How to retire early... or simply survive

[PZ99]

If you look back to the my posts, when Labor suggested the taxing of super incomes above $100k, I fully supported it and still do.

What I dissagree with is, the removal of the franking credit, takes 30% of much lower incomes.
Therefore those, as I who are trying to achieve an income above inflation, are going to be screwed.
Shares are paying about 5% give or take, with the franking credit that goes to about 7%, without the franking credit and with the ever increasing minimum drawdown, shares will have to be sold to fund it.
That is o.k, while inflation is low, but becomes a real issue as inflation increases.
Rates in our location have gone from $1,400 to $2,000 in the last 2 years. Electricity has gone from 12c/unit to 25c/unit in the past 8years, the supply charge doubled last year.
It is only the fact that there is a supermarket war on, that the cost of food has had a lid on it, for the last few years.
Like I said, there will be a huge problem, when inflation in the Western World kicks off, and all Governments are pushing for it to kick off.
Also the ATO has introduced a reporting requirement, that any large sums removed from super, have to be immediately reported. Make of that, what you will.

That's an interesting comment about the ATO reporting requirement.

I'm assuming it's aimed at people withdrawing their super illegally ?

 

[sptrawler]

The minimum contribution is compulsory, the government is still actively providing incentives to get people to invest more over and above the minimum.

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Also, just because someone is withdrawing $100K per year from their super doesn't mean the super is earning $100K per year, Some of that is capital that is already been taxed when it was originally earned.

If I earn $100, pay $15 in super contribution tax so my super account is raised by $85 when it comes time to withdraw it I shouldn't have to pay tax on it, its my money after tax, you don't pay tax when you withdraw your after tax wages form you account

Add to that, a lot of the money in super, has been put in after tax.
I think the Government will have to, at some offer people the option of removing their after tax contributions, as they are constantly changing how it is treated.
If for example you had $200k in after tax contributions, its earnings are being taxed at 15%, if it was outside super the first $18k of earnings is tax free.

 

[sptrawler]

That's an interesting comment about the ATO reporting requirement.

I'm assuming it's aimed at people withdrawing their super illegally ?

My guess is it a precursor, to bringing back max-min withdrawls, as people make a run on super.
Just pull it out and spend it as you wish, take the first $36k tax free, split with your wife.
Why leave it in super, having them tell you how you can spend it, while constantly changing how they treat it?
The point of super is being completely lost by Labor, it was introduced to improve your retirement, Labor now see it as a pool of money they want.
Anyway probably enough been said, time will tell which of us is right, best of luck with your retirement. congratulations

 

[SirRumpole]

Also, just because someone is withdrawing $100K per year from their super doesn't mean the super is earning $100K per year, Some of that is capital that is already been taxed when it was originally earned.

I'm sure that could be accounted for.

 

[Value Collector]

I'm sure that could be accounted for.

The current system does account for it, as far as I understand the bulk of super is taxed

eg. the money you put in from your wages over your life is taxed, and the earnings that are earned during the life of the super fund are taxed, and its only right at the end of the super funds life during the pension phase that the earnings become tax free, but by then the bulk of the funds are after tax capital.

 

[HelloU]

Oh, sorry. The NBN is off budget because it's a "financial asset investment".

The funds come from investment - super funds have diversified interests in the NBN for a small return. They buy govt bonds and that money goes to NBNCo.

Which means the intention is to either pay for itself or sell it off. The same thing happens with nation building projects like roads etc. We have around $80b in an off budget fund as a "headline deficit". Most of it from the Abbott/Turnbull govts I might add

It's not part of our federal budget quagmire - so technically it's not paid for by taxpayers.

As for stop handing our welfare to people who wont work for it, I agree completely - save for the people who really need it.

off topic but for clarity to see taxpayer involvement.......
initial $30B was done this way (as no more than $30B was allowed). Interest on bonds is paid each 6 months by the government and comes from revenue including NBN receipts. This initial capital amount is/was to be repayed to taxpayers when the NBN is sold at a future unknown time (not sure who buyer will be but anyway).

Then govt scrapped the $30B limit cap cos NBN needed $19B more and could NOT find any commercial funding, so another $19.5B was given by govt as a loan (Nov16) but on 'çommercial terms' so no need for the taxpayer to panic (3.71%). This will be paid off in 2021 by NBN refinancing commercially....(hence the panic to get peeps signed up at higher speeds as NBN makes more money so can look better on the books)....no idea what happens if they cannot refinance.

 

[HelloU]

................
Also the ATO has introduced a reporting requirement, that any large sums removed from super, have to be immediately reported. Make of that, what you will.

can you provide info here please.......I am currently thinking that this is a long standing requirement to do with access prior to 60 years of age (65yrs) type scenarios ..........but happy to learn

 

[sptrawler]

The current system does account for it, as far as I understand the bulk of super is taxed

eg. the money you put in from your wages over your life is taxed, and the earnings that are earned during the life of the super fund are taxed, and its only right at the end of the super funds life during the pension phase that the earnings become tax free, but by then the bulk of the funds are after tax capital.

