Division Description Changes — Bills — Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023; Consideration in Detail — 9th Oct 2024

Change	Division
representatives vote 2024-10-09#3 Edited by mackay staff on 2024-11-02 15:37:13	Title Bills — Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023; Consideration in Detail Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023 - Consideration in Detail - Unrealised gains Description ~~<p class="speaker">Allegra Spender</p>~~ <p>by leave—I move amendments (1) to (4) on the sheet revised 28 May 2024, as circulated in my name, together:</p> The majority voted against [amendments](https://www.openaustralia.org.au/debate/?id=2024-10-09.125.1) introduced by Wentworth MP [Allegra Spender](https://theyvoteforyou.org.au/people/representatives/wentworth/allegra_spender) (Independent), which means they failed. ### What do these amendments do? Ms Spender [explained that](https://www.openaustralia.org.au/debates/?id=2024-10-09.114.1): > ... the amendments that I have put forward are, firstly, around allowing a greater time period in which to pay, given that people are being taxed on unrealised gains. Because these gains are unrealised, they relate to assets that have not been sold, or realised, and people may not have the cash to pay this. We should not be forcing people, or pushing people, to be paying tax on income that they haven't earned in a time period that is unreasonable—currently at 84 days. > > My second amendment speaks to my concern about the impact on the venture sector and whether the government has adequately assessed that. I have put in my amendment that a review should be done on the impact of this sort of change on the venture and technology sector in particular. > > Finally, I'm also calling for this legislation to acknowledge, and to try and give some confidence to, the people the member for North Sydney identified, by saying that this is not going to set a precedent for taxing unrealised gains in other parts of the economy. ### Amendment text > (1) Page 3 (after line 8), after clause 3, insert: > >> 4 Review of Schedule 1 >> >> (1) The Minister must cause an independent review of Schedule 1 to be conducted as soon as practicable after this Act receives the Royal Assent. >> *>> (2) The review must include a** review of the impact, or potential impact, of Schedule 1 on the startup and high-growth sector.* >> >> (3) The persons who conduct the review must: >> >>> (a) consult with the public in conducting the review; and >>> >>> (b) give the Minister a written report of the review in sufficient time to enable the Minister to comply with subsection (4). >> *>> (4) The Minister must cause a copy of the report of the review to be tabled in each House of the Parliament before 1 Jul*y 2025. > > (2) Schedule 1, item 15, page 7 (line 11), before "The object", insert "(1)". > > (3) Schedule 1, item 15, page 7 (after line 14), at the end of section 296-5, add: > >> (2) The Parliament intends that the approach in this Division of taxing unrealised gains is not to be used in the design or policy considerations of future amendments of this Act. > > (4) Schedule 1, item 15, page 21 (after line 10), at the end of section 296-205, add: > >> Deferring when tax is payable >> >> (3) Despite subsection (1), your assessed Division 296 tax for the income year is due and payable at the end of the later day applying under the scheme mentioned in subsection (4) if, under the scheme:* >> >>> (a) you choose for the scheme to apply for the income year; and >>> >>> (b) you satisfy the conditions for the scheme to apply for the income year. >> >> (4) The regulations must prescribe a scheme that allows entities to defer their assessed Division 296 tax for an income year if the conditions provided for in the scheme are met. >> >> (5) Without limiting subsection (4), the scheme must provide for: >> >>> (a) the length of the deferral, which must be for at least 5 years; and >>> >>> (b) how an entity may choose for the scheme to apply for an income year; and >>> >>> (c) any conditions that must be met for the scheme to so apply; and >>> >>> (d) whether tax payable under the scheme can be paid in instalments; and >>> >>> (e) whether a separate choice needs to be made, and conditions need to be met again, for each income year that an entity wishes the scheme to apply. <p class="italic">(1) Page 3 (after line 8), after clause 3, insert:</p> ~~<p class="italic">4 Review of Schedule 1</p>~~ ~~<p class="italic">(1) The Minister must cause an independent review of Schedule 1 to be conducted as soon as practicable after this Act receives the Royal Assent.