Unveiling the Inequities of Super Tax: A Critical Insight from Daniel Butler

Daniel Butler, Director at DBA Lawyers, recently expressed his critique of the super tax during a webinar, deeming it unequivocally inequitable from a taxation perspective.

He highlighted the conundrum of the government eager to categorize upward trends as earnings, even if they remain as unrealised gains. However, the opposite scenario of a plummet in earnings due to a stock market crash or crypto fall does not result in any form of compensation from the government.

Butler emphasised the discrepancy, stating, "If you encounter a loss, it's effectively quarantined against any future rise in your total superannuation balance (TSB). The Tax Institute has called for a loss carry-back provision to facilitate refunds, which, in my opinion, is a fair request."

Additionally, Butler shed light on the issue of 'deemed earnings,' suggesting that SMSFs should have the option to choose between a deemed earnings rate that excludes unrealised gains or actual taxable earnings.

Butler praised the stance of the SMSF Association, stating, "I believe their proposal of allowing self-managed funds to select their desired earnings rate is both sound and sensible."

He proceeded to express his apprehension about the government's proposal to transition the system away from a realised basis, hinting at a major shift in the tax landscape.

Butler further warned about the potential for double taxation with the introduction of the $3 million tax, illustrated by a hypothetical scenario involving 'Sarah's super'.

He voiced his concerns about the complexity of the new tax system, emphasizing the various adjustments that would be required for the TSB and the definition of a 'withdrawal' under the proposed earnings formula.

"Submissions have been made to seek a range of adjustments", Butler stated, "The system's complexity is bordering on absurdity - a sentiment echoed by numerous professional bodies."