Superannuation, the ultimate government cash cow?

[sptrawler]

It just needs to be applied in the same manner. If it's retrospective in any way it applies to both civilians and pollies. If it's only on new money going in from 2025, same same.

As long as it is applied equally across all Australians, including politicians and high court judges, I will be happy with it.
When I met with a union lawyer with regard the super surcharge, being unfair as it wasn't applied to politicians. high court judges and senior management, he told me who said it had to be fair.
I said oh well I guess I'm wasting my time. ?

 

[Sean K]

Death has a way of dealing with these issues. Happens over time with closed schemes.

I'm pretty sure my wife gets my pension when I cark it. Not sure if that's what you're talking about or if related to.

 

[Sean K]

As long as it is applied equally across all Australians, including politicians

Ditto. The only problem might be that we get even less qualified and quality politicians entering the field. It's a post-politics gravy train of epic proportions.

 

[sptrawler]

I'm pretty sure my wife gets my pension when I cark it. Not sure if that's what you're talking about or if related to.

If it is a public service pension, my mother in law gets a small one, the father in law died about 30 years ago she gets 60% of his entitlement.
When she passes away it stops all together.

 

[mullokintyre]

If it is a public service pension, my mother in law gets a small one, the father in law died about 30 years ago she gets 60% of his entitlement.
When she passes away it stops all together.

So what we really need to do, is put contracts out on all those PS types and ex pollies who benefit from the scheme.
Would save hundreds of millions of bucks.
Mick

 

[Belli]

So what we really need to do, is put contracts out on all those PS types and ex pollies who benefit from the scheme.
Would save hundreds of millions of bucks.
Mick

Aww, but then you'd take away the fun of the Future Fund. Then what would Peter do to fill in his day?

"The Future Fund was established in 2006 to strengthen the Australian Government’s long-term financial position.

From 1 July 2017 the Fund’s Investment Mandate is to achieve an average annual return of at least the Consumer Price Index plus 4% to 5% per annum over the long term, with an acceptable but not excessive level of risk.

Prior to this the Fund’s objective was Consumer Price Index plus 4.5% to 5.5% per annum. The reduction in the Mandate reflects changed long-term global investment market conditions and outlook.

The Fund has received contributions from a combination of budget surpluses, proceeds from the sale of the government's holding of Telstra and the transfer of remaining Telstra shares.

In accordance with the Future Fund Act 2006, from 2020 funds can be withdrawn from it to cover the annual unfunded Commonwealth superannuation liabilities."


However, in 2017 the Government announced it would not make withdrawals from the Fund in 2020 and indicated its inclination to allow the Fund to grow until at least 2026-27. Drawing down later on the Fund is projected to strengthen the Government’s financial position over the long term.


The Commonwealth’s unfunded liabilities are currently being paid out of consolidated revenue. By helping to meet these liabilities, the Future Fund will ease pressure on the Government’s budget at a time when an ageing population is likely to place significant pressure on its finances.

 

[sptrawler]

A great article, that shows how super is the least of the evils, but the easiest to hit. So what stops the rich just moving the money from super, to the Sydney /Melbourne ponzi scheme, either just upgrade the McMansion and flip it for no tax, or use investment properties and hold them for 12 months and get the 50% CGT discount?
Lots of smoke and mirrors IMO.
If they are serious, this is the area they will hit, but as there are so many of them on the programme, I doubt it will be touched.

https://www.abc.net.au/news/2023-02...ousing-property-tax-breaks-treasury/102032674

Treasury's data shows housing tax breaks cost more in forgone revenue than superannuation tax concessions do.

Various capital gains tax (CGT) exemptions cost almost $72 billion annually, including $48 billion on CGT exemptions for the family home, and another $23.7 billion in revenue foregone on CGT discounts for individuals, such as property investors and for trusts.

It is estimated that around 2.4 million people claimed $51.3 billion of rental deductions in 2019–20, resulting in a total tax reduction of $18.6 billion.

