Superannuation, the ultimate government cash cow?

[k.smith]

http://www.abc.net.au/news/2014-05-26/janda-tax-avoidance-name-and-shame/5478450

''...
A couple of weeks ago, fellow economic journalist Peter Martin from Fairfax published an article about the 75 ultra-high-earning Australians paying no tax.

All of them, according to the ATO's statistics, made more than $1 million from investments and/or wages in 2011-12 - the average was $2.6 million - yet none paid any income tax, Medicare levy or Medicare surcharge.

The reason was that, through Australia's generous system of tax concessions and loopholes, these seven-figure earners managed to cut their taxable income to $82.

It's not just the ultra rich either - the same ATO figures showed that 1,095 Australians earned over $150,000 that financial year without paying tax....''




I note that even a journalist earns less than the "average" wage of $78k...

 

[sptrawler]

http://www.abc.net.au/news/2014-05-26/janda-tax-avoidance-name-and-shame/5478450

''...
A couple of weeks ago, fellow economic journalist Peter Martin from Fairfax published an article about the 75 ultra-high-earning Australians paying no tax.

All of them, according to the ATO's statistics, made more than $1 million from investments and/or wages in 2011-12 - the average was $2.6 million - yet none paid any income tax, Medicare levy or Medicare surcharge.

The reason was that, through Australia's generous system of tax concessions and loopholes, these seven-figure earners managed to cut their taxable income to $82.

It's not just the ultra rich either - the same ATO figures showed that 1,095 Australians earned over $150,000 that financial year without paying tax....''




I note that even a journalist earns less than the "average" wage of $78k...

If it is true, then the ATO are well aware of how they are doing it. Therefore the labor government(2011-2012) and the current government are well aware of it.

Also if you are an economic journalist, you were probably aware of it.

Shame everyone sits on their thumbs for so long.

Also the reporter stating the average journalist earns less than $78k, must be very selective.
Rumpole's post of Ross Gittens, who i think is an average juornalist, said he earns heaps, in the post.

 

[medicowallet]

http://www.abc.net.au/news/2014-05-26/janda-tax-avoidance-name-and-shame/5478450

''...
A couple of weeks ago, fellow economic journalist Peter Martin from Fairfax published an article about the 75 ultra-high-earning Australians paying no tax.

All of them, according to the ATO's statistics, made more than $1 million from investments and/or wages in 2011-12 - the average was $2.6 million - yet none paid any income tax, Medicare levy or Medicare surcharge.

The reason was that, through Australia's generous system of tax concessions and loopholes, these seven-figure earners managed to cut their taxable income to $82.

It's not just the ultra rich either - the same ATO figures showed that 1,095 Australians earned over $150,000 that financial year without paying tax....''


I note that even a journalist earns less than the "average" wage of $78k...

I hope you realise that this is a SUPERANNUATION thread

NOT a thread on PROPERTY NEGATIVE GEARING.

But hey, if you change super rules, then this is what higher income earners will do, instead of paying a guaranteed 15% (well almost ) on earnings via super.
MW

 

[medicowallet]

The much bigger issue is the cost of shelter these days compared to 20+ years ago. Rents chew up a greater share of incomes than they did in the past, and mortgages are generally quite unaffordable. In this scenario it's quite difficult to have a lot of surplus income to save, and with the precarious nature of employment today, I'd say anyone salary sacrificing into super better have a nut equivalent to 6 months after tax income or they could be in trouble pretty quickly.
.

And, I'll say it once again..

The great big elephant in the room is middle class welfare where middle income earners are given eg $10000 per annum which services $200000 of loan which allows them to bid up prices.

Then piss and moan when the gov lessens the money given to them.


Bring back reality where middle income earners support themselves, house prices will fall, and then middle class income earners will not be so dependent on handouts for their lifestyles...

Then scale off pensioners getting full pension if they get their super payouts and channel it into overpriced, unproductive property, and watch it fall again...

A win for australian society, and a way which will ensure that super can cover retirement that bit longer.

MW

 

[brty]

Very good reading this discussion, congratulations to all contributors, some very good points raised.

Just adding a little to the topic of putting money away for investment from a young age. It is not just the housing issue for the low/middle income earners. it is the HECS (or whatever it is now called) loan that is also a huge burdon for the young. Just as they start out, start earning more, thinking house family etc, BAM, out of left field kicks in the increased tax payments to pay it off. Young nieces and nephews are just entering this stage, though we are talking 30yo.
The combination of HECS and a mortgage is hurting those in the 25-34 age bracket. The high cost of child care means that nothing much is gained by Mum going back to work, while stay at home, doesn't cover everything. It's a situation where nothing can be put away for retirement. The lucky ones have grandmothers and grandfathers who step up to the plate in regard to childcare.

The both parents working, paying a mortgage and HECS, with a young family is the area of middle income welfare, we cut back much there, and there is no chance of them saving for retirement outside of the compulsory super, until they are into their late 40's to early 50's.

We, the baby boomers, have been lucky. We had no HECS, we bought houses relatively cheaply, then paid them off with the aid of inflation during the 70's and 80's. After paying off the house, we were set with a great deal of time and earning capacity to invest for the future, hence why so many posters here are doing well.
We also had relatively permanent employment, if one wanted it, another luxury the young find very hard to obtain, especially when having a mortgage.

