Superannuation, the ultimate government cash cow?

[drsmith]

They have been doing what they always do - testing the electorate for reactions to various levels of change of legislation. They have been diligently leaking various options in order to generate discussion and gauge responses without making a single statement about what they are actually considering.

It has been a pretty successful strategy in that heaps of reaction has been garnered which will then allow them to pick a level of Super gouging that will only alienate those whose votes they were never going to get anyway.

You'd think they'd do that behind the scenes.

It looks very messy in the public domain and a free kick for the Opposition.

 

[sydboy007]

If the government was genuine about long-term sustainability, it could look at reintroducing reasonable benefit limits and review access to further super tax benefits for any new contributions made by those who have formally retired (accessed their existing super benefit/government pension as part of a formal retirement).

One has to ask why Howard and Costello removed the RBL? Possibly due to the fact that it benefited LNP supporters far more than the ALP? The RBL limit was just a tad over $1 million when they changed things to the current system, as long as you took at least half as a pension. That seemed a reasonable amount to aquire with Government subsidy. IF you want more then do it outside of super and pay the taxes the country needs to operate all the services you'll need to support your twilight years.

Still don't understand why you can take all you super balance and spend it as fast as you like then put your hand out for the aged pension.

 

[sydboy007]

Might be time to only exempt the family home up to a certain value?
Then I suppose there would be much whining from those with property in eg Sydney compared to a family home in WopWop.

Maybe set it at twice the median for the City or Suburb???

then again you'd get people moving or being affected as values changed.

Something needs to be done though as the wealth stored in housing and locked away is causing taxation to be much higher than required. There's only so much longer the shrinking tax payer base can pay for everything before the system breaks under the pressure. With nominal GDP growly so weakly I think we may be starting to see the first stress cracks already.

The number of 65+ is going to double over the next 15 years. It's the kind of scenario that makes me scratch my head and wonder why anyone would want to be in politics. You are basically faced with shafting the young or trying to fight the aged - ACA and Today Tonight just LOVE dog food eating pensioner style stories.

 

[Garpal Gumnut]

You'd think they'd do that behind the scenes.

It looks very messy in the public domain and a free kick for the Opposition.

It is a free kick for the coalition, and should be.

The ALP through their Union and Faction Heavies run many "Industry Superfunds".

They will manipulate any changes in Super, in the budget, to destroy SMSF's.

This will force self funded retirees to fund Union heavies, Unions, Faction ALP heavies and ultimately the ALP.

The ALP have less than 30% of the vote, but will control more than 70% of Superannuation funds.

They will then employ more University graduates, and doctors' wives to keep their moribund party going.

The Workers need to unite against the ALP, and will via the Coalition.

gg

 

[DB008]

Can't remember if I posted in this thread, but my 'mentor' spoke to me about the ALP raiding super over a year ago.
Mentor was spot on.

 

[drsmith]

One has to ask why Howard and Costello removed the RBL? Possibly due to the fact that it benefited LNP supporters far more than the ALP? The RBL limit was just a tad over $1 million when they changed things to the current system, as long as you took at least half as a pension. That seemed a reasonable amount to aquire with Government subsidy. IF you want more then do it outside of super and pay the taxes the country needs to operate all the services you'll need to support your twilight years.

Still don't understand why you can take all you super balance and spend it as fast as you like then put your hand out for the aged pension.

What's interesting now is that Labor's not talking about reintroducing RBL's. I have not heard any commentary on this. Perhaps it just won't raise much.

Higher super contributions/earnings tax on the top 1 or 2% of income earners won't raise much either. Perhaps Labor is now looking for the most graceful way it can escape the discussion it started.

 

[Judd]

If my memory serves me correctly, the Government of the day removed the RBL because the maintenance costs to monitor every superannuation account cost more than the amount raised in excess RBL. I understand over the period RBLs applied less than 1,000 superannuation accounts for individuals were subject to this provision. Whether it would apply now and the potential amount raised versus system maintenance costs is probably a matter of debate.

 

[sptrawler]

If my memory serves me correctly, the Government of the day removed the RBL because the maintenance costs to monitor every superannuation account cost more than the amount raised in excess RBL. I understand over the period RBLs applied less than 1,000 superannuation accounts for individuals were subject to this provision. Whether it would apply now and the potential amount raised versus system maintenance costs is probably a matter of debate.

