Australians with self-managed super funds face a hefty fine if they don’t file their tax return in the next 12 days, even though parliament is yet to pass controversial new laws that could affect their retirement plans.
The Australian Tax Office imposes a fine of $313 for every 28 days late in filing, up to a maximum of $1,565.
The February 28 deadline was also met as Parliament continues to debate Labour’s plan to double the concessional tax rate for super contributions, to 30 per cent, for those with a balance of more than $3 million.
This means those with a self-managed super fund will have to plan their investments and submit them in the next 12 days, even though the Senate Economic Legislation Committee will not publish its report until April 19.
Prime Minister Anthony Albanese’s new laws will not come into force until July 1, 2025, and are opposed by the Coalition.
But H&R Block tax communications director Mark Chapman said the uncertainty would still make retirement planning more difficult.
“This is potentially a problem because the measure is not yet law, making it extremely difficult to plan for,” he told Daily Mail Australia.
Australians with self-managed super funds face a hefty fine if they don’t file their tax return in the next 12 days, even though retirement savings laws have yet to be passed by Parliament (file image)
If Labor’s legislation passes the Senate, Australians with more than $3 million in a self-managed super fund would receive an assessment notice from the tax office, starting in the 2025-26 tax year.
Australia’s biggest property lender now expects borrowers to get three rate cuts by Christmas and more relief in 2025.
The prospect of six cuts by the middle of next year would mark the most generous concessions to mortgage holders since the global financial crisis of 2008 and 2009, and the first relief since the Covid pandemic in 2020.
Commonwealth Bank Australian chief economist Gareth Aird now expects the Reserve Bank to ease monetary policy in September, November and December this year.
For the first time, those with a self-managed super fund will have to pay tax on unrealized capital gains, or the value of retirement assets, such as shares that have not been sold.
“This new tax liability will include any unrealized capital gains within the fund and its investments – traditionally unrealized capital gains have not been subject to tax, now they will be,” Mr Chapman said.
“There is a risk that you may be paying taxes on an investment that ultimately took you over the $3 million threshold, but then when you finally sell it, the asset falls back below the $3 million mark.” of dollars and the total value of the fund falls. below 3 million dollars.
“The tax is imposed on the individual, requiring them to pay the tax personally or elect to have the amount released from their retirement entitlements.”
Chapman said those with a super balance close to $3 million needed to be especially careful.
“If you have a total super balance of more than $3 million, you will be affected,” he said.
“If you have a total balance close to $3 million, you should certainly be aware of the changes and perhaps plan to implement mitigation strategies.”
With Labor needing the support of the Greens and their MPs to get their legislation through the Senate, Chapman said it would be unwise for self-managed super funds to make major decisions before the new law is enacted.
“SMSFs would be wise not to implement any planning until these new measures become law,” he said.
Australians had $3.57 trillion in superannuation in the 2022-23 financial year.
Of that fund, $876 billion was in a self-managed super fund, Australian Prudential Regulation Authority data showed.
The government estimates that only 80,000 people or 0.5 per cent of the population have more than $3 million in super.
Prime Minister Anthony Albanese’s new laws will not come into force until July 1, 2025, but the uncertainty is worrying tax experts (pictured with his fiancée Jodie Haydon).
The Financial Services Council estimated this would affect 500,000 people over the coming decades, now under the age of 30, because the $3 million threshold in Labor’s plans is not indexed to inflation.
‘There is currently no proposal to index the $3 million threshold. This means that, over time, more people are likely to be subject to this tax,” Mr Chapman said.
Those with a self-managed super fund must file by February 28 if they are self-hosted.
But the deadline is mid-May for those who use a tax agent.
Treasurer Jim Chalmers announced Labour’s proposal in February 2023, but his department did not publish a paper until March 28 last year.