Superannuation, the ultimate government cash cow?

sptrawler · 16 April 2020

Another overdue change to tax on super is the 15% tax on contributions, why not make it a 15% reduction on your marginal rate?

If someone is on the 19% tax bracket, they pay no tax on contributions, if they are in the 30% tax bracket they pay 15%, if they are on the $45% tax bracket they pay 30% tax on contributions.

At the moment those on higher tax brackets, are getting an unfair tax advantage than those in lower tax brackets? Wow is that middle class welfare OMG.
I'm sure that would save the Government a lot of money.
Why should the Barista pay the same tax as the FIFO or indeed as much as Adam Schwab?

(tax brackets rounded for simplicity).

Humid · 16 April 2020

I don't know to many baristas who pay 80k tax

sptrawler · 16 April 2020

Humid said:
I don't know to many baristas who pay 80k tax

I don't know why someone on a full government pension should get the franking credits and someone who has saved harder done without more should lose them, life is full of the inexplicable.
Or why I could have my franking credits back if I change to an industry fund, it sounds like blackmail, strange indeed.
I guess it is similar to why the barista has to pay the same contributions tax as someone who is on the highest tax rate.
Life is indeed stage grasshopper.

InsvestoBoy · 16 April 2020

sptrawler said:
Why do young left wing reporters always want it to be about retirees?

lol as if the only person who could make those statements is a young left reporter? Adam Schwab is not young, left or a reporter. He's a corporate lawyer and CEO, with a long history of capitalist pursuit.

Maybe he is making these statements "about retirees" not because he wants to but simply that is because what the data shows all the Government subsidy has gone to?

sptrawler · 16 April 2020

InsvestoBoy said:
lol as if the only person who could make those statements is a young left reporter? Adam Schwab is not young, left or a reporter. He's a corporate lawyer and CEO, with a long history of capitalist pursuit.

Maybe he is making these statements "about retirees" not because he wants to but simply that is because what the data shows all the Government subsidy has gone to?

Well then he could quite easily do away with all the suggestions he put forward, i didn't see him mention that prospect or putting his hand up for it.
Also I wonder if he accepts the 15% contribution rate to super, or just doesn't put anything in for ethical reasons.

fiftyeight · 2 May 2020

Asking for a friend, haha but actually I am, my wife runs an online business and we have been surprisingly busy, no gov hand out for us.

2 guys at work have claimed the $10k as our over time has been cut, not sure that will equal 20% or even if that counts. But more worryingly, they have claimed the $10k for their wives. The wives are stay at home mums who receive no Centerlink payments as we earn to much, but they have claimed the $10k thinking they qualify as 'unemployed'.

Pretty sure they have it wrong but I cannot find anything to confirm, can someone point me in the right direction?

Belli · 2 May 2020

fiftyeight said:
Asking for a friend, haha but actually I am, my wife runs an online business and we have been surprisingly busy, no gov hand out for us.

2 guys at work have claimed the $10k as our over time has been cut, not sure that will equal 20% or even if that counts. But more worryingly, they have claimed the $10k for their wives. The wives are stay at home mums who receive no Centerlink payments as we earn to much, but they have claimed the $10k thinking they qualify as 'unemployed'.

Pretty sure they have it wrong but I cannot find anything to confirm, can someone point me in the right direction?

The legislation relating to the Coronavirus Economic Package does not contain any definition of unemployment. It does not reference the ABS or Centerlink definitions and would if it was specifically intended to do so.

https://www.ato.gov.au/law/view/document?src=rs&pit=99991231235958&arc=false&start=1&pageSize=10&total=2&num=0&docid=PAC/20200022/Sch13-Cl6&dc=false&stype=find&tm=phrase-basic-covid&tm=sis-basic-unemployed

Would seem the two guys you refer to are in the clear with their actions for their wives. Check with the ATO which is administering the package if you are unsure.

