Coalition will oppose increase to sophisticated investor thresholds: Senator Hume

Shadow finance minister Jane Hume has expressed concern over Labor's proposed policies, which she believes will further disadvantage individual investors.

By Maja Garaca Djurdjevic • 08 May 2024 • 10 minute read

Shadow Finance Minister Jane Hume launched a scathing attack on the Labor government's economic policies on Wednesday, highlighting the Coalition's opposition to raising the bar for sophisticated investors and the introduction of the $3 million super tax.

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Speaking at the Australian Wealth Management Summit, Hume said the Coalition was concerned about Labor's plan to double the tax rate on superannuation funds with balances exceeding $3 million, which she said is a clear example of Labor targeting investors.

“The Coalition will always stand up for self managed super funds,” Hume said.

“Individuals that chose to take control of their own retirement planning should not be targeted or penalised for that decision.

“Australians opting for SMSFs do so because they want a closer control over their financial wellbeing and retirement. That is their right – it’s their money, their savings.”

Acknowledging that many commercial and industry superannuation funds have “performed very well” for their members, she stressed that “our system must continue to have room for those that wish to trust their own talents and risk appetites ahead of others”.

“A compulsory superannuation system does not mean a compulsory payment to fund managers,” the Senator said, adding that the Coalition opposes Labor’s tax “on principle”.

“Prior to the 2022 election both Anthony Albanese and Stephen Jones said it would not change superannuation settings, yet this backflip - made less than a year after the election promise - is a significant move of the goalposts for Australian retirees,” Hume said.

“We oppose it for its consequences for younger Australians.”

Moreover, Hume criticised Labor's proposed taxation of unrealised capital gains, labelling it as unprecedented and likely to deter investment in certain asset classes.

“We know self-managed super funds, particularly those operated by Australian small business owners, often own commercial properties or other non-liquid assets held for their long-term growth benefits. Fluctuations in asset values, especially unexpected spikes, could lead to unexpected tax obligations that have no relationship to the income streams generated by those assets.

“As experts from the National Farmers Federation to the Tax Institute have pointed out, taxation of unrealised capital gains could force self-managed super funds to sell assets to meet year to year tax obligations, impacting on their future retirement income,” Hume explained.

She added that while larger industry and commercial funds have the scale that allows them to cover this new tax – “it is self managed super fund operators and their retirement savings that will suffer disproportionately”.

Hume also condemned Labor's reluctance to rule out changes to negative gearing, arguing that such measures would favour corporate investors over individual property investors, and further entrench advantages for big businesses and super funds.

“Negative gearing ensures that private individual investors can also claim the costs associated with investment properites. At least in a tax sense, individuals operate on an equal playing field to the big corporate property investors,” Hume stated.

“Removing or curtailing negative gearing, which the Labor government has time and time again refused to rule out, entrenches the tax advantage with the corporate investor, against the individual.

“It would be a step towards big business and superfunds monopolising investment opportunities in Australia - indeed, that is why the Labor refuses to rule it out.”

Furthermore, Hume voiced opposition to any changes to increasing the thresholds of the sophisticated investor test, arguing that such changes would hinder individual Australians' ability to engage in the economy and support growth and innovation.

“The sophisticated investor thresholds acknowledge that some investors have access to a level of financial advice and an understanding of investment risks over and above many other Australians,” said Hume.

“Sophisticated investors play a critical role in our economy, particularly supporting start-ups and scale ups through private equity, venture capital and angel investing.

“The advantages that incentivise investment in these sectors such as the sophisticated investor tax offsets and early-stage investor tax incentives should not be moved further out of reach for Australians. We must not regulate ourselves out of growth and innovation".

Ultimately, Hume warned against unchecked bureaucracy and red tape, arguing that regulatory settings should work for all investors, not just incumbents with the resources to navigate complex regulatory frameworks.

“The fact is that, if regulatory settings are not working for individual investors, if they’re not working for small and family businesses, then they’re not working”.

Coalition will oppose increase to sophisticated investor thresholds: Senator Hume

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