Superannuation, the ultimate government cash cow?

[dyna]

Once the shock of this wears off , folks will inevitably be considering the " What's next ? " query.
I'll go a bit further out on the limb and ask : Have the boffins down at Treasury already drawn up plans for the funding of a war with China if a future Prime Minister leads us down that unthinkable route. How in hells name do we pay for it? The $ 3.3 Trillion in super will be gone in no time , then what?

 

[divs4ever]

Thanks for that, I will have to go back through the posts, been a bit busy lately.

Another issue that was brought up earlier.

Super tax on defined benefit pensions puzzles experts​

The government will have to go back to the drawing board to figure out how to apply the 30 per cent super tax on retired public servants, politicians and ABC executives.

more likely how to AVOID the 30% tax , for those folks ( 'legally ' )

i am sure Peter is all over that for the Future Fund beneficiaries

 

[divs4ever]

How the 30% tax rate will hit large super balances​

How the new super tax will hit large balances

The Government rushed a decision to increase tax on super balances above $3 million. Although the effective date is after the next election, the big surprise is including unrealised capital gains in earnings.

www.firstlinks.com.au

 

[divs4ever]

Labor's ‘stability and certainty’ sings from Morrison's hymn sheet​

Labor's ‘stability and certainty’ sings from Morrison's hymn sheet

Six years on, the Labor Government used exactly the same words that Treasurer Scott Morrison said in 2016. Before changes in super rules, we are promised "stability and certainty", but the top 1% is too tempting.

www.firstlinks.com.au

hmmm seems Graham Hand is rather motivated on this topic

 

[Belli]

i am sure Peter is all over that for the Future Fund beneficiaries

There is only one beneficiary of the Future Fund. Go and learn how it is structured and its actual purpose instead of making such inane comments.

 

[divs4ever]

There is only one beneficiary of the Future Fund. Go and learn how it is structured and its actual purpose instead of making such inane comments.

then why is Peter urging on a reduction/limitation on draw-downs ?

 

[Dona Ferentes]

then why is Peter urging on a reduction/limitation on draw-downs ?

Divs .. stop! You are clueless.

 

[farmerge]

The one that irks me is the seeming expectation that those on a pension ought get a discount.

See it all the time on another site, people posting "I need a quote for x done and I AM A PENSIONER" as though they're expecting a discount.

Yep, they're on a pension. Meanwhile there are self-funded retirees, disabled, terminally ill, unemployed, minimum wage workers, students and so on none of whom routinely get discounts for, well, anything really apart maybe bus fares.

The lack of such discounts being another tax of sorts on the self-funded ones. It's another thing that tilts the balance toward welfare being the better option for many.

How true I get this query all the time, when doing quites for generl rural work, in a very wealthy neck of the woods. Poor old pensioner my foot. Add 15% and take off 10% and still got a bonus of 55 and of course it has to be folding to get that discount.

 

[Belli]

Gold Logie Winner Tom Gleeson Reveals He’s The Person Behind The $544 Million Super Account​

Gold Logie Winner Tom Gleeson Reveals He's The Person Behind The $544 Million Super Account

WENDELL HUSSEY | Cadet | CONTACT The mystery has been solved! After days and days of speculation, the nation finally has an answer to the superannuation question that everyone wants answered. Not whether a change that effects 0.5% of the population is a slippery slope into communism, but who the...

www.betootaadvocate.com

You heard it here first, folks.

 

[divs4ever]

Gold Logie Winner Tom Gleeson Reveals He’s The Person Behind The $544 Million Super Account​

Gold Logie Winner Tom Gleeson Reveals He's The Person Behind The $544 Million Super Account

WENDELL HUSSEY | Cadet | CONTACT The mystery has been solved! After days and days of speculation, the nation finally has an answer to the superannuation question that everyone wants answered. Not whether a change that effects 0.5% of the population is a slippery slope into communism, but who the...

www.betootaadvocate.com

You heard it here first, folks.

well i knew for sure , that it wasn't me

 

[Belli]

Oh yes , indeed! Well said , sir.
Only a mug would put more into super if this unindexed cap idea, passes into law. I reckon, Jimbo's got what he wanted all along . He's driven a stake through the heart of national savings via superannuation, for good. Unless the members of the larger SMSF's are very close to retirement over the next 3 years , they are toast.
Don't count on any significant legislative changes from the Libs ,either. After this week , no one will ever trust any government with its grubby hands on our super , ever again .
Overseas investment , especially in the biggest sharemarket in the world , is looking like a far better proposition, to me.

