The Government’s proposed superannuation changes could negatively impact SMEs, according to the National Farmer’s Federation (NFF) and the Council of Small Business Organisations Australia (COSBOA). In a statement today, the NFF warned that the proposed changes could affect thousands of small businesses who use Self-Managed Superannuation Funds (SMSFs).
The Albanese government have proposed raising the tax rate on superannuation earnings for balances over $3 million to 30 per cent from July 1 2025. Amended tax rates would be calculated based on member balances, including unrealised capital gains, a fact that has COSBOA and NFF particularly worried.
SMEs impacted by Bill
According to the NFF, many SMEs hold their assets in Self-Managed Superannuation Funds (SMSFs), which would be subject to the tax rate changes. SMSFs are an important tool for many SMEs, who use them for asset management and business succession purposes, the NFF says.
“Farmers and small business owners are united in our view that this Bill will have unintended consequences on the operations and succession planning of these small businesses across the country, in particular for those who hold a Self-Managed Superannuation Fund (SMSF) to structure their business,” said NFF President David Jochinke.
“In the case of agriculture and small business, older farmers or business owners will often hold their assets in a SMSF and lease the operations to their children, providing both retirement income for them as well as an opportunity for the next generation to enter the business.”
Bill to target “top end of town”
Ostensibly, the proposed changes to super taxation target only the very wealthy. However, the NFF and COSBOA are concerned that it could place financial burden on small businesses too.
“This new tax on the unrealised gains on assets held in the SMSF may see an increased obligation that represents a significant proportion of an owner’s annual income, or even exceed it,” said Luke Achterstraat, COSBOA CEO.
“This may see the older generation left in a terrible situation where they may have to sell their assets to meet this new tax obligation or increase lease rates to their children so much that their own children’s business may become unviable.”
The peak bodies are urging the Government to listen to the concerns of SMEs and make amendments to the Bill to prevent harming small businesses.