</p>~~ ~~<p class="italic">(2) The review must include a review of the impact, or potential impact, of Schedule 1 on the startup and high-growth sector.</p>~~ ~~<p class="italic">(3) The persons who conduct the review must:</p>~~ ~~<p class="italic">(a) consult with the public in conducting the review; and</p>~~ ~~<p class="italic">(b) give the Minister a written report of the review in sufficient time to enable the Minister to comply with subsection (4).</p>~~ ~~<p class="italic">(4) The Minister must cause a copy of the report of the review to be tabled in each House of the Parliament before 1 July 2025.</p>~~ ~~<p class="italic">(2) Schedule 1, item 15, page 7 (line 11), before "The object", insert "(1)".</p>~~ ~~<p class="italic">(3) Schedule 1, item 15, page 7 (after line 14), at the end of section 296-5, add:</p>~~ <p class="italic">(2) The Parliament intends that the approach in this Division of taxing unrealised gains is not to be used in the design or policy considerations of future amendments of this Act.</p> ~~<p class="italic">(4) Schedule 1, item 15, page 21 (after line 10), at the end of section 296-205, add:</p>~~ ~~<p class="italic"> <i>Deferring when tax is payable</i></p>~~ <p class="italic">(3) Despite subsection (1), your assessed Division 296 tax for the income year is due and payable at the end of the later day applying under the scheme mentioned in subsection (4) if, under the scheme:</p> ~~<p class="italic">(a) you choose for the scheme to apply for the income year; and</p>~~ ~~<p class="italic">(b) you satisfy the conditions for the scheme to apply for the income year.</p>~~ <p class="italic">(4) The regulations must prescribe a scheme that allows entities to defer their assessed Division 296 tax for an income year if the conditions provided for in the scheme are met.</p> ~~<p class="italic">(5) Without limiting subsection (4), the scheme must provide for:</p>~~ ~~<p class="italic">(a) the length of the deferral, which must be for at least 5 years; and</p>~~ ~~<p class="italic">(b) how an entity may choose for the scheme to apply for an income year; and</p>~~ ~~<p class="italic">(c) any conditions that must be met for the scheme to so apply; and</p>~~ ~~<p class="italic">(d) whether tax payable under the scheme can be paid in instalments; and</p>~~ ~~<p class="italic">(e) whether a separate choice needs to be made, and conditions need to be met again, for each income year that an entity wishes the scheme to apply.</p>~~ <p>I am sympathetic to the government's objective of considering the taxation treatment of super and particularly about balancing the taxation of younger and older Australians more equitably. I note with real concern the increasing burden that the taxation system in its current form is placing on younger Australians. For example, I note that the share of income tax paid by older Australians has gone from 27 per cent to 17 per cent in one generation. I note that young Australians are not getting ahead in the way that previous generations did. I note that from 2004 to 2016 the average wealth of households of Australians over the age of 65 grew by 50 per cent while the average wealth of households under the age of 35 did not move. This change in the distribution of wealth and opportunity between generations does not bode well for our country and does not bode well for the opportunities that every single one of us wants to offer our children.</p> <p>So I do think we need to consider the tax system more broadly, and, as I think many in this House know, I have long advocated for tax reform, including considering the tax system within the superannuation system. However, I am deeply opposed to the taxation of unrealised gains, which is why I'm putting forward a number of amendments. While I'm open to considering taxing large balances of super, I think the taxation of unrealised gains is extremely problematic. I'm also concerned that this increase in tax that the government is proposing is not being used to actually reduce tax burden, which is what it should be doing—reducing tax burden on young workers, because that is where that rebalancing should be.</p> <p>Let me explain some of the concerns I have in relation to the taxation of unrealised gains. The first is on principle, which is that this is not money that anybody has. So, why the government should tax it is beyond me. As a principle of taxation, it is extremely problematic. I'm also concerned about how this plays out in practice, and I'm going to focus particularly on the venture and technology sector, which is a big part of my community and a sector that I'm really concerned about. Australia has lower investment in venture than other countries. We have about a third of the rate of investment in young, growing firms—venture capital—than the US, and about half that of the UK. We have a productivity hole. We know we need to grow it, and we know that young, growing firms drive productivity in this country.