money money money 822 taxing unrealised gains? understanding the Division 296 superannuation tax
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Jun 2, 2025 The discussion revolves around the proposed 15% tax on superannuation balances exceeding $3 million, set to start in July 2025. The complexities of taxing unrealized gains are dissected, showcasing historical attempts and the challenges involved. The impact on farmers and future generations in relation to wealth distribution is also explored. Public reactions highlight fairness concerns, particularly regarding taxing paper gains, and the need for a more equitable taxation policy is emphasized amid evolving financial landscapes.
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Division 296 Tax Basics
- Division 296 tax applies only to super balances over $3 million with an effective 30% tax on earnings above that threshold.
- This targets very few people (0.5% of super accounts) yet raises significant revenue over 10 years.
Controversy of Taxing Unrealised Gains
- Taxing unrealised gains is controversial because you pay tax on paper growth without selling.
- Countries like Sweden and Germany tried and abandoned such taxes due to complexity and liquidity problems.
Farmers and Superannuation Wealth
- Farmers typically accumulate wealth in super funds as security against volatility but often don't own farms directly within SMSFs.
- Farms in certain areas can be worth tens of millions, making liquidity for tax payments a concern.