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Superannuation, the ultimate government cash cow?

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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 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.
 
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 said:
See if you spot the flaw or rather omission.
Click to expand...

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.
 
Bellcose said:
The subtle kicker is on page 12. A growing amount in a concessionally taxed environment becoming available for intergenerational wealth transfer.
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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.
 
sptrawler said:
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.
Click to expand...
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.:)
 
Bellcose said:
Starts the grey cells firing wondering if that issue will be addressed in the future.:)
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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 )
 
Bellcose said:
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.:)
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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.
 
sptrawler said:
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.
Click to expand...

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.
 
Bellcose said:
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.
Click to expand...
That is a very personal judgement and each situation would have to be considered separately IMO.
But I'm sure that situation will eventuate.
 
The Government to push ahead trying to tax unrealised capital gains, that should open a real can of worms, how will trustees manage the cash reserve to cover an unrealised capital gain obligation.
Interesting times.


Council of Small Business Organisations Australia also claim the tax on unrealised gains from assets held in self managed super accounts could swallow or even surpass the annual income of a small business.
 
Here we go again.

Initially, the unrealised gains tax would be restricted to relatively few people, but will seep through the superannuation movement because the trigger is not indexed.​
​
Inevitably it will then spread into other forms of savings. Eventually the family home may be a target. It represents a fundamental change to Australian taxation.​
​
How do I reach these conclusions? When public servants conceal the truth it can be an accidental mistake, but almost always the concealment is part of a carefully thought out agenda. Often the minister responsible is completely fooled.​

ALP’s super tax a smokescreen that could target more than you think

As you dig deeper, the proposed 30 per cent tax on income from superannuation balances above $3m is actually a Trojan horse, or a smokescreen, for Treasury’s real agenda: a hidden plot to make unrealised gains taxes a massive source of income.

Initially, the unrealised gains tax would be restricted to relatively few people, but will seep through the superannuation movement because the trigger is not indexed.

Inevitably it will then spread into other forms of savings. Eventually the family home may be a target. It represents a fundamental change to Australian taxation.

How do I reach these conclusions? When public servants conceal the truth it can be an accidental mistake, but almost always the concealment is part of a carefully thought out agenda. Often the minister responsible is completely fooled.

When the unrealised gains tax was announced as part of the 30 per cent tax on superannuation income on balances over $3m, Treasury claimed if the industry and retail superannuation funds were required to provide the data it would cause massive expenditures on new systems.

In theory this was true, but there were obvious, low cost, ways for the industry and the retail funds to retain control of the money and provide the income data to enable the 30 per cent tax to be levied without an unrealised gains tax.

Treasury officials are not stupid and they must have known this. For those Treasury officials, the superannuation tax was a side issue. This was the beginning of an unrealised gains tax for the nation.

The fact this wider tax would devastate Australian innovation, property and investment in smaller listed and unlisted enterprises was ignored. It is possible Jim Chalmers did not know and still does not know the hidden agenda. The traditions of the TV series “Yes Minister” run deep in wide sectors of the Canberra public service.

I will take you through the problems the Treasurer faced and the ignored, easy solutions which might actually benefit industry and retail funds:

• Fund balance data. All APRA-regulated super funds (including industry, retail, corporate, and public sector funds) must report members’ balances annually to APRA and the data ends at the MyGov website. This makes implementing the unrealised gains tax very easy.

Self-Managed Super Funds report their balances through their SMSF Annual Return, typically lodged with the ATO. This data feeds into MyGov, where individuals can view their total super balance. This also makes taxing the unrealised gains tax very easy.

• SMSFs calculate taxable and non-taxable income, and the data is also part of the super stream system which enables the tax office to monitor SMSF income from bank deposits and a large number of other income areas.

SMSFs can provide the data needed to calculate the 30 per cent tax. SMSFs report to the Australian Taxation Office, not APRA.

• Industry and retail funds report to APRA. In terms of taxation paid, each industry and retail fund is treated as one and taxation is not levied member-by-member. (In some situations a theoretical tax is calculated, but it is not real.)

And so, all the concessions which apply on an individual basis are lumped together.

We saw this in the franking credits debacle which helped Scott Morrison retain the Prime Ministership.


In the income calculation area, a person reducing their balances (for example, in retirement) might theoretically be forced to sell, say, BHP shares. But, in fact, because new money is coming to the fund no shares are actually sold and there is no tax paid. Treasury is right that altering that system would be expensive. Alternatives are not hard.

• Let me put forward two obvious ones, and I am sure there are many more. There already is provisions for an APRA (not ATO) controlled self-managed funds system where the trustees are not the members, but are instead an independent group. The management of these funds can be controlled by industry and retail funds and offer the same investment choices available to normal members. The income data can be provided.