</p> <p>So, we should be doing everything we can to support these companies. My biggest concern with this bill is that, according to the Tech Council, around 25 per cent of money that goes into venture comes out of self-managed super funds. Now, venture is volatile, and it is illiquid. Therefore, if we are going to be taxing unrealised gains on venture firms, which are both volatile and illiquid, there is a real danger that people in self-managed super funds are just going to move that money out of venture and into other areas—maybe the listed index. They are going to miss out from a returns point of view, and we as a country will also miss out, from the point of view of not having that investment in venture firms that is critical to future growth and productivity. That is my major concern with this issue and, frankly, I have not seen evidence that the government has engaged properly with the venture sector and with the technology sector to understand the impact of this legislation on those young and growing firms.</p> <p>My amendments cover three elements of this. Firstly, I'm recognising that if you make an investment there's a very short period in which you're meant to pay this tax on unrealised gains. I've already noted that for venture, but it is also the case for land and for farms and businesses. You can't sell them on a dime. Therefore, one of my amendments is to ensure that a longer period is allowed for payment of this tax—over five years. That is a minimum requirement and I think a reasonable one.</p> ~~<p class="speaker">Kylea Tink</p>~~ <p>I rise to speak in support of the amendments moved by the member for Wentworth, and I want to thank her and her team for doing the work to try to find a way through what is a truly concerning, unprecedented move by this government. To be clear, I believe that the intent of the Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023 warrants investigation. But to see the taxation of unrealised gains included in this legislation should send a shiver down the spine of not only every Australian but potentially every global citizen, because this is globally unprecedented. Nowhere else in the world do they tax unrealised gains.</p> <p>What are the implications of this? It means, particularly for people in the rural sector and the small-business sector, that if they own assets that are fluctuating within their superannuation balance and one year the value of those assets goes up then, even though that will not will be in true cash terms, this government will have the right to approach those people and have them pay cash to the ATO, and the ATO doesn't take an IOU note.</p> <p>In the subsequent year—let's say it's a farm, and you hit drought and your land price drops, and you fall back under the $3 million mark—you don't get a rebate from the government for the money you paid the previous year. But you have lost cash somewhere. So, from the minute this legislation was tabled, this really egregious change in taxation policy in this country was flagged with alarm by many key stakeholders. I have had lots of conversations with the member for Wentworth, the assistant minister, and other members of the crossbench who have tried to appeal to the government to please drop this unprecedented reform. Yet—it's extraordinary—the government hasn't been prepared to negotiate in this space and to recognise not only the potentially immediate damage to our superannuation system but also the potential damage to Australians' confidence, when they hold assets, that the government isn't going to adopt this as a standard practice across everything we hold.</p> <p>People have asked me, 'If this is now included in super, what does that mean for my home in the future?' So, I would say to the minister, I think the member for Wentworth and her team have done an excellent job in providing you with a way to frame this and to give Australians greater certainty. While I would prefer to see this measure completely removed, this is what's being offered, in the interest of compromise, and I commend it to the minister and his team. I'll be interested to see why the minister says the government won't take it up.