Well, Tax is paid at 15% inside super, but yes it is a lower tax structure, one of the best actually except for its disadvantage of being locked away.The really wealthy put as much as they can in super. 20 people have over $100 million in super. Tax advantages are very lucrative. They can collect more dividends than they can use and ensure no tax is paid.
That is the real problem, people putting too much into super, but believe it or not the IMO the Government wants that, because it actually becomes a pool of money that underpins our economy.The really wealthy put as much as they can in super. 20 people have over $100 million in super. Tax advantages are very lucrative. They can collect more dividends than they can use and ensure no tax is paid.
Thats already how it works. (its called Division 293 tax linked below)but reduce the contribution concessions to something like a 15% reduction on your marginal rate, not a flat 15% as it is now, because the higher paid workers get more of a benefit.
Unfortunately 95% of people live beyond their means, so can't ever hope to hit the magic formula.
People who have hit the magic formula, are people that probably don't need super, as they are savers anyway.
I always tried to think of super as the icing on the cake, because the Gov can change the rules at any time, as has happened and as is happening now.
As @Value Collector said I did similar build up my wealth outside super, then as I got closer to retirement decided how much was worth having in super during retirement. I don't have over the transfer cap in my super and I do have my other investments outside super.
Everyone to their own.
The really wealthy put as much as they can in super. 20 people have over $100 million in super. Tax advantages are very lucrative. They can collect more dividends than they can use and ensure no tax is paid.
But dyne the pollies are to concerned about their own survival to worry about minow matters such as this !!!!!It's taken a very long time just to get to this week's superannuation consultation for the coming May budget , so imagine how many years into the future , before death duties are back, to clear the decks , so - to - speak ?
Meantime, if super contribution restrictions are brought in for the well to do , they could simply take their dough out of the productive side of the economy and bury it in this country's other great tax dodge ...the sacred P.P.O.R.
That would become the next hurdle/ headache for the reformist pollies to tackle.
Be real quick with that , because Jimbo and Co are taking aim at the borrowing for real estate through SMSF's , trick.to purchase a property through a SMSF.
The funny part is, it was Julia Gillard's Govt that brought in the ability for SMSF's to borrow for property, so it does show that super is a very fluid investment that can be changed at a Govt whim.Be real quick with that , because Jimbo and Co are taking aim at the borrowing for real estate through SMSF's , trick.
Could it be introduced in this May budget ? Seems hard to believe , I know.
Me thinks , a reform notion as grand as that , would have to be taken to the next election . There are just too many voters ( perhaps not Labor voters ) who have set up super on the side , specifically for that purpose,
The problem is, those on $40,000, think they are only getting a 4% tax break.Thats already how it works. (its called Division 293 tax linked below)
If I put the $27,500 maximum into my Super, the super fund deducts 15% tax eg $ 4,125... but then when I do my tax return and the ATO sees that I earned over $250 K, they will send me a bill for another $4,125 bringing the total tax on the contribution to 30% which is around a 15% saving off the top tax bracket. This basically means that the benefit is around a 15% reduction in tax no matter your earning level.
Division 293 tax
What you said about the benefits of having a large pool of investment capital being great for the nation is true, Australian Super funds invest all over Australia making large patient capital allocations, and they also invest over seas, bringing in millions of over seas earnings into the country.
The government also does co contributions, so if a person earning $40,000 makes additional payments into there super, on top of their 4% tax saving they will also receive up to $500 co contribution from the government, which increases they benefit to potentially more than 15%, possibly 100%The problem is, those on $40,000, think they are only getting a 4% tax break.
Let's be honest, those on welfare are complaining, they don't get super..
I'm trying to keep it real.
Yes we know, but most on $40k don't feel they have any spare money, to put away for 50 years.The government also does co contributions, so if a person earning $40,000 makes additional payments into there super, on top of their 4% tax saving they will also receive up to $500 co contribution from the government, which increases they benefit to potentially more than 15%, possibly 100%
Yes we know, but most on $40k don't feel they have any spare money, to put away for 50 years.
Like I said I'm trying to keep it real, that means trying to appreciate their point of view and work with it.
