Albanese Government backtracks on ‘unfair’ superannuation tax farmers say put family businesses at risk

Farmers are celebrating after Treasurer Jim Chalmers dumped plans to tax unrealised capital gains on assets held in super funds of more than $3 million, with industry figureheads labelling it a “monumental win”. Dr Chalmers revealed several changes to his now watered-down superannuation tax plan after Cabinet signed off on it on Monday, saying the Federal Government had “worked through issues in a considered way”. It marked a significant change from the Government’s initial legislation proposed two years ago, which National Farmers Federation believed would have impacted 3500 self-managed super funds holding farmland across Australia. National Farmers Federation president David Jochinke said the decision was the “right one”. “From the beginning, we have said this policy of taxing unrealised gains risked family farm businesses,” he said. “The Government has listened, and we thank them for that. “Farmers can now plan for the future with confidence . . . knowing their hard work and succession plans are safe from this unfair tax.” Dr Chalmers first unveiled the plans to wind back tax concessions on $3m super accounts in the 2023 Budget and put legislation for it to Parliament in 2024, but the move lapsed when the election was called. The Bill attracted harsh criticism from farming groups — who said it would be most felt in multigenerational families where older farmers held their assets in self-managed super funds and leased the day-to-day operations to their children. This arrangement works because it provides retirement income for the parents, as well as an opportunity for the next generation to start farming. In announcing the changes, Dr Chalmers admitted to hearing key criticisms but denied he had been forced to back down after Prime Minister Anthony Albanese took a close interest in the policy. He said the new proposal would raise about $2 billion, while the original plan would have raised about $2.5b. “The Prime Minister and I have had discussions over recent months about finding another way to satisfy the same objectives, and that’s what’s happening here,” he said. Under the changes, those with more than $3m in super will be taxed on earnings from share dividends and bank interest held within a superannuation fund. A new 15 per cent tax on realised — as opposed to unrealised — gains would be levied on super balances above $3 million but at the level of the individual rather than the fund. The plan will still need to pass through Federal Parliament, with the Greens set to be key to passing it through the Senate. GrainGrowers chair Rhys Turton, who farms at York, said industry would continue to “work constructively” with government on “fair, practical policies that support long-term investment and succession planning for farmers”. “Many farms are held in superannuation structures, and the original proposal risked penalising intergenerational farming families for simply holding land,” he said.