Another alternative is to set up a large fund where the accounting is done on an individual basis. Again, the current fund investment choices be offered.

• Those people who appear to have balances of $3m in their superannuation, partly via various funds, would be notified by the ATO, but it would be a member’s responsibility to do the calculation.

If all their money is in self-managed funds the individual income data is clearly available. In industry and retail funds people would need to either transfer money into the conventional self-managed funds or adopt one of the choices offered by industry and retail funds.

Many have money invested in industry funds because of the attractive life insurance on the table, so they would choose the industry fund alternative to conventional self-managed funds.

• People who did nothing and could not provide an income figure would be taxed at a deemed rate of income, which would start low but then rise into double figures.

Had the Treasurer been offered those solutions, he would now have the 30 per cent tax in place for July 1.

But, as it stands, he is potentially complicit in the Treasury attempt to introduce an unrealised gains tax in Australia using the 30 per cent super tax as a Trojan horse.
Click to expand...
 
The Ist July 2025 proposed 30 % tax rate for Super earnings above $ 3 million TSB has yet to be passed into law .
That might not go to plan . Albo's got to win his election , first .
 
dyna said:
The Ist July 2025 proposed 30 % tax rate for Super earnings above $ 3 million TSB has yet to be passed into law .
That might not go to plan . Albo's got to win his election , first .
Click to expand...


In the next couple of weeks enormous pressure will be placed on Pocock and Lambie and other crossbenchers, claiming that they are stopping medical benefits etc by opposing the tax.​
​
Treasury and Jim Chalmers are using “sleight of hand” concealment tactics to establish one of the most vicious taxes ever conceived by an Australian government – taxing unrealised gains.​
​
And the concealment methods borrow from the extraordinary successful techniques used by former Victorian premier Daniel Andrews.​

Government’s ruthless tactics on taxing unrealised gains​

05eee5790e6bfd6df977da31c15c23b7.jpg
Federal Treasurer Jim Chalmers is hoping to pass his legislation through the Senate with help from the crossbench. Picture: Nadir Kinani/NewsWire

Treasury and Jim Chalmers are using “sleight of hand” concealment tactics to establish one of the most vicious taxes ever conceived by an Australian government – taxing unrealised gains.
And the concealment methods borrow from the extraordinary successful techniques used by former Victorian premier Daniel Andrews.
The devastation he left in Victoria is nothing to what will happen to the nation if the Chalmers tax passes the Senate and then spreads.
As things now stand, the Coalition, teals and most crossbenchers oppose the Chalmers tax in the Senate, so the nation can be grateful. But others have a different agenda, and it's down to David Pocock and Jacqui Lambie, who have the nation’s fortunes in their hand.

a754e39da97cbbe1b338e1409a74970f.jpg
The votes of senators David Pocock and Jacqui Lambie will be crucial. Picture: Martin Ollman/NewsWire

Before I explain how the Chalmers tax concealment works, I want to detail the techniques Andrews used to fool Victorians.
During his decade in office, Andrews embarked on one of the most popular and value for money set of infrastructure projects ever implemented in modern Australia.
Andrews eliminated large numbers of railroad level crossings. And in almost all cases people were thankful because their lives had been improved. He was also the best “one line” political operator in the nation.
The combination of being an excellent political operator and doing something people related to attracted a lot of votes, particularly as the opposition never got its act together.
Now to Chalmers.
After considerable research and community consultation, Chalmers devised a tax of 30 per cent on superannuation income attributed to a person’s superannuation assets above $3m.
There was opposition to the tax, but overall there was widespread community support.
The first Chalmers tax, which can be equated with Andrews level crossings – it ranked as a “good tax” that would help fund major community benefits, particularly in the medical field.
When the tax was first conceived, people naturally thought the 30 per cent on the eligible income would be calculated in the same way as the 15 per cent current tax rate. The $3m cut off point was also to be indexed.
But that’s not what Chalmers did. He and Treasury conceived a totally new and vicious tax – the unrealised gains tax – which also would not be indexed.