During the accumulation phase, as you say, the earnings are taxed at 15% even if you aren't working. the $18,000 tax free threshold doesn't apply.
But the majority of people including Bill Shorten, would have you believe it hasn't been taxed at all.
They also like to include the after tax contributions, in there misinformation, as it adds BS to their figures.
A worker would have to be crazy, to put their own money into super, pre Bill Shorten I would have encouraged people to put extra money in. Now the cat is out of the bag, so to speak, it has become obvious the Government will class super as their money, not yours. IMO

 

[sptrawler]

can you provide info here please.......I am currently thinking that this is a long standing requirement to do with access prior to 60 years of age (65yrs) type scenarios ..........but happy to learn

As far as I'm aware, as from July1 it applies to funds in the pension phase. Junior or one of the other specialists, can probably give the exact provisions.
I wouldn't want to state something that isn't accurate, as I have no qualifications, regarding finance or tax.

 

[HelloU]

As far as I'm aware, as from July1 it applies to funds in the pension phase. Junior or one of the other specialists, can probably give the exact provisions.
I wouldn't want to state something that isn't accurate, as I have no qualifications, regarding finance or tax.

thanks, googled already and will have another whilst waiting...

Aside, if u r not prepared to just make stuff up then i am afraid the internet has no place for people like you.




lol

 

[sptrawler]

thanks, googled already and will have another whilst waiting...

Aside, if u r not prepared to just make stuff up then i am afraid the internet has no place for people like you.
lol

Here is a link to the new reporting system, I think it is called event based reporting.

https://www.hlb.com.au/event-based-reporting-impacts-smsfs/

It is to do with anything, that affects your transfer balance cap.

 

[Tisme]

Early retirement is very alive and well.
Just wander down to any Social Security
Office and you’ll find a whole room full
Of experts.

Sun Surf lazy afternoons
Work—-why?
Both are a life style choice how good
IS the lucky country!

 

[Toyota Lexcen]

spot on spitrawler, if you 45yrs +up, own your home or close too it the pension is no brainer for a couple

 

[PZ99]

Here is a link to the new reporting system, I think it is called event based reporting.

https://www.hlb.com.au/event-based-reporting-impacts-smsfs/

It is to do with anything, that affects your transfer balance cap.

So this is for SMSF's with balances over 1 million then. That's fair enough.

Must be tempting for someone to quietly borrow from the fund for black magic

Are they doing it for fear of Bill Shorten confiscating it or something ?

spot on spitrawler, if you 45yrs +up, own your home or close too it the pension is no brainer for a couple

You just wanna hope that it's still there when you reach 67.

Because if everyone does it - it'll only be paid to them after they've died.

Personally I can't wait that long. I got fings to do

 

[Toyota Lexcen]

cool, spend it all, and the pension there for you

 

[PZ99]

But what if Bill Shorten gets in?

We've already read in post 228 that Labor want to increase the pension age - apparently.

What happens if he abolishes it altogether?

 

[Toyota Lexcen]

guess that depends on peoples age and individual circumstances

 

[PZ99]

The individual circumstances are that I've taken your advice and blown all my dough on a Lamborghini and a fridge with 6G internet to qualify for the pension. So has everyone else. The age of entitlement is alive and well. Then the pension has to be rolled out to the entire aged population.

Enter Labor. We can't afford it so it gets abolished. WhatdoIdo ? lol

 

[sptrawler]

spot on spitrawler, if you 45yrs +up, own your home or close too it the pension is no brainer for a couple

I would definitely keep saving, just wouldn't use super as the vehicle, employer contributions fine just wouldn't put my own money in.

It is a shame the Government years ago raided the pot, and decided to pay pensions from consolidated revenue.

If we had a system(which I believe we had), like U.K, NZ and Canada, everyone gets the pension, your super is taxed as income.
Therefore everybody gets the minimum pension, and it is up to you if you want to save for a better retirement.
It sounds a whole lot fairer, than the system we have.
From memory,I think it was Keating who removed the statutory 6% levy on income tax, that was meant to be set aside for welfare.
Ah, how history has a way of changing.

 

[sptrawler]

The individual circumstances are that I've taken your advice and blown all my dough on a Lamborghini and a fridge with 6G internet to qualify for the pension. So has everyone else. The age of entitlement is alive and well. Then the pension has to be rolled out to the entire aged population.

Enter Labor. We can't afford it so it gets abolished. WhatdoIdo ? lol

No, No, enter Labor, we can't afford it, everyone who has anything spend it, those who have nothing increase the pension.
It's equivalent to having $800k in the bank already.