</p> ~~<p class="speaker">Allegra Spender</p>~~ <p>In continuation of my previous remarks, I'd like to thank the member for North Sydney for her support of these amendments. As I described earlier, the amendments that I have put forward are, firstly, around allowing a greater time period in which to pay, given that people are being taxed on unrealised gains. Because these gains are unrealised, they relate to assets that have not been sold, or realised, and people may not have the cash to pay this. We should not be forcing people, or pushing people, to be paying tax on income that they haven't earned in a time period that is unreasonable—currently at 84 days.</p> <p>My second amendment speaks to my concern about the impact on the venture sector and whether the government has adequately assessed that. I have put in my amendment that a review should be done on the impact of this sort of change on the venture and technology sector in particular.</p> <p>Finally, I'm also calling for this legislation to acknowledge, and to try and give some confidence to, the people the member for North Sydney identified, by saying that this is not going to set a precedent for taxing unrealised gains in other parts of the economy. Frankly, these aren't the amendments I would like to pass. There are other amendments I would have loved to pass. Unfortunately, because this is an appropriation bill, I am unable to put forward the amendments that I would have put forward, but I do believe they should be considered.</p> <p>Frankly, all this talk on unrealised gains is for superannuants who can calculate their actual earnings to pay their taxation on actual earnings. From my understanding, that would capture 80 per cent of the people that this bill is meant to address. So 80 per cent of the 80,000 people who would initially be affected by this would be able to pay tax on their actual earnings, and the 20 per cent who are in major funds would have to pay tax on unrealised gains. Then, it would be up to the funds to provide the right tax information so that, in the future, people perhaps would not have to pay tax on unrealised gains. I think that is an appropriate opportunity for the government to look at. From my understanding, just because APRA funds can't calculate gains that are realised funds versus unrealised funds, why should self-managed super funds be penalised for the technical incapacity of the other funds? I don't think that's a fair challenge. This change would make a huge difference to the self-managed super funds who are, by and large, the larger holders of these sorts of assets and the larger investors, particularly in the venture sector.</p> <p>Failing that opportunity, there should've at least been a clawback mechanism to acknowledge that this is a proxy measure and that people may be overpaying their tax liability, because, as we all know, the value of assets goes up and down, particularly if you're in venture assets, where, for instance, the asset might be worth $50,000 one year and have a valuation of $2 million the next year. By the third year, it might be worth zero. A clawback mechanism would ensure that if you did have to pay tax at a valuation that you would never be able to realise then you could get the tax back. Again, that is a precedent we have in many other parts of our tax system, and it should be in this part of the tax system as well. I think these are some of the things that should have been in the legislation. These were alternative options for the government had it wanted to pursue what is a reasonable goal and do it in a way that is not so detrimental and not so distorting of our tax system.</p> <p>I would like to ask the government a couple of key questions, via the minister. The first question to the minister is really around why the government chose to exclude people who can calculate their actual earnings—their realised gains versus their unrealised gains. Why did you choose to tax everybody on unrealised gains, when some people can actually calculate their realised gains?</p> <p>The second question I really want to get an answer to is: what has the government done to understand the impact on the technology and venture sector, which is such an important part of our productivity and the economy. Those are two questions I would appreciate the minister's advice on.</p> ~~<p class='motion-notice motion-notice-truncated'>Long debate text truncated.</p>~~

~~Allegra Spender~~
by leave—I move amendments (1) to (4) on the sheet revised 28 May 2024, as circulated in my name, together:
The majority voted against [amendments](https://www.openaustralia.org.au/debate/?id=2024-10-09.125.1) introduced by Wentworth MP [Allegra Spender](https://theyvoteforyou.org.au/people/representatives/wentworth/allegra_spender) (Independent), which means they failed.
