??? Imputation credits are included as part of assessable income - can you explain to me what you see as a benifit for moving more towards franked dividends?
Well, that's just going to push people towards fully franked dividends even more.
That's why I think, the tax should be all encompasing of everyone, at a pension amount, not on earnings.
It should also cover polliticians pensions, which would be very easy to apply if it was triggered at a certain pension amount.
Surely it's time for Tony Abbott to stop making irresponsible comments?
There will be thousands of ordinary, ill-informed Australians who will take this extravagant statement at face value.
Perhaps he will gain some votes from such people as a result, but isn't he in the process losing respect from people whose goodwill he needs?
How are you going to tax pension income without removing the ability for people to take lump sums?
??? Imputation credits are included as part of assessable income - can you explain to me what you see as a benifit for moving more towards franked dividends?
Upon reading that statement, I'm unsure as to whether unrealised variation in the capital assets will be considered as part of the income stream for the above tax threshold. I would say no on the above, but that's only because of omission rather than a definitive answer.
We may need to wait for the fine print to get the definitive answer, if it gets that far.
http://resources.news.com.au/files/2013/04/05/1226613/049704-aus-na-file-superannuation.pdf
Hey Craft, you seem to have a good handle on the accounting side.
If they are going to tax earnings above $100k in the pension phase, will that mean that loses will be able to be applied?
At present as it's untaxed, losses can't be applied?
What do you reckon?
That might need to be more opaque than multiple funds under the same name (TFN), but after the MRRT debacle, you never know.
This I suspect will be an issue left for the bureaucrats to resolve in the detail should Labor be re-elected.
IF the proposed changes are ever passed I can see small family-owned business being negatively affected, again. Nothing new for this segment of our economy to be completely overlooked by our present Govt.
A good number of family owned SMEs own their business premises via their SMSFs. Quite often these same people haven't been able to make extra contributions to their super and the property forms the bulk of the value of the fund - well below the 2M mark. Upon retirement and the probable sale of the premises there would hopefully be a reasonable capital gain - which would then be subject to the 15% tax on cap gain/earnings over 100K. I know the grandfathering clause exempts property already owned for up to 10 years - but this is no comfort to those family businesses who don't envisage retirement or relocation within that timeframe. I guess not only accountants and planners will benefit from yet more tinkering with super, but also real estate agents, who will benefit from the inevitable push to sell lumpy assets within the 10 years. It would certainly make sense for those whose SMSF's main asset is a factory or similar to sell and rent back for a few years.
Noel Whittaker wrote a great article in the 'Sunday Times' today, the article is called 'Ad Fab for some'
It gives a great summary of the superannuation system and who are really the winners.
Here is another article in a similar line, just shows what a bunch of hypocrits the pollies are.
http://www.perthnow.com.au/news/pol...-says-opposition/story-fnhnv0wb-1226613617102
POLITICIANS on generous taxpayer-funded defined benefits would be thousands of dollars better off than ordinary workers whose superannuation earnings will be slugged, the Opposition said last night.
I hope Bolt or someone gets stuck into them.lol
The newspaper article being discussed earlier was asking whether capital gains are to be included as income. Given that it is the performance of the pension phase account that is being assessed (not the actual pension drawn) then the answer would appear on face value to be "yes" - CGT events are treated as income. CGT events create "lumpy" income that could easily push someone on a middle of the road SMSF pension over the $100,000 threshold creating more incentive to seek yield over capital gains.
Introducing it from an alternative revenue source was the bad policy. It should have been looked at in the context of weighing up the low income super contribution against the super-co contribution and the former reduced to fund the latter if the latter was regarded as a better incentive for low income earners.The retirement funding system should be thought about in a holistic way – Ie the cost of tax concessions + Pension payments.
The low income super rebate probably doesn’t do much to the overall funding cost of the demographic it touches – but it is a big measure in transferring the costs from the pension payment component to the tax concession component.
The tax concession cost occur earlier – removing this measure takes pressure of the budget now but pushes the cart down the road to when low wage /intermittent earners retire underfunded and will need to rely on the pension more heavily.
This really should be getting some scrutiny because introducing it was good policy – removing it is bad policy. However critiquing a Libral policy on ASF is akin to self torture – Best avoided I think.
Thanks craft, for all the posts, it's really great to have posters such as yourself, who have a proffessional understanding of the implications.
We are driven by spin and missinformation, self generated and press generated.
It's great you can supply some clarity to the actual issues, you certainly have answered a lot of my questions. Cheers
They are talking fund level at the moment as V indicated. If they don’t have something in the legislation to limit the exemptions at the individual level then multiple funds will be with-in the law. It's this type of thing that is not foreseen that makes legislation porous.
It’s all academic because a realistic evaluation of circumstances suggest we will never see legislation.
However I can’t imagine unrealised gains/losses would be captured – There is already legislation in place that specifies everything with-in super is on a Capital Acoount. A CGT event would have to happen for a gain to be included.
Even so realising capital gains is the smoking gun in the legislation – It has the potential to catch many funds in years when gains are realised.
The grandfathering measures are generous.
You must have me confused with somebody else. I’m just a bum with an interest in super that read the press releases. I don’t bother with the media, everything gets lost in the translation and biases.
I wasn’t sure why you were singling out franked income.
I can only comment in the accumulation phase as I'm not yet retired. The annual statement I get describes fund earnings in any given financial year as a single figure which is inclusive of asset price variation (unrealised capital gains/losses).
In the pay down (retirement) phase, do funds break this down into the separate components such as unrealised capital movement and income from investments ?
They would need to do this for unrealised gains/losses not to be captured.
The Government will better target the tax exemption for earnings on superannuation
assets supporting income streams, by capping it to the first $100,000 of future
earnings for each individual.
Under current arrangements, all new earnings (such as dividends and interest) on
assets supporting income streams (superannuation pensions and annuities) are taxfree.
This is in contrast to earnings in the accumulation phase of superannuation,
which are taxed at 15 per cent.
From 1 July 2014, earnings on assets supporting income streams will be tax free up to
$100,000 a year for each individual. Earnings above $100,000 will be taxed at the
same concessional rate of 15 per cent that applies to earnings in the accumulation
phase.
For superannuation assets earning a rate of return of 5 per cent, this reform will only affect individuals with more than $2 million in assets supporting an income stream.
I've gone back to Wayne Swan's and Bill Shorten's media release from Friday,
http://resources.news.com.au/files/2013/04/05/1226613/049704-aus-na-file-superannuation.pdf
I'm in the PSS which shows earnings and tax as follows,
Change in market value of investments: $228.7m
Other income: $2.1m
Income tax Expense: $34.2m
$34.2m is 15% of $228m.
http://pss.gov.au/storage/1-PSS 2011-2012 Annual Report to Members.pdf
My bolds.
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