610dff9a457a5308e76a963f2e1cd951.jpg
Jim Chalmers during a press conference in Brisbane. Picture: Dan Peled/NewsWire

People who invested in property shares, new ventures etc would be taxed each year on the increase in the value even though they had not sold the asset.
By concealing the “bad tax” with a “good tax” one can assume that the bad tax, which is not indexed, won’t stop at superannuation balances. It will move throughout the community.
The biggest victims will be those trying to develop a new business and asking for capital to help.
Nobody will invest if they have to sell assets to pay for the unrealised gains tax. And if there is a later loss, they must wait for capital profits to get the money back.
Worse still, the valuation of assets will be left to the Australian Taxation Office to decide and, as we have seen so many times, there are bad as well as good people in the ATO.
If the “baddies” don’t like a particular person, they will do nasty things and valuation will be used as a weapon. The new Chalmers tax will clearly cause a substantial reduction in innovation and productivity in Australia.
Originally, we thought that this new tax was forced on the Treasurer because the industry and retail funds couldn’t calculate conventional income.
We now know this was wrong. It is very easy to calculate conventional income at 30 per cent on superannuation assets over $3m.
All that’s required is to simply put the onus on those with more than $3m in their superannuation funds to make the calculation by investing in funds that can provide the correct calculation.
If there is a problem, give the person an extra year when the return will be based on a deemed rate which can be relatively low.
But in the second year it can be at a punishing rate.
It is very easy for people to invest in superannuation funds – including industry and retail funds – that have moved on from abacus-style accounting systems (apologies to my Chinese friends) to modern calculating systems. It’s not hard.
In campaigning for the “good tax” the Treasurer never explains that his legislation has been framed to conceal the fact that it’s linked to the “bad tax”.
Chalmers can raise most of the money that’s required from the “good tax” and put the “bad tax” in the rubbish tin.
In the next couple of weeks enormous pressure will be placed on Pocock and Lambie and other crossbenchers, claiming that they are stopping medical benefits etc by opposing the tax.
That is simply utterly false.
The 30 per cent tax, if calculated correctly, will raise the money.
There are very few leading countries, if any, that have an unrealised gains tax, which means that we shouldn’t ask for any overseas investment here because our unrealised gains tax will not stop at superannuation.
Fascinatingly, former US vice-president Kamala Harris put an unrealised gains tax in her set of policies. But whereas the Chalmers cut-off was at $3m, the Harris cut-off was $US1bn ($1.62bn).
I suspect that tax induced a large number of American billionaires to back Donald Trump. Once Australians understand that “Daniel Andrews” political tactics are being used to start a totally new tax in Australia, it may have the same reaction.

More Coverage​

Click to expand...
 
dyna said:
The Ist July 2025 proposed 30 % tax rate for Super earnings above $ 3 million TSB has yet to be passed into law .
That might not go to plan . Albo's got to win his election , first .
Click to expand...
one can only HOPE ( he doesn't win )

even though personally i liquidated my personal super in 2010 , i still have frustration over the constant meddling of what was meant to be a term savings plan for Australian taxpayers
 
JohnDe said:
Here we go again.

Initially, the unrealised gains tax would be restricted to relatively few people, but will seep through the superannuation movement because the trigger is not indexed.​
​
Inevitably it will then spread into other forms of savings. Eventually the family home may be a target. It represents a fundamental change to Australian taxation.​
​
How do I reach these conclusions? When public servants conceal the truth it can be an accidental mistake, but almost always the concealment is part of a carefully thought out agenda. Often the minister responsible is completely fooled.​
Click to expand...
of course it is a Trojan Horse ,

was the Minister fooled , that might depend if politicians and senior civil servants are exempt from this extra tax ( i bet they are )
 
divs4ever said:
of course it is a Trojan Horse ,

was the Minister fooled , that might depend if politicians and senior civil servants are exempt from this extra tax ( i bet they are )
Click to expand...

Who needs super ? 🤭 Be like my sisters ex husband unemployed on a disability pension for 30 years because of drug addiction 20 years ago 🤷‍♂️ he’s the nicest guy you’ll ever meet lives modestly and happy as Larry 🥸 but a lazy f*#¥ 😝
 
Jeda said:
Who needs super ? 🤭 Be like my sisters ex husband unemployed on a disability pension for 30 years because of drug addiction 20 years ago 🤷‍♂️ he’s the nicest guy you’ll ever meet lives modestly and happy as Larry 🥸 but a lazy f*#¥ 😝
Click to expand...
well i am being moved off the disability pension ( given to me early 2017 ) onto the aged pension , BUT i worry the aged pension will be whittled away , whittled away and moved farther and farther away from younger taxpayers

i was supposed to get the aged pension from 65 ( years old on ) but they moved the goalposts , so instead i cost Medicare a carload of medical bills .. just to confirm my working days are over , period

( and probably shouldn't have been working since 2010 )

and sure i live fairly modestly , just to keep in practice in case the pension gets meddled with yet again ( just like they are addicted to do with Super )

maybe they need to abandon the Future Fund and give everyone the same aged pension/super fund conditions ( see how the pollies and senior civil servants like being treated like old people )
 

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