Another reason the RBL was removed.
The thinking of the government changed, to one of controlling how much can be put in tax effectively.
There is real problems getting the money back into super once it is removed.

 

[drsmith]

If my memory serves me correctly, the Government of the day removed the RBL because the maintenance costs to monitor every superannuation account cost more than the amount raised in excess RBL. I understand over the period RBLs applied less than 1,000 superannuation accounts for individuals were subject to this provision. Whether it would apply now and the potential amount raised versus system maintenance costs is probably a matter of debate.

That might explain why the current government isn't looking there.

 

[drsmith]

What the government could raise by increasing the contributions tax from 15 to 30 per cent for those earning over $240k,

Mr Swan would not confirm the likely targets ... in the wake of reports that changes would affect only the top 1-2 per cent of workers, earning about $240,000 or more…

The National Centre for Social and Economic Modelling estimates there are about 190,000 people in the top 2 per cent earning incomes of more than $240,000 a year…

The government last year said it would raise $946.5 million over three years by raising the contributions tax from 15 to 30 per cent for those earning more than $300,000 a year, but could adjust the pending legislation to extend that to others.

Industry experts told The Australian yesterday that widening the change to those earning $240,000 or more would raise an additional $250m each year.

Another option would be to apply a higher tax on super fund earnings for those in the top 2 per cent, but experts said this would raise only a modest amount because those with the highest incomes do not necessarily have the biggest account balances.

http://www.theaustralian.com.au/nat...e-gain-for-labor/story-fn59nsif-1226612076606

http://blogs.news.com.au/heraldsun/...comments/blowing_billions_dying_for_millions/

 

[sptrawler]

Maybe it's just a diversion, give everyone a common focus, stops them focusing on the actual policies that have failed and are continueing to fail.

You are not seeing much in the press about all the other failures.
So it would appear to be working, let's not forget even the reporters have skin in the superannuation game.

Gillard is playing a time wasting diversion tactic.IMO
The budget won't have any real nastys in it and they have survived another couple of months.

Slimy lot.

 

[craft]

What chances that Labor are planning some Henry Recommendations implementation on Super?

Out of Labor's mouth I have heard long term sustainability, equity and Hawk/Keating type reform. That pretty much sounds to me like Henry is a possibility.

Recommendation 18:

The tax on superannuation contributions in the fund should be abolished. Employer superannuation contributions should be treated as income in the hands of the individual, taxed at marginal personal income tax rates and receive a flat-rate refundable tax offset.

Recommendation 19

The rate of tax on superannuation fund earnings should be halved to 7.5 per cent. Superannuation funds should retain their access to imputation credits. The 7.5 per cent tax should also apply to capital gains (without a discount) and the earnings from assets supporting superannuation income streams.

http://www.taxreview.treasury.gov.au/content/FinalReport.aspx?doc=html/publications/Papers/Final_Report_Part_2/chapter_a2-2.htm



If they go for it or something else structurally substantial – lets hope we don’t have a repeat of the Resource Rent Tax implementation fiasco.

Undoubtable we will once again (already started) have the minority who stand to lose running a mis-information campaign to hoodwink the majority who stand to benefit.

 

[drsmith]

Ken Henry ?

Who's he ??

I think even Labor have forgotten.

 

[medicowallet]

Undoubtable we will once again (already started) have the minority who stand to lose running a mis-information campaign to hoodwink the majority who stand to benefit.

Would the ones likely to benefit be middle class welfare dependent Australians?

Would the ones likely to lose be the Australians with a disproportionately high tax burden?


It always seems nicer when you are the recipient of government welfare than a contributor.

I wonder if offering incentives to work harder would increase productivity? No test wrt theory since Ruddy got in eh?

MW

 

[sptrawler]

With returns on capital gauranteed investments at or about 4 to 5%, taxing earnings is dumb.

But this government falls into that catergory, only joking, Like I've said I think it's all crap to take the heat off.

 

[sptrawler]

The other laugh is the Independents and Peter Slipper, have probably been pushing the SMSF for their family members, it would make sense.

