The amendment called on the government to recognise that the inclusion of unrealised capital gains in the measurement of earnings will:

1. add further complexity, red tape, and costs to the superannuation legislative framework;
2. lead to unintended consequences that contradict the stated objective of the bill;
3. impact small business owners and farmers who hold land and business premises in self-managed super funds;
4. risk substantial liquidity stress and financial stress for members of self-managed super funds;
5. constitute a significant departure from the long-established principles of our tax system.

Furthermore it called on the Government to replace the current measurement of earnings with a simplified measurement that reduces uncertainty and the severity of including unrealised capital gains, such as using a deemed rate of return (adjusted for unrealised gains) as a proxy for earnings”.

“This reform can and could work, but it will not work in its current form,” Tink said.

“While people in my electorate of North Sydney broadly support the intent and principle of the Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023, they're also very concerned that the legislation is being poorly executed and will create a dangerous precedent within our taxation system. They are concerned this legislation is really a trojan horse, designed to put an end to self-managed super funds and instead preference the large commercial superannuation.”

The motion was seconded by Zoe Daniel, Independent MP for Goldstein.

Much of the opposition to the proposed legislation centred around the taxing of unrealised gains and lack of indexation, and its potential impact on future generations of young Australians.

Kate Chaney, independent Member for Curtin, said she had serious concerns about the structure of the change which makes it impractical and potentially unfair.

“As a matter of principle, we need to ensure that changes we make are consistent with common sense approaches and fairness,” she said.

She added she had four main concerns with the bill including taxing unrealised gains; double taxation; not indexing the threshold; and there being no transition period.

“Today, $3 million seems like a lot of superannuation, but $3 million in 2064 won't look like it does now. It's been submitted that, for a 30-year-old today, this cap is effectively more like a $1 million cap, in today's dollars, by the time they retire,” she said.

“Indexing these sorts of thresholds allows the intent of a policy to continue into the future, instead of gradually ratcheting down the benefit of superannuation saving over time. Not indexing the $3 million threshold has the potential to embed further intergenerational inequality.”

She added the legislation as it stands breaks an existing tax principle in taxing unrealised (or paper) gains that may never be realised and will become a “fee fest for accountants, lawyers and an army of time wasting valuers/advisers that will further reduce Australian productivity”.

Aaron Violi, Liberal MP for Casey MP, argued there is “no reason why the government couldn't index this other than that they want to bank some savings, moving forward, to continue their tax-and-spend budgetary agenda”.

He claimed the government is “throwing conventional tax wisdom out the window” and the new Division 296 tax will hit small-business owners, farming families and self-managed super funds the hardest.

Luke Howarth, LNP member for Petrie, said the legislation is “bad for Australians” and changes the goalposts for young people.

“It's a tax on aspiration, and as many as two million Australian people may face these taxes as they approach retirement,” he stated.

Other MPs who spoke out in opposition to the legislation included Dr Monique Ryan, Opposition whip Melissa Price, Terry Young, Helen Haines, Sam Birrell, Jenny Ware, Bert Van Manen, Russell Broadbent, and Nola Bethwyn Marino.

Graham Perrett, Labor Member for Moreton, was the only speaker in Wednesday’s debate in favour of the legislation, and said the bill was a “responsible change for Australians and for the budget”

“It's the focus of this government to implement changes to ensure that the generous superannuation tax breaks are better targeted and more sustainable,” he said.