Of the total number of people with rental deductions, almost half (1.3 million) had a rental loss, known as negative gearing, which added up to total rental losses of $10.2 billion. These rental losses provided a tax benefit of around $3.6 billion in 2019–20.

Work-related expense deductions are also a big area of forgone revenue. Treasury says about 9.8 million individuals claimed $22.6 billion of work-related expense deductions in 2019–20, resulting in a total tax reduction of $8.3 billion.

And the GST exemption on food is expected to cost more than $8 billion in forgone revenue.

Dr Richardson says, while housing tax breaks cost more in foregone revenue, the political cost of scaling back negative gearing and CGT discounts for the wealthy may be greater.

 

[Value Collector]

I would be happy if they put whatever limit they like on super, as long as those with more than the limit are allowed to extract it without penalty.
They will have to invest in something else that attracts tax, preferably above the 15% they were paying prior to taking it out.
Mick

They might invest it over seas, and pay 0% Australian tax on it.

I don’t see anything wrong with the current system, there is already a limit to how much super can be in the pension phase account with tax free earnings, and any above that level is taxed at 15%.

If someone is funding their own retirement paying 15% tax, that’s certainly better than some one being on the pension.

Not to mention that even though their dividends might be only taxed at 15%, the portion of the companies earnings that are retained are still being taxed at 30%.

 

[Value Collector]

A great article, that shows how super is the least of the evils, but the easiest to hit. So what stops the rich just moving the money from super, to the Sydney /Melbourne ponzi scheme, either just upgrade the McMansion and flip it for no tax, or use investment properties and hold them for 12 months and get the 50% CGT discount?
Lots of smoke and mirrors IMO.
If they are serious, this is the area they will hit, but as there are so many of them on the programme, I doubt it will be touched.

https://www.abc.net.au/news/2023-02...ousing-property-tax-breaks-treasury/102032674

Treasury's data shows housing tax breaks cost more in forgone revenue than superannuation tax concessions do.

Various capital gains tax (CGT) exemptions cost almost $72 billion annually, including $48 billion on CGT exemptions for the family home, and another $23.7 billion in revenue foregone on CGT discounts for individuals, such as property investors and for trusts.

It is estimated that around 2.4 million people claimed $51.3 billion of rental deductions in 2019–20, resulting in a total tax reduction of $18.6 billion.

Of the total number of people with rental deductions, almost half (1.3 million) had a rental loss, known as negative gearing, which added up to total rental losses of $10.2 billion. These rental losses provided a tax benefit of around $3.6 billion in 2019–20.

Work-related expense deductions are also a big area of forgone revenue. Treasury says about 9.8 million individuals claimed $22.6 billion of work-related expense deductions in 2019–20, resulting in a total tax reduction of $8.3 billion.

And the GST exemption on food is expected to cost more than $8 billion in forgone revenue.

Dr Richardson says, while housing tax breaks cost more in foregone revenue, the political cost of scaling back negative gearing and CGT discounts for the wealthy may be greater.

I actually hate the fact that when there a situations of reduced tax rates for certain reasons they are called “forgone revenue”, in my opinion it puts the wrong idea into peoples head.

It gives the impression that earnings first and foremost belongs to the government, and not the private citizens that earned it. When the earnings first and foremost belong to the person who earned it, what ever the tax whether it be 10% or 50% any revenue the government gets is extra revenue contributed by the tax payer, if a situation exists that the tax payer is eligible for a deduction or a lower tax rate, it shouldn’t ever be seen as the government forgoing anything, it was never there money to begin with.

 

[Garpal Gumnut]

A very silly query.

Can someone enlighten me on whether it is the fund or the members in the fund who are to be taxed under the new legislation.

So if a fund has 5 members each holding $2m , the fund has $10m. Is this fund to be included under the legislation. Or as the members have only $2m. each it is exempt.

gg

 

[Value Collector]

Politicians defined benefits will have to be included. I'm on an Defence defined benefit type pension and I know how much that's worth in the pool. Just about any politician who has been in for 10 years will be well over the $3m mark. If they don't apply it to themselves then watch out. The problem is, it affects all sides of politics, so who is going to support that?

