APRA-regulated funds have reportedly raised concerns with the government over Division 296, as news of potential policy tweaks makes headlines.
Growing media coverage and internal Labor dissent are believed to be adding pressure on the government to reconsider Division 296, amid concerns about political backlash and the tax’s impact on Australia’s already fragile productivity.
APRA-regulated funds, in particular, are said to have warned the government that the tax would create costly and complex new reporting obligations.
Speaking to Super Review sister brand SMSF Adviser, following reports in The Australian Financial Review that the government has paused plans to impose an additional 15 per cent on earnings of super balances above $3 million, Peter Burgess, CEO of the SMSFA, said: “It’s no secret there is opposition to this tax within the Labor party ranks.
“I think the other thing is that the government is trying to position the Labor Party as pro-aspirational … You can’t get a better example of a tax on aspiration than this tax.”
The Treasury’s recent economic reform roundtables are also understood to have reignited concerns in specific circles, with the tax increasingly viewed as anti-innovation and anti-aspirational.
“It’s very hard for the government to be arguing that it stands for innovation when it’s got a tax like this on the table,” Burgess said.
“I think that’s probably what the backbench and Labor Party members are pointing out – that it’s completely inconsistent with the government’s policy positioning.”
Wilson Asset Management founder Geoff Wilson, who has been campaigning against the tax and released three research papers on its impact, told SMSF Adviser he had circulated the reports to roundtable participants, several of whom responded with specific questions.
“There was quite a bit of discussion about the insanity of taxing unrealised gains,” he said. “It’s an insane tax and very negative for Australia’s productivity. To me, if what we’re hearing is true, then good on Anthony Albanese for standing up for sanity.”
APRA funds voice concerns
Burgess further told SMSF Adviser that APRA-regulated funds are mounting pressure on the government over worries they would be forced to overhaul their processes and reporting obligations under the new tax.
“We know that one of the implications of this tax is that funds will have to re-report balances for people that have defined benefit pensions, and it’s messy, costly,” he said.
“There are other ways to go about achieving what the government is trying to achieve that don’t have these unintended consequences.”
In a live televised Q&A following his National Press Club address this week, Paul Schroder, CEO of AustralianSuper, didn’t hold back on how funds cope with tweaks like Division 296, telling attendees: “We’ve become expert at adjusting for regulatory change.
“We think of it [regulatory change] as a constant state.
“We have to budget for it every year. We have experts deep in the system to make sure we do a very good job of trying to meet all of our obligations.
“There’s always costs associated with regulatory change. It will cost a bit, it will take a bit of effort, but for us, it’s kind of like the cost of doing business.”
How APRA-regulated funds feel about the tax remains unclear, with ASFA CEO Mary Delahunty publicly backing Division 296 at a Super Review sister brand InvestorDaily event earlier this year, describing it as a “worthwhile pursuit”.
The waiting game for Division 296, originally set to take effect on 1 July 2025, took a turn late last month when Treasurer Jim Chalmers told ABC’s Insiders program that he was in no hurry to reintroduce the legislation.
He, however, insisted at the time that the tax was “a pretty modest” but “meaningful change”, which makes the system “a bit more sustainable”.
At the time, Nicholas Ali, head of technical for Neo Super, accused the government of being “disingenuous”.
“On the one hand Treasurer Chalmers states the backlash against Div 296 by professional bodies doesn’t augur well for more substantive tax reforms because the change is modest and methodical, yet on the other hand he states he is in no hurry to introduce the Div 296 legislation back into Parliament as it is not set to start until mid-next year,” Ali said.
“If it was so well designed and methodical, why has it not been passed as legislation?”