As I was typing out my view, I was contemplating that should a retiree have a balance cap of $1.9m at 4% that's $76k pa tax free which is close to double the married rate age pension. I recognise that superannuation is concessionally taxed at present and will continue to be so when at or below $3m so I doubt the retiree would be scrambling around in a rubbish bin looking for breakfast. Nothing to stop them investing outside super and if they can build a portfolio $1.1m at 3.5% return that would be an additional $38.5k pa. If it attracted franking credits of $16.5k, they would be in line for a refund of $7k. Could be looking at $114.5k pa cash flow as well as a tax refund.

Of course things change. When I first contributed to superannuation all income above $50k was taxed at 48.5% inclusive of the Medicare levy, so super at 15% tax was a no brainer. Plus the concessional contribution was $100k pa per member and non-concessional was $150k pa (later increased to $180k.) Then the dastards decided in 2000 to change the tax scales so the tax advantage, while still there, was reduced. After which so did concessional contribution and non-concessional amounts.

The idiotic fiscal time bomb which can only be viewed through a political prism was introduced by Howard/Costello in 2006 when it was decided that account-based pensions were no longer required to be included in your tax return and removed any tax in pension phase. Before that it was all taxed at 15%, reported in your tax return and a 15% rebate applied. I had discussions at the time with a number of those who know way more than me and all expressed the view it was economic stupidity.

It was unsustainable and later Governments knew it introducing Div 293 and subsequently balance caps by the Morrison Government in an attempt to constrain costs.

So to use a phrase from the Lord of the Rings "How did it come to this?"

Well, silly, stupidity and a political wish for power got in the way.

 

[Ferret]

Yes, in 2006 when Howard made super pensions tax free, I was approaching 50.

I said to my wife, this is ridiculously generous and can't last, but we need to get as much into super as we can.

The advantages of super are being chipped away at, but even after these latest changes, it is still a great place to store and grow wealth.

Not at all what was originally intended. I say enjoy it while you can!

 

[dyna]

I well remember that allowable 100 kay concessional super contribution, because it was the only time in my life, I had a zero tax liability ! Treasury went into a blind panic over the lost revenue , so Pete had to reduce it to $50,000 for the following year or two , then $ 35 000 until it settled eventually at $ 25,000 .
Yep, Howard and Costello are certainly to blame for the free for all , that super became under their watch.
None of us will ever see the like of that rorting , again .
So here we are now, with the 80,000 who have.....well, over- done it , basically.
My guess is that , since everything to do with this super caper is age related , most of them are now old enough to retire and escape with their cap excess , still intact. ( Bye , bye taxman.)
The Labor government's hoped for , $ 2 Billion per year savings could prove to be a bit of a delusion.

 

[Belli]

So here we are now, with the 80,000 who have.....well, over- done it , basically.

I suspect that number was cobbled together in haste and is understated likely due to the pressure-cooker from the media and others towards the Government on "Whatcha gonna do?" approach. I haven't gone into deep detail on the stats the ATO has published on SMSF profiles. It's available to the end of 2021FY (takes time to get and verify numbers so that is probably why the 2022FY data isn't there yet.)

It's pretty easy to find but I'm not inclined to do it.

 

[basilio]

Where story, sarcasm and satire marry in throuple harmony.

The Australian finds super ‘victims’ among Sydney’s well-heeled – or is it satire?​

Amanda Meade


The paper has a case study of the pain to be inflicted by Labor’s higher tax rate on superannuation above $3m, but so does the Shovel. Plus: the ABC’s Mardi Gras ‘indulgence’

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Fri 3 Mar 2023 12.49 AEDTLast modified on Fri 3 Mar 2023 12.50 AEDT


Journalists love a good case study to personalise a news story and national broadsheet the Australian found a perfect one in Sydney couple Malcolm and Kathy Clyde. The couple were photographed wearing their best sombre faces – against a backdrop of yachts – for a story in which they complained about Labor’s decision to impose a higher concessional tax rate on super over $3m.
The Clydes said it would disadvantage them because they had given up buying a “nicer car” and going overseas on holidays to put their money into super.

“I was contributing on the promise by the government that those funds would be concessionally taxed,” Malcolm said. They’re going back on that promise.”

Could it be the same Clydes who in 2020 appeared in realestate.com.au after they sold a Mosman Bay three-bedroom property for a reported $7m in order to be closer to their grandchildren on the northern beaches?

“We recently fully retiled our private pool with Spanish glass-mosaic which has been greatly loved by our grandchildren,” Mrs Clyde said.

