unrealised capital gains.'
Sky News AU
02-06-2025
- 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
28-05-2025
- 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.'
