FARMER groups have applauded the Federal Government’s decision to back down on its controversial proposed superannuation tax, announced this morning.

Federal Treasurer Jim Chalmers announced his plans to introduce a new super tax would no longer include a tax on unrealised gains. The proposed tax would now also be indexed, with superannuation balances between $3 million and $10 million to be taxed at 30 percent, while balances over $10 million would be taxed at 40pc.

The proposal attracted widespread industry criticism on Beef Central, including articles like this.

The National Farmers Federation claimed today’s result as a “monumental win for farmers.”

The original policy would have had serious unintended consequences for thousands of family farms and small businesses who hold property in Self-Managed Superannuation Funds (SMSFs) as part of their succession plans, NFF president David Jochinke said.

The Government’s decision to revisit the tax was the right one,” he said. “The tax will now only apply to realised earnings and the superannuation balance thresholds will be indexed.

“This is a monumental win for farmers, small business, and commonsense. From the beginning, we’ve said this policy of taxing unrealised gains risked family farm businesses. The Government has listened, and we thank them for that,” Mr Jochinke said.

“Farmers can now plan for the future with confidence, knowing their hard work and succession plans are safe from this unfair tax.”

The NFF has been campaigning on the issue for nearly two years, leading a coalition from the small and family business sector concerned about the taxation of unrealised gains.

NSW Farmers President Xavier Martin said the result was a huge relief for farming families who’ve been staring down the barrel of a tax that never should’ve applied to them in the first place.

“The Government’s rethink shows they’ve listened to reason. Farmers plan long term, in decades, not financial years, and this decision gives them the confidence to keep building farm businesses they can succeed for the next generation,” Mr Martin said.

GrainGrowers chair, Rhys Turton said modelling had found more than 3500 self-managed super funds holding farming land would have been impacted from day one, with a further 14,000 at risk as property values increased.

“Today’s decision was the right one. We now look forward to continuing to work constructively with the Government on fair, practical policies that support long-term investment and succession planning for farmers,” Mr Turton said.

“This outcome shows what can be achieved when agriculture stands together and sticks to the facts,” Australian Dairy Farmers president, Ben Bennett said. “It’s a great result for farmers and small businesses right across the country.”

“The government wanted to tax money people hadn’t earnt, because they’ve supposedly made money on assets they hadn’t sold – and it’s good to see they’ve finally seen sense on this super tax,” NSW Farmers’ President Xavier Martin said.

“Thousands of Aussie farming families have their businesses or farm assets in self-managed superannuation funds, and this tax would have crippled them if it had gone ahead unchanged.”

“Farmers now have a shot at a brighter future, where they can continue to feed the world and use superannuation structures to support succession planning, without senseless taxes to cripple them.”

“They’ve done the right thing by the people who feed and clothe our wonderful country.”

National accounting industry body CPA Australia said the revisions followed months of campaigning from industry groups and stakeholders.

CPA’s Superannuation Lead Richard Webb said Parliament should now legislate the changes.

“The government has listened to our concerns. The outcomes will help make Australia’s superannuation system fairer and more equitable,” Mr Webb said.

“The indexing of the Division 296 proposal and taxing of realised earnings will ensure that Australia’s superannuation system remains fit for purpose for future generations.

“If legislated, this change is expected to benefit millions of low-income earners by improving their capacity to contribute to superannuation and build long-term retirement savings.”

Mr Webb said that if the $3 million balance threshold had not been indexed, it would have eventually impacted a greater number of Australians than was acknowledged.

“We are pleased that the government has listened to feedback and made these common-sense changes,” he said. “Policymakers have a duty to ensure that the spending power of future retirement savings is preserved.

“Bracket creep already has a silent eroding effect on personal finances. Allowing further erosion of superannuation savings would have been contrary to the fundamental principles of our tax system.”

CPA Australia said it was also relieved to see the government change course on its plan to tax unrealised capital gains as part of its reforms of superannuation.

“This was a particularly egregious element of the government’s initial proposal,” Mr Webb said.

“Providing certainty and financial stability for this and future generations of retirees is critical. Taxing unrealised gains would have distorted our tax system, which needs broader reform.”

Mr Webb said updating the low-income superannuation tax offset (LISTO) to $810 from $500 and increasing the eligibility threshold from $37,000 to $45,000 are positive and long-overdue steps that will help ensure more Australians – especially women and part-time workers – are not left behind when it comes to retirement savings.