Forgot to mention I am not quibbling about the ethics of it. If it's lawful, it's lawful.

fiftyeight · 2 May 2020

Belli said:
The legislation relating to the Coronavirus Economic Package does not contain any definition of unemployment. It does not reference the ABS or Centerlink definitions and would if it was specifically intended to do so.

https://www.ato.gov.au/law/view/document?src=rs&pit=99991231235958&arc=false&start=1&pageSize=10&total=2&num=0&docid=PAC/20200022/Sch13-Cl6&dc=false&stype=find&tm=phrase-basic-covid&tm=sis-basic-unemployed

Would seem the two guys you refer to are in the clear with their actions for their wives. Check with the ATO which is administering the package if you are unsure.

Forgot to mention I am not quibbling about the ethics of it. If it's lawful, it's lawful.

Well that is unexpected.

The restrictions are so loose, why not just say everyone can cash out if they feel they choose to

Junior · 2 May 2020

fiftyeight said:
Well that is unexpected.

The restrictions are so loose, why not just say everyone can cash out if they feel they choose to

I agree. They've left it too open to interpretation.

They should just let everybody do it.

OR make the eligibility criteria tight and require you to upload evidence with your application. One or the other!

qldfrog · 2 May 2020

fiftyeight said:
Well that is unexpected.

The restrictions are so loose, why not just say everyone can cash out if they feel they choose to

You can only get the 10k per business(cash flow boost)+ 10 k split in the coming months if you were paying payg tax as an entity in the previous quarter
This is unrelated to loss of turnover vs last year then there is jobkeeper
Which you can claim for anyone on the payroll if you have turnover down there are restrictions etc
People can claim as they want,bit does not mean the ATO will not come back with a revenge in 6 months

Belli · 2 May 2020

qldfrog said:
You can only get the 10k per business(cash flow boost)+ 10 k split in the coming months if you were paying payg tax as an entity in the previous quarter
This is unrelated to loss of turnover vs last year then there is jobkeeper
Which you can claim for anyone on the payroll if you have turnover down there are restrictions etc
People can claim as they want,bit does not mean the ATO will not come back with a revenge in 6 months

I tend to disagree given the first eligibility requirement "if it is required to assist the person to deal with the adverse economic effects of the coronavirus known as Covid-19 if: (a) the person is unemployed." Each definition is separate and not dependent on other definitions.

qldfrog · 2 May 2020

Belli said:
I tend to disagree given the first eligibility requirement "if it is required to assist the person to deal with the adverse economic effects of the coronavirus known as Covid-19 if: (a) the person is unemployed." Each definition is separate and not dependent on other definitions.

You have 2 schemes: cash boosthttps://www.ato.gov.au/Business/Bus...Boosting-cash-flow-for-employers/#Eligibility
There a a few eligibility check but that is basically anti rort ones.
ATO pay back your PAYG tax withdrawn up to a level and at least 20k
This is NOT linked to turnover reducing etc .Just helicopter money
Then there is the jobKeeper scheme which is different and far more complex
Feel free to discuss with your accountant
Basically if your mate was already paying wages (aka income splitting) with his wife for let's say accounting task: the lady might do a few hours per week doing invoicing etc.
or was paying himself from his own company as a payg employee, this is all legal and unrelated to reduced activity

JobKeeper is a different type of fish and you should see reduced activity to qualify
Talk to your accountant if you think you qualify.

Belli · 25 May 2020

qldfrog said:
You have 2 schemes: cash boosthttps://www.ato.gov.au/Business/Bus...Boosting-cash-flow-for-employers/#Eligibility
There a a few eligibility check but that is basically anti rort ones.
ATO pay back your PAYG tax withdrawn up to a level and at least 20k
This is NOT linked to turnover reducing etc .Just helicopter money
Then there is the jobKeeper scheme which is different and far more complex
Feel free to discuss with your accountant
Basically if your mate was already paying wages (aka income splitting) with his wife for let's say accounting task: the lady might do a few hours per week doing invoicing etc.
or was paying himself from his own company as a payg employee, this is all legal and unrelated to reduced activity

JobKeeper is a different type of fish and you should see reduced activity to qualify
Talk to your accountant if you think you qualify.

