Australian (ASX) Stock Market Forum

Superannuation, the ultimate government cash cow?

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Ferret said:
I've been trying to get my head around the application of the additional 15% tax to unrealised capital gains and whether this is double taxation of capital gains. The conclusion I've reached is that it isn't really.

Say you have $3.1m in super and the $0.1m is used to buy shares. In 2 years time the shares have doubled in value, but the rest of your super hasn't changed in value. Under the new proposal, you will pay 15% tax on the unrealised capital gain of the shares, ie $15k over the two years.

If you now sell the shares you will pay 10% capital gain on the shares, ie $10k.

So under current rules you would be paying $10k tax on the profit from the shares. Under the new rules you would be paying $10k + $15k.

This is an extra 15% on income from balances > $3m, so it is exactly as the proposal intends. It is not double cg taxation plus an additional 15%.
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LOL. I also made a post on this matter in this thread.

Belli said:
It is nebulous. Thing is the press release (link below) is that the tax is proposed to be calculated based on Total Superannuation Balances over $3m and earnings are calculated as the difference between the TSB with adjustments for contributions/withdraws. That is what is concerning to some.


Think of it in this context. You hold a share at the end of 2025 and it is priced at a total of $3.5m (corrected to $3m). The next FY its value has increased by 50% to $4.5m. It hasn't been sold, you've just sat on it for the year and you don't meet a condition of release. The difference in TSB is $1.5m and the proposed tax arrangements, as it stands, is tax will be levied on that difference.

By the way, a number of major industry funds support a cap. Simple reason is it is very unlikely many, if any, of their members will be impacted. The really big money is in SMSFs.

The ATO has released data on SMSFs and APRA released data on funds with more than six members, i.e. non-SMSF. Real nerds can knock themselves out salivating over this stuff.

www.ato.gov.au

Self-managed super funds: A statistical overview 2020-21

Our self-managed super fund (SMSF) analysis and statistics annual overview for 2020–21 includes key data on the sector.
www.ato.gov.au www.ato.gov.au

Annual fund-level superannuation statistics | APRA

APRA publishes statistics on individual superannuation funds and their trustees, on an annual basis. These statistics contains information on fund profile and structure, financial performance and position, conditions of release, fees and membership. In October 2024 APRA released, for the first...
www.apra.gov.au www.apra.gov.au
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If you don't sell though the SMSF could be caught because the presser is referring to the tax being based on the TSB.

But expand it beyond easily priced assets. Commercial properties in SMSFs. Not sold but the value has increased. Same with any farm which has been placed in the SMSF.

I've had some discussions with people who are involved in these. It could be a valuer's nightmare. It'd be great fun being an auditor of an SMSF in these circumstances - not.

I'll say it again we really don't know at this point. And although the Government is saying it isn't intended to index the $3m, it hasn't said or clarified whether the Balance cap is to continue to be indexed beyond the $3m point. What happens if indexation of it continues and it reaches $3m? From 1 July it is "only" $1.1m away from that amount. There are so many unknowns at the moment.
 
Belli said:
the presser is referring to the tax being based on the TSB.
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Sigh*. May I suggest people look at the examples of calculations in the press release to which I have provided a link. In particular the one for Warren. If that is not a tax on unrealised gains, I don't know what is.

1678250782451.png

Will people be able to withdraw any excess above $3m? Not if you are Louise (see example in the link) as she does not meet a condition of release which hints to me the Government may not be kind in this matter. I reckon it wants its pound of flesh and is not going to let those really big funds off the hook.
 
Belli said:
and is not going to let those really big funds off the hook.
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Yep, that's the crux of the matter.
Members of any SMSF worth just a few $ Mill are going to get it in the neck.
Ultimately all SMSF's will then go the way of the dodo as further Labor government regulation forbids holding direct property in your own super.. the only good reason left , to set one up. Otherwise its hardly worth the hassle. Control ? You can get as much of that as you want in any number of Industry funds or not for profits.

ATO's figures for the , at least 15 % expected drop in the number of SMSF's , will be out this month. Last month , NAB was predicting a 20 % decline. The value of nearly $ 900 Billion attributed to SMSF assets will continue to slide , as those lucky ones wind up over the next 3 years.
 
dyna said:
Members of any SMSF worth just a few $ Mill are going to get it in the neck.
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I fear that is the case.

As I have said previously, I feel it isn't worth the pain to have more than the balance cap in superannuation but if you do it may be better to make sure it doesn't get close to the $3m which, for the purposes of this proposed taxation arrangements, will include adding back any withdrawals during the year. $2.5m max seems safer to me.

Also, even those in full account-based pension based on $3m or above region are going to cop it by the feel of it. The focus is on the total balance whether it is in pension phase or not is my reading of the situation.

But understand I know less than SFA.
 
qldfrog said:
So will the ATO reimburse the fund on unrealised capital losses in crash years?
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put in a claim !!

you can only hope , maybe enough claims ( of capital losses ) will move the answer to yes

since taxes on unrealized gains are being contemplated , maybe unrealized losses are also on the table
 
Thanks to those contributors taking this along. Belli drills deep, and others of course.

I'm glad I'm not being targeted! And as mentioned, don't have all your eggs in the same basket, otherwise the ducks, all in a row, get taken out.
 
Belli said:
As I have said previously, I feel it isn't worth the pain to have more than the balance cap in superannuation but if you do it may be better to make sure it doesn't get close to the $3m which, for the purposes of this proposed taxation arrangements, will include adding back any withdrawals during the year. $2.5m max seems safer to me.
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Maybe this will be true some people who hold assets in super that will generate high unrealised capital gains and have limited income outside of super.

However, many with high super balances will be generating income inside super and have income outside of super that takes them into the top tax bracket.

Surely they are still better off keeping income producing assets inside super and paying up to 30% tax if the balance exceeds $3m, rather than move them outside super and pay 45% tax + medicare levy?
 
Ferret said:
Maybe this will be true some people who hold assets in super that will generate high unrealised capital gains and have limited income outside of super.

However, many with high super balances will be generating income inside super and have income outside of super that takes them into the top tax bracket.

Surely they are still better off keeping income producing assets inside super and paying up to 30% tax if the balance exceeds $3m, rather than move them outside super and pay 45% tax + medicare levy?
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i am more concerned 'unrealized capital gains ( tax ) will be applied to other assets outside your super , sooner rather than later ( and that $3 million limit might shrink as well ) plenty of precedents to support that concern
 
Ferret said:
Maybe this will be true some people who hold assets in super that will generate high unrealised capital gains and have limited income outside of super.

However, many with high super balances will be generating income inside super and have income outside of super that takes them into the top tax bracket.

Surely they are still better off keeping income producing assets inside super and paying up to 30% tax if the balance exceeds $3m, rather than move them outside super and pay 45% tax + medicare levy?
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Try to see the return on real estate, or even US shares etc.
I wish I could have issues with top tax rates with my current returns on the market, in or out of super and have no regret having always put minimum in super.
 
qldfrog said:
Try to see the return on real estate, or even US shares etc.
I wish I could have issues with top tax rates with my current returns on the market, in or out of super and have no regret having always put minimum in super.
Click to expand...
Nailed it, how many middle income earners are going to own their house and nudge the $3m cap.
Only those who inherit mum and dads Sydney/Melbourne home. LOL
 

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