Wilson Asset Management chairman Geoff Wilson has made it his mission to educate the Greens regarding the impact the taxing unrealised gains component of the $3 million super tax would have on Australians.
Speaking to Super Review sister brand SMSF Adviser, Wilson said he is “very supportive” of the Greens and agrees with its push to lower the threshold to $2 million and allow indexation.
“[I have] a lot of respect for them … The Greens proposal of indexing it and even lowering the threshold to $2 million will be much more beneficial to the Australian population,” Wilson said.
His respect for the Greens stems from the role they played in blocking changes to franking credits a few years ago.
“My challenge now is convincing them of the negative impact of taxing unrealised gains,” he said.
He said that conversations have revealed that some of the 130,000 shareholders in his own company are considering taking their money out of super, ultimately resulting in “lost revenue” for the government.
“The government is delusional if it believes it will raise the tax it is talking about because everyone is adjusting their portfolios – that is lost revenue,” he said.
“If the Greens vote against this legislation, it won’t make it through the Senate. And I take my hat off to crossbench senators David Pocock and Jacqui Lambie. They have stood incredibly firm against this. That’s the reason there is so much discussion on this issue now. The government said it had a mandate following the election, but it doesn’t have a mandate on this.”
As he did when fighting Labor’s push for changes to franking credits, over the weekend, Wilson launched a petition against the super tax and in two days, the number of signatures has reached nearly 8,000.
He said almost half of those have come from people who do not have a self-managed super fund (SMSF).
“Since the petition was launched, it has blown our previous petition on franking in 2018–19 out of the water. It is attracting a 41,250 per cent higher level of interest than that of the franking credits,” he said.
“This is a strong signal that all Australians know taxing unrealised gains is flawed and needs to be stopped.”
Noting that he is happy to see corporate Australia take a stand against the tax, Wilson said the purpose behind the petition is to reach the common Australian.
“If I was a Labor politician who won by only a small margin, I would be putting as much pressure as I can on the government,” he said.
“They know in their hearts this is bad policy and if the voting public knows it and Labor brings it in regardless, it is a breach of their social contract with everyone who puts money into super.”
In recent weeks, a strong campaign has been waged against the proposed Division 296 tax on super balances above $3 million, especially by big business, with the likes of Wilson voicing their discontent with the move to tax unrealised capital gains.
Calling it a policy mistake, former QSuper chair Karl Morris told The Australian the tax is “totally ill-conceived”.
Super funds, too, have expressed their support for indexation, with HESTA recently warning that without adjustment, the tax risks capturing far more members over time than originally intended.
“Australia’s tax system favours high-income earners with high super balances,” a HESTA spokesperson told Super Review.
“We support the proposed 30 per cent tax on investment earnings on super balances over $3 million to help make our super system fairer and more equitable. Indexing the threshold will help preserve the policy intent over time.”
ART echoed this view, saying the tax should be subject to “some form of regular review mechanism or indexation … to ensure the policy remains aligned into the future”.
Treasurer Jim Chalmers recently confirmed on ABC’s The Conversation podcast that while he understands the argument for indexation, there are “many instances in the tax system where thresholds aren’t indexed” and future governments have the opportunity to adjust the threshold.
Coalition open to alternative super tax measure
Ted O’Brien told Sky News on Tuesday that the Coalition sees the $3 million super tax as “super big and super bad” and said Labor must walk away from key parts of the bill to gain support.
“There’s no doubt in opposition we will be constructive where we can, but critical where we must and when it comes to this super tax at the moment, I see no choice but to be absolutely critical,” O’Brien said.
“I can’t pre-empt the final decision that ultimately will come through the party room, but what I can say is that there are aspects of this policy that Labor has put forward which are absolutely egregious, in particular the unrealised capital gains and secondly, the lack of indexation.”
O’Brien said that if Treasurer Chalmers confirms he will walk away from the unrealised capital gains component and the lack of indexation, then he believes the opposition can “have a conversation”.
“That does not mean that he [Chalmers] will necessarily get support, but that’s at least the basis for a conversation, because right now it is so unreasonable,” he said.
“This is such a bad policy that there is no possibility of any arrangement between the Coalition and Labor.”
O’Brien said that the Coalition learned “some big lessons from the last election” and one of those was the need to ensure the party stays true to being the party for lower taxes.
“The whole thing is a dog. It really is. So again, if Labor wants to walk all of that back and engage in good faith talking about the possibility for super reform, of course, we’ll be constructive where we can and critical where we must,” O’Brien said.