### What do these amendments do?
Ms Spender [explained that](https://www.openaustralia.org.au/debates/?id=2024-10-09.114.1):
> *... the amendments that I have put forward are, firstly, around allowing a greater time period in which to pay, given that people are being taxed on unrealised gains. Because these gains are unrealised, they relate to assets that have not been sold, or realised, and people may not have the cash to pay this. We should not be forcing people, or pushing people, to be paying tax on income that they haven't earned in a time period that is unreasonable—currently at 84 days.*
>
> *My second amendment speaks to my concern about the impact on the venture sector and whether the government has adequately assessed that. I have put in my amendment that a review should be done on the impact of this sort of change on the venture and technology sector in particular.*
>
> *Finally, I'm also calling for this legislation to acknowledge, and to try and give some confidence to, the people the member for North Sydney identified, by saying that this is not going to set a precedent for taxing unrealised gains in other parts of the economy.*
### Amendment text
> *(1) Page 3 (after line 8), after clause 3, insert:*
>
>> *4 Review of Schedule 1*
>>
>> *(1) The Minister must cause an independent review of Schedule 1 to be conducted as soon as practicable after this Act receives the Royal Assent.*
>>
>> *(2) The review must include a review of the impact, or potential impact, of Schedule 1 on the startup and high-growth sector.*
>>
>> *(3) The persons who conduct the review must:*
>>
>>> *(a) consult with the public in conducting the review; and*
>>>
>>> *(b) give the Minister a written report of the review in sufficient time to enable the Minister to comply with subsection (4).*
>>
>> *(4) The Minister must cause a copy of the report of the review to be tabled in each House of the Parliament before 1 July 2025.*
>
> *(2) Schedule 1, item 15, page 7 (line 11), before "The object", insert "(1)".*
>
> *(3) Schedule 1, item 15, page 7 (after line 14), at the end of section 296-5, add:*
>
>> *(2) The Parliament intends that the approach in this Division of taxing unrealised gains is not to be used in the design or policy considerations of future amendments of this Act.*
>
> *(4) Schedule 1, item 15, page 21 (after line 10), at the end of section 296-205, add:*
>
>> *Deferring when tax is payable*
>>
>> *(3) Despite subsection (1), your *assessed Division 296 tax for the income year is due and payable at the end of the later day applying under the scheme mentioned in subsection (4) if, under the scheme:*
>>
>>> *(a) you choose for the scheme to apply for the income year; and*
>>>
>>> *(b) you satisfy the conditions for the scheme to apply for the income year.*
>>
>> *(4) The regulations must prescribe a scheme that allows entities to defer their assessed Division 296 tax for an income year if the conditions provided for in the scheme are met.*
>>
>> *(5) Without limiting subsection (4), the scheme must provide for:*
>>
>>> *(a) the length of the deferral, which must be for at least 5 years; and*
>>>
>>> *(b) how an entity may choose for the scheme to apply for an income year; and*
>>>
>>> *(c) any conditions that must be met for the scheme to so apply; and*
>>>
>>> *(d) whether tax payable under the scheme can be paid in instalments; and*
>>>
>>> *(e) whether a separate choice needs to be made, and conditions need to be met again, for each income year that an entity wishes the scheme to apply.*
(1) Page 3 (after line 8), after clause 3, insert:
~~4 Review of Schedule 1~~
~~(1) The Minister must cause an independent review of Schedule 1 to be conducted as soon as practicable after this Act receives the Royal Assent.~~
~~(2) The review must include a review of the impact, or potential impact, of Schedule 1 on the startup and high-growth sector.~~
~~(3) The persons who conduct the review must:~~
~~(a) consult with the public in conducting the review; and~~
~~(b) give the Minister a written report of the review in sufficient time to enable the Minister to comply with subsection (4).~~
~~(4) The Minister must cause a copy of the report of the review to be tabled in each House of the Parliament before 1 July 2025.~~
~~(2) Schedule 1, item 15, page 7 (line 11), before "The object", insert "(1)".~~
~~(3) Schedule 1, item 15, page 7 (after line 14), at the end of section 296-5, add:~~
(2) The Parliament intends that the approach in this Division of taxing unrealised gains is not to be used in the design or policy considerations of future amendments of this Act.
~~(4) Schedule 1, item 15, page 21 (after line 10), at the end of section 296-205, add:~~
~~ Deferring when tax is payable~~
(3) Despite subsection (1), your *assessed Division 296 tax for the income year is due and payable at the end of the later day applying under the scheme mentioned in subsection (4) if, under the scheme:
~~(a) you choose for the scheme to apply for the income year; and~~
~~(b) you satisfy the conditions for the scheme to apply for the income year.~~
(4) The regulations must prescribe a scheme that allows entities to defer their *assessed Division 296 tax for an income year if the conditions provided for in the scheme are met.
