Superannuation, the ultimate government cash cow?

[Bellcose]

There are multiple papers on the Australian Taxation system one of which is this

A brief history of Australia's tax system | Treasury.gov.au

 Sam Reinhardt and Lee Steel1 This paper was presented to the 22nd APEC Finance Ministers’ Technical Working Group Meeting in Khanh Hoa, Vietnam, on 15June2006. It provides an overview of Australian taxation history, identifying trends and discussing key reforms to Australia’s tax system at...

treasury.gov.au

Useful to read various sources to get an understanding and not rely on one such as that from good old Darren Dixon. From the look of it he seems to have lifted parts from the Treasury document. Great independent research Darren.

 

[Bellcose]

Yeah @sptrawler. The Constitution gives Parliament the power to enact legislation. As you realise it has to get passed by both Houses which, in my opinion, is where the Senate plays a very important role. The Senate knocked back the tax on superannuation amounts greater than $3m so Yippee on that aspect where the proposed legislation adversely impacted a group of people. Where legislation is introduced it's always worthwhile I think, if the matter is important to you, to watch the Senate and if necessary lobby your Senator. The efforts may not work but it's better than sitting complaining about it.

Politics versus Governance. The games which are played.

 

[Bellcose]

See if you spot the flaw or rather omission.

H he. The Grattan Institute didn't actually do a survey of potential retirees. It based it's report in part on a number of other surveys including the ABS Retirement Intentions survey. The 80% figure of potential retirees who found issues confusing was from a Choice 2020 report.

Nothing wrong with the way the report was done but to my mind it doesn't follow through with a question would that 80% be reduced, and by how much, if the people received some simple guidance? I don't accept the entire 80% could not have matters resolved if provided adequate guidance. Does the retirement confusion extend to those who run an SMSF or have direct investments with industry superannuation funds? It's not clear to me from the report whether these groups were included or not.

On the question financial advice it is expensive due to the reforms which caused a lot of experienced planners to leave the industry which pushed up prices to the public. Obtaining higher qualification to be an FP isn't cheap.

The Institute seems it wants the Government to take on what superannuation funds are already being encouraged to do but are being a bit tardy about it

The subtle kicker is on page 12. A growing amount in a concessionally taxed environment becoming available for intergenerational wealth transfer.

 

[sptrawler]

The subtle kicker is on page 12. A growing amount in a concessionally taxed environment becoming available for intergenerational wealth transfer.

That is the issue worrying both political parties and it is a hard issue to address, because it presents in many forms. PPR value increases, super balance increases, pre death transfer of wealth etc.

 

[Bellcose]

That is the issue worrying both political parties and it is a hard issue to address, because it presents in many forms. PPR value increases, super balance increases, pre death transfer of wealth etc.

It certainly is an issue in many ways and yet the death transfer of wealth with super can be overcome.

Encountered one last year. With the assistance of a financial planner, a dear lady in her 90's decided to wind up her fund as things weren't going well for her. So the fund paid a relatively small amount of tax and the assets were transferred to her. She passed away around three months later. The tax on her personal investment income was small but through her Will her named beneficiaries (with the agreement of her family, she skipped a generation with some of her assets) received (tax free) a seven figure amount each.

Not bad for a child to have over $1m of shares earning a conservative 3%, subject to adult tax rates and more than likely getting a refund of excess franking credits.

Avoided that death benefit tax and saved her beneficiaries heaps of tax i.e the G'ment didn't get anything much.

Starts the grey cells firing wondering if that issue will be addressed in the future.

 

[divs4ever]

Starts the grey cells firing wondering if that issue will be addressed in the future.

sadly , you probably correct

although assuming the grandchildren are still not adults ( but at 93 that might be a bold assumption )

a $1 million share portfolio ( each ) might not be a huge windfall , given current , inflation , just a nice nudge away from poverty , a helpful suggestion about future planning ( for them )

 

[sptrawler]

It certainly is an issue in many ways and yet the death transfer of wealth with super can be overcome.

Encountered one last year. With the assistance of a financial planner, a dear lady in her 90's decided to wind up her fund as things weren't going well for her. So the fund paid a relatively small amount of tax and the assets were transferred to her. She passed away around three months later. The tax on her personal investment income was small but through her Will her named beneficiaries (with the agreement of her family, she skipped a generation with some of her assets) received (tax free) a seven figure amount each.

Not bad for a child to have over $1m of shares earning a conservative 3%, subject to adult tax rates and more than likely getting a refund of excess franking credits.

Avoided that death benefit tax and saved her beneficiaries heaps of tax i.e the G'ment didn't get anything much.

Starts the grey cells firing wondering if that issue will be addressed in the future.

Re intruducing inheritance tax will be high on the agenda, it is just a case of which party wants to commit political suicide, but the above example is exactly how it is addressed in a lot of countries.

 

[Bellcose]

Re intruducing inheritance tax will be high on the agenda, it is just a case of which party wants to commit political suicide, but the above example is exactly how it is addressed in a lot of countries.

Which is why, provided you have the financial backing, you consider feeding cash out now to your intended beneficiaries. I haven't calculated the exact amount but I'm pretty sure it's a large six figure one each.

 

[sptrawler]

Which is why, provided you have the financial backing, you consider feeding cash out now to your intended beneficiaries. I haven't calculated the exact amount but I'm pretty sure it's a large six figure one each.

That is a very personal judgement and each situation would have to be considered separately IMO.
But I'm sure that situation will eventuate.