Super tax requires a 'holistic' review: ASA

The Australian Shareholders' Association (ASA) is urging the federal government to reconsider the proposed terms on the Division 296 superannuation tax.

The super tax has received mixed opinions since its announcement, but the Labor government has insisted on proceeding with the bill to impose an additional 15% on super balances that exceed $3 million.

ASA chief executive Rachel Waterhouse said despite the measure only affecting a small portion of high-balance accounts, the tax raises "broader concerns".

"It risks undermining long-term planning, reducing fairness in the system, and affecting more Australians over time than initially anticipated," Waterhouse said.

"Existing precedent suggests that Division 296 tax credits may not transfer to a member's estate, meaning tax already paid on unrealised gains could be lost upon death - while capital gains tax on those same assets may still be owed by the estate."

Waterhouse also raised concerns over defined benefit pensions, which are assessed using formulas rather than actual account balances, meaning many public sector employees and politicians "will not be affected".

"This creates a two-tiered system. Many of those responsible for designing or implementing the policy may not be personally impacted, while the financial burden falls on others," Waterhouse argued.

However, Treasurer Jim Chalmers claims there will be no exemptions.

Regardless, Waterhouse is urging a comprehensive review to eliminate taxing unrealised gains and implement indexation on the threshold to ensure "fairness".

Similarly, Wilson Asset Management chair Geoff Wilson, who has been actively advocating against the bill, urged the industry to sign a petition opposing the tax.

The petition has since reached over 10,000 signatures.

Modelling from the Financial Services Council (FSC) indicates that up to 1.8 million Australians could be affected by the tax at their retirement.

Waterhouse said the ASA is not opposed to taxation, but "introducing this measure without a holistic review of the broader tax system and forcing people to act against their own retirement interests... goes beyond what most would consider fair."

"ASA will continue to advocate for a fair, transparent, and consistent superannuation system that supports the retirement ambitions of all Australians," she said.