🏦 Unrealised Gains
Plans to tax unrealised gains on earnings from superannuation accounts over $3 million are another potential hit to a startup ecosystem still reeling from proposals to lift sophisticated investor thresholds.
Not long after triggering mayhem in the angel investment sector with proposed changes to the sophisticated investor threshhold, it looks like the government has done it again.
The Albanese government has dug in on its controversial plan to tax unrealised gains on earnings from superannuation balances over $3 million. While the pushback on sophisticated investors meant the government caved in and opened submissions on the proposal to the community — which close today — it appears to be holding the line on this one. So far, stakeholder feedback has been limited to a two-week consultation period, and no more appears forthcoming.
A Senate committee this week supported the controversial changes to superannuation earnings tax concessions. Announced in May 2023, the proposed changes would see the tax rate on super earnings increase to 30% (from 15%) for balances over $3 million. The committee rebuffed concerns about the inclusion of non-discounted unrealised capital gains as ‘earnings’, and the bill will now return to the lower house.
While parliament is yet to pass the legislation, the implications are already being felt. Rampersand partner Paul Naphtali told Capital Brief the feedback from limited partners (LPs) is that there's genuine hesitation to continue funding startups due to the looming uncertainty of the potential tax changes.