~~(5) Without limiting subsection (4), the scheme must provide for:~~
~~(a) the length of the deferral, which must be for at least 5 years; and~~
~~(b) how an entity may choose for the scheme to apply for an income year; and~~
~~(c) any conditions that must be met for the scheme to so apply; and~~
~~(d) whether tax payable under the scheme can be paid in instalments; and~~
~~(e) whether a separate choice needs to be made, and conditions need to be met again, for each income year that an entity wishes the scheme to apply.~~
I am sympathetic to the government's objective of considering the taxation treatment of super and particularly about balancing the taxation of younger and older Australians more equitably. I note with real concern the increasing burden that the taxation system in its current form is placing on younger Australians. For example, I note that the share of income tax paid by older Australians has gone from 27 per cent to 17 per cent in one generation. I note that young Australians are not getting ahead in the way that previous generations did. I note that from 2004 to 2016 the average wealth of households of Australians over the age of 65 grew by 50 per cent while the average wealth of households under the age of 35 did not move. This change in the distribution of wealth and opportunity between generations does not bode well for our country and does not bode well for the opportunities that every single one of us wants to offer our children.
So I do think we need to consider the tax system more broadly, and, as I think many in this House know, I have long advocated for tax reform, including considering the tax system within the superannuation system. However, I am deeply opposed to the taxation of unrealised gains, which is why I'm putting forward a number of amendments. While I'm open to considering taxing large balances of super, I think the taxation of unrealised gains is extremely problematic. I'm also concerned that this increase in tax that the government is proposing is not being used to actually reduce tax burden, which is what it should be doing—reducing tax burden on young workers, because that is where that rebalancing should be.
Let me explain some of the concerns I have in relation to the taxation of unrealised gains. The first is on principle, which is that this is not money that anybody has. So, why the government should tax it is beyond me. As a principle of taxation, it is extremely problematic. I'm also concerned about how this plays out in practice, and I'm going to focus particularly on the venture and technology sector, which is a big part of my community and a sector that I'm really concerned about. Australia has lower investment in venture than other countries. We have about a third of the rate of investment in young, growing firms—venture capital—than the US, and about half that of the UK. We have a productivity hole. We know we need to grow it, and we know that young, growing firms drive productivity in this country.
So, we should be doing everything we can to support these companies. My biggest concern with this bill is that, according to the Tech Council, around 25 per cent of money that goes into venture comes out of self-managed super funds. Now, venture is volatile, and it is illiquid. Therefore, if we are going to be taxing unrealised gains on venture firms, which are both volatile and illiquid, there is a real danger that people in self-managed super funds are just going to move that money out of venture and into other areas—maybe the listed index. They are going to miss out from a returns point of view, and we as a country will also miss out, from the point of view of not having that investment in venture firms that is critical to future growth and productivity. That is my major concern with this issue and, frankly, I have not seen evidence that the government has engaged properly with the venture sector and with the technology sector to understand the impact of this legislation on those young and growing firms.
My amendments cover three elements of this. Firstly, I'm recognising that if you make an investment there's a very short period in which you're meant to pay this tax on unrealised gains. I've already noted that for venture, but it is also the case for land and for farms and businesses. You can't sell them on a dime. Therefore, one of my amendments is to ensure that a longer period is allowed for payment of this tax—over five years. That is a minimum requirement and I think a reasonable one.
~~Kylea Tink~~
I rise to speak in support of the amendments moved by the member for Wentworth, and I want to thank her and her team for doing the work to try to find a way through what is a truly concerning, unprecedented move by this government. To be clear, I believe that the intent of the Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023 warrants investigation. But to see the taxation of unrealised gains included in this legislation should send a shiver down the spine of not only every Australian but potentially every global citizen, because this is globally unprecedented. Nowhere else in the world do they tax unrealised gains.
What are the implications of this? It means, particularly for people in the rural sector and the small-business sector, that if they own assets that are fluctuating within their superannuation balance and one year the value of those assets goes up then, even though that will not will be in true cash terms, this government will have the right to approach those people and have them pay cash to the ATO, and the ATO doesn't take an IOU note.
