Opinion Piece: 20 May 2025
With the new Labor government sworn in and cabinet now formed, critical economic decisions are being progressed – and one policy looms as a serious threat to Australia’s entrepreneurial spirit and economic stability: the so-called Better Targeted Superannuation Concessions Bill.
Despite widespread concern, Jim Chalmers has confirmed he remains committed to pushing forward with legislation that will double the tax rate on super balances over $3m (from 15 per cent to 30 per cent) and, most alarmingly, apply that higher rate to unrealised gains.
Let’s call this what it is: an aspiration tax. A tax on ambition, on responsible succession planning and on businesses that support jobs and local economies across the country.
And while the Treasurer insists this reform targets the ultra-wealthy, the reality is starkly different. This policy will hit family and small business owners, including farmers and tradespeople, many of whom have done exactly what governments have long encouraged: invested in their own businesses and assets through self-managed super funds to build financial security for retirement, without relying on the Age Pension.
This is not a tax on cash in the bank. In fact, it is a tax on money that does not exist yet. It’s a tax on the hypothetical increase in the value of assets such as business premises, shares or farmland that may never be sold and don’t generate income.
Under this regime, someone could be forced to pay tens of thousands of dollars in tax on an asset they have no intention of selling and that may well decline in value the following year.
It’s like taxing someone for owning a house because property prices went up and sending the bill before they’ve sold it.
This sets a dangerous precedent for Australia’s tax system. Once you start taxing unrealised earnings, no asset class is safe.
Homes, trusts, investment portfolios – everything could be fair game and not a fair go for Australian business owners. It’s not just bad tax policy. It’s economically reckless.
The proposal also risks undermining the succession plans of thousands of family-owned businesses.
For many, a self-managed super fund has provided a practical and strategic way to transition assets, such as the family business or property, to the next generation.
For example, the older generation retains the asset in their SMSF and leases it to their children, providing stability, continuity and a reliable income stream in retirement.
This model has worked for decades, but the proposed tax could shatter it. Families may be forced to sell long-held assets or increase rents significantly, not because of market forces but to meet an unexpected and unfair tax burden.
That’s not sensible retirement planning, that’s financial sabotage.
Let’s be clear: this policy isn’t about strengthening superannuation integrity. It’s a revenue-raising measure that penalises the people we should be celebrating – those who’ve taken risks, built businesses, created jobs and helped grow our communities.
We support sensible tax reform. But sensible reform encourages productivity and investment, it doesn’t penalise it.
If the Treasurer truly wants to improve productivity – as he claimed this week – he must start by scrapping this toxic tax and returning to first principles.
That means taxing income once it’s realised, not based on paper valuations that can fluctuate wildly.
The Council of Small Business Organisations Australia and the Family Business Association represent sectors that are responsible for more than half of private sector employment in Australia and 98 per cent of Australian businesses.
Our members are longstanding family organisations, they are tradies, pharmacists, cafe owners, manufacturers, local shops that have been serving their communities for decades.
These are Australians who built something, often across generations, and hoped that one day their children might continue that legacy.
This tax threatens to end that dream for many of them.
We urge the government to remove the bill and return to the drawing board. Specifically, the government must:
● Remove the provision to tax unrealised gains. It is unworkable and unjust.
● Revisit the threshold and indexation rules to ensure they reflect today’s asset values and avoid dragging in more everyday Australians over time.
● And most of all, engage in genuine tax reform that supports investment, rather than undermining it.
With the Productivity Commission looking into ways to improve the dynamism of the Australian economy, the aspiration tax must be shelved. Instead, the government should look at policies that reignite confidence and investment rather than hamper it.
Some immediate wins would be to make the instant asset write-off permanent and increase its threshold so more small businesses can upgrade their machinery and productive capital. This would provide small businesses with the certainty to invest rather than the current situation where the policy is tediously extended one year at a time.
The company tax rate for small business also should be reduced from 25 per cent to 20 per cent in recognition of the challenges small businesses face accessing finance and capital. A boost to retained earnings and cashflow would increase productivity, innovation and growth in the engine room of the economy.
Australia’s family businesses and small enterprises are looking for certainty, fairness and a government that recognises their contribution, not a policy that punishes them for doing the right thing.
Luke Achterstraat is chief executive of the Council of Small Business Organisations Australia; Catherine Sayer is chief executive of the Family Business Association
Additional talking points for family businesses looking to advocate on this issue:
- It's a double standard to impose tax that means that the very individuals imposing the tax are exempt from it. The PM, Minister, former state premiers, MPs, governors and judges would be exempt from Division 296, as these former officials “cannot be taxed on their superannuation under the Constitution.”
- Labor have, to date, positioned the tax as a rich versus poor argument. The reality is without indexation of the $3m threshold or if the Greens are successful in lowering the threshold to $2 million this tax will end up affecting hundreds of thousands of Australians and their ability to fund retirement. Models have shown the average 22-year-old will be caught by 60.
- Under the proposed rules, members who are taxed on unrealised gains do not get a credit for unrealised losses and then they pay again on the asset values if the assets make gains again. Members are paying tax on profits they may never make.
- Most individuals are likely to take money out of the super system rather than pay the tax. They would rather pay tax on money they actually have than an unrealised capital gain.
- The measure will potentially disadvantage the start-up sector. Funding from self-managed superfunds will disappear given the risk of significant unrealised gains.
- The question needs to be asked, is this taxing of unrealised gains the beginning of other policy changes?
- Many family businesses and farming families used their SMSF to put their operating premises in. This tax will be a significant impost on an unrealised asset that is central to an operating business employing Australians. On top of an increasing land tax burden how will the tax on unrealised gains on an operating property be funded without the sale of the asset?