Do many come back for a second serve of advice? ?I guess they need to focus on their earning problem before they worry about their investing problem.
At least they should be getting the employer contribution, and can always fall back on the age pension to supplement that.
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To be honest, from the low income family members that have come to me for advice (sadly two decades to late), the largest problem with their super I have found is that they never paid attention to all the insurances etc that get deducted.
Super is meant to be for your retirement, if 40 year old you wants income insurance, 40 year old you should pay for it.
But sadly having life and income insurance inside your super seems like a “FREE” benefit when you are 40 and don’t have to pay for it out of pocket, but it can reduce your potential super balance by 10’s of thousands of dollars.
I recently tried to explain that to my mother in law, I said “how long have you been paying all these insurances” she said “forever, I wanted them just incase I got hurt”, that’s all well and good but here younger self should have been paying for that insurance, not robbing here 67 year old self.
Not wanting to be offensive, but you are in the 5% of people that according to Noel Whittaker actually make it, most don't.Hahaha, sometime yes sometimes no ?.
I am the guy you come to for advice, and then promptly ignore because you wanted a quicker solution, but then whinge to later.
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5% that make it to what? I don’t class “making it” as ending up with 8 figures or anything like that.Not wanting to be offensive, but you are in the 5% of people that according to Noel Whittaker actually make it, most don't.
The last thing those that don't or wont make it, is to be lectured, by one of the 5% that do.
Also adding to that, I think I remember you said you didn't have children, so that really puts you in the cross hairs, "smug ba$tard with no kids, doesn't have a clue what real life is".
But don't think that gives them an excuse, I came from a really poor background, not because of uneducated parents, more from the alcohol related issues my father had. The only thing he taught me was, backing down and begging, just brought a bigger beating.
But getting to the point, I always saved and scrimped to get ahead, even when I was on better money I would put the trailer on the back of the car and take the kids to collect aluminium cans, then take them to Sims metal and give the kids the money, in the hope it would give them an understanding of how much effort it took to get some money together.
With one of my sons, who was not putting effort in at school, yet still wanted to stay there. I thought o.k I will show him what working for a wage was like, that may make him pull his finger out at school.
So a mate owned a tyre shop, I asked him to put my son on for the xmas holidays he was 16 and I would pay his wages.
He enjoyed the money, but stayed at school, the missus said I was being negative.
Did any of it help? not a bit. ?
The kids, and I had four of them, none have gone down the track I travelled.
Will they end up as comfortable as us, probably not, will they blame me? yes if the media has its way, are they happy? I hope so.
Do I tell them how to do it anymore? No they are in their mid 30's to mid 40's if they haven't worked it out now, there is no chance they are going to listen to a 67 year old bloke who hasn't worked for 12 years.
I'm so yesterday.
Anyway back on track, they need to make superannuation something you can put money into when you are working, that helps you and the Government.
It helps you by adding to your pension and it helps the Government by adding stability to the financial system.
The only way IMO that can happen in a welfare state, is by making super a positive to your pension, then those that don't want to work have a choice, the basic pension if you don't work a better retirement if you do.
Currently if you don't work you get a pension, if you do work there is every likely hood the money they take out of your wages will make sure you don't get a pension.
Getting into the hamster wheel isn't attractive for many.
Spot on Belli, as the thread name says, 'the ultimate Government cash cow', while the Government gives a tax break for super investments, they feel it is their money and will continue to change the rules forever.Just in case people missed it, one matter raised in other publications by the Gratten Institute was its proposal that each member be limited to a max of $2m in super. So great, my pension account is above that and you dudes expect me to withdraw any amount above that. What if, due to price variations, it's below $2m; you reckon I'd be allowed to top up to $2m?
I am bemused by a lot of the chatter where those who have been able to grow the amounts in super are demonised to some extent as if they have done something illegal. Um, maybe some did the wrong thing but the vast majority adhered to what was permitted by legislation which was passed by Parliament. A lot of the problems have been caused by various Government decisions but I don't recall that aspect being raised - and I doubt whether it will ever be mentioned.
The kids, and I had four of them, none have gone down the track I travelled.
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