I wouldn’t be surprised if the defined benefit portion isn’t affected, because it’s just adjusted for inflation which isn’t technically “earnings”

But I am not sure, I might be a bit younger than you, my military super is the type where it’s a combination of inflation adjusted lump sum and Investments assets

(It’s a BS plan in my opinion, I pull out all I could and put it into a private super, but I still have that inflation adjusted portion that I can’t touch sitting there)

 

[Value Collector]

A very silly query.

Can someone enlighten me on whether it is the fund or the members in the fund who are to be taxed under the new legislation.

So if a fund has 5 members each holding $2m , the fund has $10m. Is this fund to be included under the legislation. Or as the members have only $2m. each it is exempt.

gg

It would have to be individual member accounts, the “super fund” is just a pass through organisation, it’s not the owner of the assets.

 

[sptrawler]

I actually hate the fact that when there a situations of reduced tax rates for certain reasons they are called “forgone revenue”, in my opinion it puts the wrong idea into peoples head.

It gives the impression that earnings first and foremost belongs to the government, and not the private citizens that earned it. When the earnings first and foremost belong to the person who earned it, what ever the tax whether it be 10% or 50% any revenue the government gets is extra revenue contributed by the tax payer, if a situation exists that the tax payer is eligible for a deduction or a lower tax rate, it shouldn’t ever be seen as the government forgoing anything, it was never there money to begin with.

A bit like those on welfare saying they deserve a rise and criticising workers for getting a tax break, life's full of contradictions.

 

[farmerge]

A bit like those on welfare saying they deserve a rise and criticising workers for getting a tax break, life's full of contradictions.

Ah sptrawler, then there are those that work and want to work and those that are the perpetual bludgers. The Andy Capp's fo the world.
Because of this, that and other I deserve what you have and more. I am a "citzen of the world" so support me and my kin.

 

[divs4ever]

You would probably care a lot more about an investor two blocks away, if he could affect your investment, as a politician can. ?

touche !

 

[qldfrog]

A bit like those on welfare saying they deserve a rise and criticising workers for getting a tax break, life's full of contradictions.

I saw as well the quote
Work-related expense deductions are also a big area of forgone revenue
So basically I buy an egg 1$ I sell it back $1.1 and they see $1 of foregone taxation revenue as they just tax $0.1 gain.
Incredible,also with 7% if not 15% inflation ,de facto taxing anything without taking inflation into account is pure stealing.
Not being able to balance a budget in this environment is pure incompetence

 

[Dona Ferentes]

Well, here's a self serving headline.

Industry funds urge Labor to use super tax savings to close balance gap

Paraphrasing Mandy Rice-Davies, "They would, wouldn't they".

 

[mullokintyre]

Well, here's a self serving headline.

Industry funds urge Labor to use super tax savings to close balance gap

Paraphrasing Mandy Rice-Davies, "They would, wouldn't they".

The super funds do not exist to look after members interests, they exist to cream as much money as they can get away with from members.
They are a business, nothing more, nothing less.
Mick

 

[Value Collector]

The super funds do not exist to look after members interests, they exist to cream as much money as they can get away with from members.
They are a business, nothing more, nothing less.
Mick

Some of them are member owned, and are more member focused than others.

 

[dyna]

Some of them are member owned, and are more member focused than others.

True that.
Last year, I paid 9 basis points ( 0.09 % ) in fees and charges. This year , roughly about 7 , I think .
It's been going down steadily for years. If only the SMSF was that cheap .

Interesting article in Monday's AFR : Treasury's rubbery figures claim an annual spend of $600 Billion a year. (And here they are trying to save a couple of $ Billion with the new super cap. Peanuts. )

Our fiscal masters' numbers fail to take account of any change in taxpayer behaviour.
I recon none of the 80,000 are gonna cop a 30% tax on their savings. Watch the draw down begin after 2025.
As already stated in this thread ,the well- to -do ,will do what they've always done .......adapt.