In the subsequent year—let's say it's a farm, and you hit drought and your land price drops, and you fall back under the $3 million mark—you don't get a rebate from the government for the money you paid the previous year. But you have lost cash somewhere. So, from the minute this legislation was tabled, this really egregious change in taxation policy in this country was flagged with alarm by many key stakeholders. I have had lots of conversations with the member for Wentworth, the assistant minister, and other members of the crossbench who have tried to appeal to the government to please drop this unprecedented reform. Yet—it's extraordinary—the government hasn't been prepared to negotiate in this space and to recognise not only the potentially immediate damage to our superannuation system but also the potential damage to Australians' confidence, when they hold assets, that the government isn't going to adopt this as a standard practice across everything we hold.
People have asked me, 'If this is now included in super, what does that mean for my home in the future?' So, I would say to the minister, I think the member for Wentworth and her team have done an excellent job in providing you with a way to frame this and to give Australians greater certainty. While I would prefer to see this measure completely removed, this is what's being offered, in the interest of compromise, and I commend it to the minister and his team. I'll be interested to see why the minister says the government won't take it up.
~~Allegra Spender~~
In continuation of my previous remarks, I'd like to thank the member for North Sydney for her support of these amendments. As I described earlier, the amendments that I have put forward are, firstly, around allowing a greater time period in which to pay, given that people are being taxed on unrealised gains. Because these gains are unrealised, they relate to assets that have not been sold, or realised, and people may not have the cash to pay this. We should not be forcing people, or pushing people, to be paying tax on income that they haven't earned in a time period that is unreasonable—currently at 84 days.
My second amendment speaks to my concern about the impact on the venture sector and whether the government has adequately assessed that. I have put in my amendment that a review should be done on the impact of this sort of change on the venture and technology sector in particular.
Finally, I'm also calling for this legislation to acknowledge, and to try and give some confidence to, the people the member for North Sydney identified, by saying that this is not going to set a precedent for taxing unrealised gains in other parts of the economy. Frankly, these aren't the amendments I would like to pass. There are other amendments I would have loved to pass. Unfortunately, because this is an appropriation bill, I am unable to put forward the amendments that I would have put forward, but I do believe they should be considered.
Frankly, all this talk on unrealised gains is for superannuants who can calculate their actual earnings to pay their taxation on actual earnings. From my understanding, that would capture 80 per cent of the people that this bill is meant to address. So 80 per cent of the 80,000 people who would initially be affected by this would be able to pay tax on their actual earnings, and the 20 per cent who are in major funds would have to pay tax on unrealised gains. Then, it would be up to the funds to provide the right tax information so that, in the future, people perhaps would not have to pay tax on unrealised gains. I think that is an appropriate opportunity for the government to look at. From my understanding, just because APRA funds can't calculate gains that are realised funds versus unrealised funds, why should self-managed super funds be penalised for the technical incapacity of the other funds? I don't think that's a fair challenge. This change would make a huge difference to the self-managed super funds who are, by and large, the larger holders of these sorts of assets and the larger investors, particularly in the venture sector.
Failing that opportunity, there should've at least been a clawback mechanism to acknowledge that this is a proxy measure and that people may be overpaying their tax liability, because, as we all know, the value of assets goes up and down, particularly if you're in venture assets, where, for instance, the asset might be worth $50,000 one year and have a valuation of $2 million the next year. By the third year, it might be worth zero. A clawback mechanism would ensure that if you did have to pay tax at a valuation that you would never be able to realise then you could get the tax back. Again, that is a precedent we have in many other parts of our tax system, and it should be in this part of the tax system as well. I think these are some of the things that should have been in the legislation. These were alternative options for the government had it wanted to pursue what is a reasonable goal and do it in a way that is not so detrimental and not so distorting of our tax system.
I would like to ask the government a couple of key questions, via the minister. The first question to the minister is really around why the government chose to exclude people who can calculate their actual earnings—their realised gains versus their unrealised gains. Why did you choose to tax everybody on unrealised gains, when some people can actually calculate their realised gains?
The second question I really want to get an answer to is: what has the government done to understand the impact on the technology and venture sector, which is such an important part of our productivity and the economy. Those are two questions I would appreciate the minister's advice on.
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