SMSF Association CEO, Peter Burgess, told SMSF Adviser that if the bill is not passed before the end of this calendar year, the government would have another looming problem: the short amount of time super fund members would have to restructure their super interests.

“This will be particularly important for members with legacy pensions as we don’t expect the legacy pension amnesty regulations to be tabled until after the Better Targeted Super Concessions Bill has been passed,” Burgess said.

“Allocations from fund reserves, which typically occur when a legacy pension is commuted, will be counted as earnings for Division 296 tax, so it’s critically important these members are given sufficient time to consider their options, and take the appropriate action, before this proposed tax takes effect.”

There has been growing opposition to the bill, which was passed through the lower house last month.

On 9 October, Member for North Sydney Kylea Tink introduced an amendment calling for the $3 million cap to be indexed, which was defeated 52-9.

“The lack of indexation is out of step with current accepted tax principles, with most other elements of our super system being indexed from contribution limits to the transfer balance cap and lump sum benefits,” Tink said.

“Leaving the cap at $3 million without indexing it will mean people in my generation will have an entirely different and relatively higher threshold to that of my children, with the real value of the threshold likely falling to $2 million due to inflation by around 2040.”

Aaron Dunn, Smarter SMSF CEO, said the government needs 39 seats to pass the bill in its current form in the Senate, and currently only has 25, so would need the support of the Greens to give them 11 seats and three of the six independents, which include Jacqui Lambie, One Nation and the United Australia Party.

He said it was these crossbenchers whom the SMSFA and other industry bodies had been lobbying.

“Most in the minor parties would side with the Opposition and it then becomes a discussion and debate with the independent senators on whether they agree with the bill in its current form,” Dunn said.

Burgess added that without amendments being made, there is no clear pathway for the bill to be passed.

“We are continuing to liaise with the senate crossbench to ensure all the unintended consequences and unfairness of taxing unrealised capital gains is well understood,” Burgess said.