The Australian finds super ‘victims’ among Sydney’s well-heeled – or is it satire? | Weekly Beast

The paper has a case study of the pain to be inflicted by Labor’s higher tax rate on superannuation above $3m, but so does the Shovel. Plus: the ABC’s Mardi Gras ‘indulgence’

www.theguardian.com

 

[divs4ever]

“I was contributing on the promise by the government that those funds would be concessionally taxed,” Malcolm said. They’re going back on that promise.”

i was shocked that the ABC could still access a real journalist ,

i am amazed that a couple with $3 million ( or $3 million each ) in super , still believed the government kept promises ( even in the same parliamentary term ) maybe they see pixies at the bottom of the garden as well

a smart retiree would point out the taxes lost on the couple's reduced spending ( not to mention the boost to the economy in doing so )

instead of buying that nice care the couple are liable to consult a highly skilled adviser ( tax affairs or financial services or both and rightfully claim deductions ) and work to reduction ongoing tax obligations

would the ALP try such a counter-productive move , yes that part is believable ( even after the Bill Shorten franking credit backlash )

 

[sptrawler]

I well remember that allowable 100 kay concessional super contribution, because it was the only time in my life, I had a zero tax liability ! Treasury went into a blind panic over the lost revenue , so Pete had to reduce it to $50,000 for the following year or two , then $ 35 000 until it settled eventually at $ 25,000 .
Yep, Howard and Costello are certainly to blame for the free for all , that super became under their watch.
None of us will ever see the like of that rorting , again .
So here we are now, with the 80,000 who have.....well, over- done it , basically.
My guess is that , since everything to do with this super caper is age related , most of them are now old enough to retire and escape with their cap excess , still intact. ( Bye , bye taxman.)
The Labor government's hoped for , $ 2 Billion per year savings could prove to be a bit of a delusion.

I agree with your sentiment, but in all fairness, when the $100k concessional contribution was active, there would have been a lot of workers between 50-65 that would have had next to nothing in super, as it had only been in operation for a short period of their working lives and with very small employer contributions.
I know a lot of old blokes that I worked with back then, that had next to nothing in super and were nearing retirement, so from memory the intention was to give those the opportunity to get at least a small but usable sum in super, there was never an intention to keep it going ad infinitum from memory.

People with huge amounts of wealth will always find ways of minimising tax, they would be dumb if they didn't, but that is the reason tax rules constantly require adjusting.
I have no doubt there will be unintended consequences from these rule changes, it doesn't mean they shouldn't be enacted it just means something else will have to be plugged at a later date.
No doubt there will be some that then will claim Albo and Chalmers stuffed up and caused something like negative gearing or CGT exemptions to skyrocket and the mega rich made a zillion out of it, that's the thing with being rich it gives them a lot more options than we plebs have.
I personally think the whole tax/welfare system requires a holistic overhaul.
I feel super should be something that enhances the workers pension, but IMO it should be added to the pension and taxed as income, so that it encourages someone to work.
As it is currently most young people who work a full working life, will be paying for someone else's dole and probably that persons pension also, the young worker is also losing income now into super that will mean they may not qualify for a pension either.
Meanwhile people wonder why wages have to be so high.
If super was added to a basic pension, then the decision is easy, if I go to work I will have a better retirement, currently those who put away $500k into super I think they would be better spending it down to get a full pension + minimum super, which really is counterproductive.

 

[sptrawler]

Yes, in 2006 when Howard made super pensions tax free, I was approaching 50.

I said to my wife, this is ridiculously generous and can't last, but we need to get as much into super as we can.

The advantages of super are being chipped away at, but even after these latest changes, it is still a great place to store and grow wealth.

Not at all what was originally intended. I say enjoy it while you can!

Worth a read, just to look at from a different perspective.

The myth about Costello’s super generosity

Peter Costello's 2007 changes made payments from superannuation tax free after age 60 for those who are fully retired. Is he responsible for making super unaffordable which is now forcing policy changes?

www.firstlinks.com.au

 

[Ferret]

Worth a read, just to look at from a different perspective.

Thanks SP, Interesting stuff. I didn't realise super could be so generous prior to the 2006 changes.

Nevertheless, I think the bottom line is it is still the best tax shelter currently available.

 

[divs4ever]

Thanks SP, Interesting stuff. I didn't realise super could be so generous prior to the 2006 changes.

Nevertheless, I think the bottom line is it is still the best tax shelter currently available.

i wouldn't know , my employers before the early 2000' found excuses not to pay super , let alone $100,000

the good part is by then i realized they would always mess with it , so didn't count on it