I missed this. You're correct about different schemes.

And I found out it doesn't matter if you are not in the workforce or never have been. According to the information on the ATO web-site someone who receives investment income may also contribute to superannuation. Sooo, if you have been a canny investor and never have even seen the inside of a factory but have been contributing to super and effectively unemployed being an investor only then here's $10k now and $10k later if you want it.

qldfrog · 25 May 2020

You still need to have a business and fill bas etc but yes, any business should get it

Belli · 25 May 2020

qldfrog said:
You still need to have a business and fill bas etc but yes, any business should get it

Possibly. However, it doesn't seem one needs to actually be operating a business or have an ABN.

According to this:

https://www.ato.gov.au/Individuals/...-deductions-for-personal-super-contributions/

a plain vanilla investor isn't required to be a business but still may contribute to superannuation. Could be someone who early on came into a large windfall (inheritance, tattslotto) and did the plonk it into VAS sort of thing. In that case, in conjunction with the ability to extract $10k + $10k from super being considered unemployed (no specific definition in the relevant legislation) easy as to take it out and then re-contribute provided it's within the $25k concessional or even as a non-concessional and so convert tax-taxable to tax free.

Some absorbing scenarios abound.

qldfrog · 26 May 2020

Unclear where you link it to superannuation, the cash flow boost is linked to payg payment as shown in bas/ias, i assumed on salary.
But if you invest as a business, yes you could qualify
Probably the wrong thread to discuss these items

Belli · 30 June 2020

fiftyeight said:
Well that is unexpected.

The restrictions are so loose, why not just say everyone can cash out if they feel they choose to

Junior said:
I agree. They've left it too open to interpretation.

They should just let everybody do it.

OR make the eligibility criteria tight and require you to upload evidence with your application. One or the other!

Loose but not too loose it seems.

https://www.ato.gov.au/Media-centre...sf_news_73&utm_source=atogov&utm_medium=email

And there is this oddity. It isn't necessarily a monetary reduction in salary but working hours is part of the criteria for access. You may have a 20% pay cut but if your working hours are the same????

on or after 1 January 2020 either:

you were made redundant

your working hours were reduced by 20% or more (including to zero)

you were a sole trader and your business was suspended or there was a reduction in turnover of 20% or more (partners in a partnership are not eligible unless the partner satisfies any other of the eligibility).

Could be be some interesting questions posed to a number of tax payers after they have submitted their tax returns. Good fun and times ahead.

sptrawler · 7 July 2020

Belli said:
And there is this oddity. It isn't necessarily a monetary reduction in salary but working hours is part of the criteria for access. You may have a 20% pay cut but if your working hours are the same????

Could be be some interesting questions posed to a number of tax payers after they have submitted their tax returns. Good fun and times ahead.

I'll give you an update, someone who works with a mate did it, so we should get live feed.

Belli · 9 July 2020

sptrawler said:
I'll give you an update, someone who works with a mate did it, so we should get live feed.

Yes, I'll be sitting back watching with interest to hear about the outcomes.

It doesn't impact me directly but the long-term aspect on some could be intriguing such as I don't have enough super to retire. And why? Pretty expensive car you may have bought there Sunny Jim ($20k @ 7.5% over 30 years) and now cautious ones may be required to dig into the back pocket to help you.

However, it's nice to know my belief in people seeking what is apparently easy money has been reaffirmed.

sptrawler · 22 July 2020

Apparently the banking regulator, is going to relax the dividend restrictions, it imposed on the financial sector.

I wonder if this has been brought about, by the amount of self funded retirees, who now qualify for a government pension and are lined up at centerlink?

Their dividends have been stripped, the value of their investments has dropped and they no doubt are eating their capital which in every probability they can't replenish.
I guess the only upside is, it is only the kids inheritance, after this hit the only thing to be sorted will be the PPR.

Superannuation, the ultimate government cash cow?

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