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June 6, 2025
Friday 06 June 2025
Matthew Cranston and Geoff Chambers
The Australian
Key members of Anthony Albanese’s economic team considered exempting family farms and properties owned by small business from Labor’s controversial unrealised capital gains tax, which was excluded from Treasury’s official advice to the government on how to make superannuation fairer.
As Sussan Ley’s shadow cabinet on Thursday formalised its opposition to Labor’s proposal to slug Australians with $3m or more in their super accounts, a prominent ALP source disclosed there were internal discussions about certain assets being exempt.
The senior source revealed a more “pragmatic” approach was considered and should have been adopted because “there is an issue with illiquid assets” such as farms and small business properties.
Under the Treasurer’s proposal – which has faced criticism from investors, business leaders and tax experts – rising valuations on farms and small business properties would be taxed every year before they were sold, leaving cash-poor, asset-rich farmers and small business owners scrambling to pay the tax office, and possibly forced to sell part or all of their property.
Treasury’s advice was ultimately that it was better if superannuants didn’t have farms and properties in their super funds.
“Some stakeholders have noted that as a result of the changes, there may be a greater focus on investing in income-generating assets, such as shares and bonds, as opposed to property and other more illiquid assets,” Treasury said in its advice to Dr Chalmers.
“This could represent a positive shift as it would better align with the intention of superannuation to provide income in retirement.”
Asked whether he thought including farms and small business property in super should be subject to the tax, the Prime Minister said on Thursday: “What we need to do is make sure that our superannuation system is fair … that is what we are setting about to do”.
Grace Bacon – partner at one of the nation’s largest accounting networks, RSM Australia – said she was receiving calls from clients concerned about the inclusion of farms and small business property.
“We are getting a lot of calls,” Ms Bacon said. “It’s a real concern for our clients in small business and farmers because we have never had legislation like this taxing unrealised capital gains. They will have to pay for the valuations. And they have to find the money to pay for it. Our advice to clients is to wait until we see how the legislation lands.”
Modelling from the Financial Services Council released on Thursday showed that, under four different scenarios of the unrealised gains tax policy, anywhere between 500,000 and 1.8 million Australians currently in the workforce would be stung by the time they reached retirement. Using a conservative model based on CPI, under Labor’s current proposal where $3m accounts are taxed without indexation, 500,000 would be captured by the time of retirement.
Under the Greens’ policy, lowering the threshold to $2m but with indexing to inflation, more than 200,000 currently in the workforce would be impacted by the time they reached retirement.
Under a negotiated outcome where the threshold is reduced to $2m without any indexation, 1.8 million Australians currently in the workforce would be hit with the tax by retirement.
FSC chief executive Blake Briggs said the superannuation industry recognised that the government had the capacity to force the new tax through parliament with the support of the Greens but irghed urged the two parties to take a “more constructive and consultative approach”.
The Coalition on Thursday formally enshrined its opposition to Labor’s super tax model after Ms Ley’s shadow cabinet signed off on its first major policy position since Labor’s landslide May 3 election victory.
The one-hour virtual meeting, the first convened since Ms Ley and Nationals leader David Littleproud agreed to keep the Coalition intact, was dominated by discussions on the government’s super tax plan. The shadow cabinet, which convened following a wider shadow ministry meeting, determined that Dr Chalmers was not serious about negotiating with the Coalition, which is concerned about taxing of unrealised capital gains, Labor’s refusal to apply indexation and the principle of introducing a superannuation tax.
After Dr Chalmers on Wednesday effectively ruled out dealing with the Coalition on Labor’s super tax package, Anthony Albanese on Thursday reiterated that he was open to any proactive suggestions put forward by the Liberal Party.
As the Treasurer embarks on a round of negotiations with Greens economic justice spokesman Nick McKim before parliament returns on July 22, the Prime Minister backed the super tax model unveiled by Dr Chalmers in February 2023.
With the Coalition firming against considering any deals on the super tax, Mr Albanese was asked about the Greens demands for the threshold to be lowered to $2m and indexed.
“The Greens usually don’t have good points, and I will allow them to put forward whatever they want to do, as the Liberal Party will, as will other senators, no doubt,” he said. “We have put forward our position. That was before the Senate for some time. It did not receive support prior to the election, but then again, the Greens and the Liberals joined to form the ‘no-alition’, and to vote against public housing, to vote against a whole range of projects. We’ll wait and see.”
Opposition finance spokesman James Paterson said he believed “the prospect of a deal was so faint and so remote, it wasn’t really worth worrying about”. Senator Paterson said the Liberal Party would not help a Labor government increase taxes.
“The Labor Party would have had to compromise so fundamentally on what they proposed that in order to even sit down and talk with us, I didn’t think they were likely to do so,” Senator Paterson told Sky News.
“It’s unsurprising to me that they have now preferred to do a deal with their unofficial coalition partners, the Greens, because we were not in the business of helping a Labor government raise taxes.”
Dr Chalmers attacked opposition Treasury spokesman Ted O’Brien for sending mixed messages. “One day he said he wanted to have a discussion about it, the next day he said that he didn’t,” the Treasurer said. “There’s a lot of disunity in the Coalition over this. They seem to have different views amongst them and different views from day to day.”
Nationals deputy leader Kevin Hogan said the Coalition would never negotiate on taxing unrealised capital gains. “We think that’s almost immoral, and obviously not indexing that is not okay either because obviously the amount of people that we get to get affected by that would be enormous,” Mr Hogan said.
Greens senator Sarah Hanson-Young did not rule out surrendering her party’s indexation and threshold requirements. Senator Hanson-Young signalled that the minor party was open to discussing other concessions to the legislation.