The proposed taxation of unrealised gains in the current drafting of the bill was at the top of the priority list, with the MPs adding that the continued delay in action on the legislation is causing “even more uncertainty for Australians”.

“The crossbench has consistently opposed the egregious proposal to tax unrealised capital gains, highlighting the negative impact this would have on small businesses, start-ups, farmers, and self-managed super fund members,” the statement said.

Member for North Sydney Kylea Tink, who has previously introduced amendments calling for the government to recognise the issues and use a simpler method, said the legislation is “being poorly executed and will create a dangerous precedent within our taxation system”.

“The taxation of unrealised capital gains means people will be taxed on money they may never see. This is deeply problematic and must be addressed,” Tink said.

“The lack of indexation on the large balance threshold amount means, over time, this measure will impact many more ordinary Australians, who have done nothing more than they are required to do under law in terms of meeting their superannuation payments.

“Leaving this legislation in limbo creates even more uncertainty. The Better Targeted Super legislation was introduced months ago, what is the Minister doing?”

Allegra Spender, member for Wentworth, is also set to introduce an amendment to allow the deferral of payment for taxpayers who might otherwise be forced to sell their illiquid assets.

“We need to have appropriate tax on super, but taxing unrealised gains is just bad policy. People shouldn’t be taxed on paper profits they may never see,” Spender said.

“I’m really concerned about the impact on the start-up and innovation sector, in particular, which is an area we need to see grow, rather than diminish. It appears this is a policy fudge to accommodate technical limitations in large APRA-regulated funds when the overwhelming majority of these high balances are in self-managed super funds that could easily calculate their actual earnings and associated tax.”

Member for Goldstein Zoe Daniel said the tax could turn retirement into a “nightmare”.

“Self-managed super fund members who hold illiquid assets such as property will be required to pay tax before realising those gains, and many may not have the funds to pay the tax,” Daniel added.

“It is a looming nightmare for people such as farmers who are asset rich, but cash poor, a nightmare that can be avoided by amending this legislation.”

Dr Helen Haines, member for Indi, also specifically pointed to members who hold their family farms in self-managed super funds as being unfairly impacted.

“If this tax on superannuation above $3 million goes ahead as currently drafted, these farming families may not receive the lease payments or rental yields to meet the annual tax bill on their land assets without selling the land itself,” Haines said.

“Indexing the $3 million threshold and excluding agricultural land assets would ensure our superannuation system fulfils its objective of providing for people in retirement.”

Kate Chaney, Dr Monique Ryan, Dr Sophie Scamps, and Zali Steggall also expressed their concerns with the bill, with the group of independents adding that the government “must listen to the concerns of the community and the crossbench, and revise the legislation to ensure a fairer, simpler system”.

NFF and COSBOA call for change

On Tuesday, the National Farmers’ Federation (NFF) and the Council of Small Business Organisations Australia (COSBOA) also urged the government to make “sensible changes to the legislation”.

NFF president David Jochinke argued the bill could still achieve its overall aim without causing undue hardship if the government made amendments to address these concerns.

“Farmers and small business owners are united in our view that this bill will have unintended consequences on the operations and succession planning of these small businesses across the country, in particular for those who hold a self-managed superannuation fund (SMSF) to structure their business,” Jochinke said.

“In the case of agriculture and small business, older farmers or business owners will often hold their assets in an SMSF and lease the operations to their children, providing both retirement income for them as well as an opportunity for the next generation to enter the business.”

Taxation of unrealised gains also featured heavily in COSBOA’s statement, with chief executive Luke Achterstraat pushing MPs to consider the “real-world impact”.

“This new tax on the unrealised gains on assets held in the SMSF may see an increased obligation that represents a significant proportion of an owner’s annual income, or even exceed it,” Achterstraat said.

“This may see the older generation left in a terrible situation where they may have to sell their assets to meet this new tax obligation or increase lease rates to their children so much that their own children’s business may become unviable.

“The government has consistently said this Bill targets the top end of town, people with hundreds of millions of dollars in their super accounts – not hard-working, family-run small businesses.”