Well that was untill Gillard and the union run industry funds get involved.LOL

http://www.theage.com.au/opinion/po...per-changes-revealed-20130403-2h759.html#poll

Now it probably may reflect on them and their families, they call for an explanation.LOL

The Australian public has been calling for an explanation for 5 years?
It obviously clouds your vision when you have your nose in the trough.

Adam Brandt, worried why?
Bob Katter, worried why?

No comment from the three amigos, why?
because they are in the loop, it's a game.IMO

Let's see if there isn't a great announcement, that gives everyone a feel good hit and the three amigos get airplay for supporting it.lol
I'm probably being cynical.

 

[prawn_86]

Press conference happening now:

"Changes not retrospective"

"Concessions cant be open ended"

 

[bigdog]

http://www.centralwesterndaily.com.au/story/1411392/super-changes-how-you-will-be-affected/?cs=2452

SUPER CHANGES: How you will be affected

By Daniel Hurst and Jonathan Swan
April 5, 2013, 9:39 a.m.

Source: The Sydney Morning Herald

Australians with about $2 million in superannuation will lose tax concessions under changes to the system announced on Friday by Treasurer Wayne Swan.

Treasury estimates that about 16,000 people will be affected by this measure in 2014-15, which represents about 0.4 per cent of Australia's projected 4.1 million retirees in that year.

For superannuation assets earning a rate of return of 5 per cent, this reform will only affect individuals with more than $2 million in superannuation assets supporting income streams.

This reform will save about $350 million over the forward estimates period.

Under current arrangements, all earnings on assets supporting income streams (superannuation pensions and annuities) are tax-free, in contrast to earnings in the accumulation phase of superannuation, which are taxed at 15 per cent.

However, Mr Swan announced that from July 1, 2014, future earnings (such as dividends and interest) on assets supporting income streams will be tax free only up to $100,000 a year. Earnings above $100,000 will be taxed at the same concessional rate of 15 per cent that applies to earnings in the accumulation phase

 

[sptrawler]

http://www.centralwesterndaily.com.au/story/1411392/super-changes-how-you-will-be-affected/?cs=2452

SUPER CHANGES: How you will be affected

By Daniel Hurst and Jonathan Swan
April 5, 2013, 9:39 a.m.

Source: The Sydney Morning Herald

Australians with about $2 million in superannuation will lose tax concessions under changes to the system announced on Friday by Treasurer Wayne Swan.

Treasury estimates that about 16,000 people will be affected by this measure in 2014-15, which represents about 0.4 per cent of Australia's projected 4.1 million retirees in that year.

For superannuation assets earning a rate of return of 5 per cent, this reform will only affect individuals with more than $2 million in superannuation assets supporting income streams.

This reform will save about $350 million over the forward estimates period.

Under current arrangements, all earnings on assets supporting income streams (superannuation pensions and annuities) are tax-free, in contrast to earnings in the accumulation phase of superannuation, which are taxed at 15 per cent.

However, Mr Swan announced that from July 1, 2014, future earnings (such as dividends and interest) on assets supporting income streams will be tax free only up to $100,000 a year. Earnings above $100,000 will be taxed at the same concessional rate of 15 per cent that applies to earnings in the accumulation phase

Yes another sly move, why not tax the pension above $100,000 at 15%.
Well the reason would be, that it would mean the politicians would have to pay tax on their pensions.LOL
But wouldn't that be fairer.

 

[craft]

[SUP][/SUP]

Yes another sly move, why not tax the pension above $100,000 at 15%.
Well the reason would be, that it would mean the politicians would have to pay tax on their pensions.LOL
But wouldn't that be fairer.

...

Applying the same treatment to defined benefit funds

The Government will ensure that members of defined benefit funds, including federal politicians, are impacted by this new reform in the same way as members of defined contribution funds (i.e. that there will be a corresponding decrease in concessions in the retirement phase).

This will be achieved by calculating the notional earnings each year for defined benefit members in receipt of a concessionally-taxed superannuation pension. These calculations will be based on actuarial calculations, and will depend both on the size of the person's superannuation pension and their age. The amount of notional earnings each year will fall as a person grows older, in the same way that yearly earnings for people in defined contribution schemes fall over time as they draw down their capital.

Where a person's notional yearly earnings exceed the $100,000 threshold, the amount in excess of $100,000 will be subject to tax at a rate of 15 per cent.