PFA welcomes decision to spare unrealised gains from new $3 million superannuation tax plans

Property Funds Association of Australia (PFA) welcomes the Federal Treasury’s decision not to tax unrealised gains on investments as part of its amended superannuation tax changes, which will introduce higher taxes on balances above $3 million.

The original plans, announced as part of the Treasury Laws Amendment (Better Targeted Superannuation Concessions) Bill 2023, included taxation on unrealised gains, which would have meant taxing gains made on paper even if an asset had not been sold.

However, the Federal Treasurer, Jim Chalmers, announced the new tax would now only apply to realised gains, the thresholds will be indexed, and the new superannuation tax regime will commence from 1 July 2026, a year later than first planned.

Paul Healy, CEO of the PFA, said the decision to tax only realised gains avoided potential complications for illiquid assets including unlisted property. “The decision to tax only realised gains is a good outcome for unlisted property funds and other illiquid investments.

“Under the previous plans, illiquid assets could have experienced a cash-flow mismatch, being liable for taxes on gains without receiving any distributions from a sale.”

Mr Healy said the news provides clarity to unlisted property fund managers and investors. “PFA welcomes this decision and the clarity it provides to the unlisted property funds industry and its investors, to keep investing and building with confidence.”