Industry Groups Demand Government Rule Out Tax on Unrealised Gains
By Keeli Cambourne for SMSF Adviser | 16 April 2025
A coalition of industry groups including the SMSF Association is demanding the government and the opposition "immediately and unequivocally rule out any move to tax unrealised investment gains in any part of the tax system".
In a joint statement, the SMSFA, the Council of Small Business Organisations Australia (COSBOA), National Farmers' Federation, and the Family Business Association have said plans to tax paper gains are tantamount to "confiscation" and "punish aspiration, destroys liquidity, and turns volatile market movements into tax bills".
"The absurdity of taxing paper gains is laid bare with the recent turmoil in investment markets. It shows just how easy it is for a paper gain in one period to be wiped out in the next, leaving the investor with a tax bill for an investment gain they never received."
— Joint industry statement
"While both major parties have ruled out changes to negative gearing, recognising the political and economic damage such a policy would cause, no such commitment has been made on taxing unrealised capital gains," the statement continued.
It went on to warn that as Division 296 remains a live threat, its passage would set a "dangerous precedent". "Once taxing unrealised gains becomes embedded in superannuation, it opens the door to expansion across the entire tax system. Once you cross the line and start taxing gains that haven't been realised, the entire tax system is up for grabs."
With a hung parliament also on the cards, the risk is heightened as the government would have to rely on the Greens, who have announced they want to lower the $3 million super threshold on which Division 296 would be triggered to $2 million. The Greens have also called for a limit on the ability of SMSFs to borrow to invest in property.
"International precedent is damning. Attempts to introduce similar taxes in the United States were scrapped after facing fierce economic and legal backlash. Experts agree such taxes are unworkable, unfair, and damaging to investment, innovation, and long-term growth."
— Joint industry statement
"Australia has a proud history of rewarding effort, enterprise, and prudent investment. A tax on unrealised gains turns that on its head. It punishes people not for what they've earned, but for what they might earn, and that's a road no country should go down," the statement said.
Coalition Response
Shadow treasurer Angus Taylor strongly reiterated the Coalition's opposition to the $3 million super tax at Momentum Media's Election 2025 event last week.
He confirmed the Coalition has not softened its stance on the Division 296 tax on assets above $3 million within super, stating he is "100 per cent dead against it".
"I can absolutely assure you it will not go into place if I am the Treasurer of this nation. If we have a Dutton-led national government, we are dead against it."
— Angus Taylor, Shadow Treasurer
"I mean taxing unrealised capital gains, give me a break. They are unrealised, that's the point. So, how do you pay tax on an unrealised gain? You realise it. Well, these are small businesses. I mean, seriously, it wasn't thought through. It wasn't thought through," Taylor said.
He said Division 296 "will not be part of our costings".
This article is shared for educational purposes with permission, originally written by Keeli Cambourne and published by SMSF Adviser on 16 April 2025. Any advice is general in nature only and has been prepared without considering your needs, objectives or financial situation. Before acting on it you should consider its appropriateness for you, having regard to those factors.