 

[sptrawler]

Very good reading this discussion, congratulations to all contributors, some very good points raised.

Just adding a little to the topic of putting money away for investment from a young age. It is not just the housing issue for the low/middle income earners. it is the HECS (or whatever it is now called) loan that is also a huge burdon for the young. Just as they start out, start earning more, thinking house family etc, BAM, out of left field kicks in the increased tax payments to pay it off. Young nieces and nephews are just entering this stage, though we are talking 30yo.
The combination of HECS and a mortgage is hurting those in the 25-34 age bracket. The high cost of child care means that nothing much is gained by Mum going back to work, while stay at home, doesn't cover everything. It's a situation where nothing can be put away for retirement. The lucky ones have grandmothers and grandfathers who step up to the plate in regard to childcare.

The both parents working, paying a mortgage and HECS, with a young family is the area of middle income welfare, we cut back much there, and there is no chance of them saving for retirement outside of the compulsory super, until they are into their late 40's to early 50's.

We, the baby boomers, have been lucky. We had no HECS, we bought houses relatively cheaply, then paid them off with the aid of inflation during the 70's and 80's. After paying off the house, we were set with a great deal of time and earning capacity to invest for the future, hence why so many posters here are doing well.
We also had relatively permanent employment, if one wanted it, another luxury the young find very hard to obtain, especially when having a mortgage.

So what is your sugestion?

Keep blowing out the deficit?
Tax the crap out of the baby boomers, so all are on a pension?
Tax the crap out of manufacturing industries, that are closing down?
Tax the crap out of electricity, because everyone uses it, but they don't think it's a tax?
Tax the crap out of small industry, who is going broke anyway?
Tax the crap out of superannuation, so no one puts money in other than the employer contribution?
Tax the miners, when we are praying they don't fold?
Tax the retailers who can't make a profit?
Or set a price on a degree, that takes the place of the old leaving certificate and matriculation, if you want it work for it?
Funny how what goes around comes around, it took a long time to get rid of exams, then everyone could go to university.
Now everyone goes to university we have to charge.lol

 

[brty]

sptrawler,

Keep blowing out the deficit?

I thought this had already been discussed and dismissed, Australia has one of the lowest deficits in the world as a percentage of GDP, it's just a line used by politicians to justify whatever they want.

Think for a minute what would happen if the deficit was raised.

The $Aus would fall.

Manufacturing would be better off, Agriculture better off, mining better off. Higher inflation, GST income for the states better off, house prices might fall because of higher interest rates.

In reality, what solves a lot of Australia's perceived problems is a lowering of the $Aus, against the $US and especially against the Chinese Yuan. It is often called a race to the bottom, but why should we be last?

When looking at the forecasts in different companies DFS, with OZLs Khasmin yesterday being a good example, the $Aus they use for the future 2016-2018 always seems to be in the 80-85c range against the $US, not what it actually is. The other numbers are all very close to existing prices. The mining companies are clearly telling government to lower the dollar for investment to happen.

What will lowering the deficit do to the $Aus?

Everyone wants a nice, clear, easy answer to problems, often there isn't one. I do not proclaim that just lowering the dollar will provide all the answers, just that it is one of a range of aspects that need close inspection. I certainly do not have all the answers, I just wanted to point out why and how it is now different to earlier times, therefore solutions probably need to be different as well.
We seem to be giving old solutions to new problems, it's not likely to end well.

 

[FxTrader]

I thought this had already been discussed and dismissed, Australia has one of the lowest deficits in the world as a percentage of GDP, it's just a line used by politicians to justify whatever they want.

Think for a minute what would happen if the deficit was raised. The $Aus would fall.

Manufacturing would be better off, Agriculture better off, mining better off. Higher inflation, GST income for the states better off, house prices might fall because of higher interest rates.

In reality, what solves a lot of Australia's perceived problems is a lowering of the $Aus, against the $US and especially against the Chinese Yuan. It is often called a race to the bottom, but why should we be last?

Drifting off topic, but yes, being fiscally and monetarily responsible has kept the AUD exchange rate high releative to our trading partners thus supporting imports and damaging the competiveness of local industry. That coupled with not so free trade agreements that heavily favour our trading partners is moving us back toward banana republic territory. The tough budget we had to have will support the AUD if fully implemented.

As for taxing super, limiting the abuse of it by the very wealthy would be a good start. Why not return to the concept of an indexed RBL? Any realistic solution to funding the retirement of an aging population will involve compulsion and incentives to save that lock in funds over decades. The alternative is excessive taxation on a shrinking working class.

 

[craft]

Very good reading this discussion, congratulations to all contributors, some very good points raised.

Just adding a little to the topic of putting money away for investment from a young age. It is not just the housing issue for the low/middle income earners. it is the HECS (or whatever it is now called) loan that is also a huge burdon for the young. Just as they start out, start earning more, thinking house family etc, BAM, out of left field kicks in the increased tax payments to pay it off. Young nieces and nephews are just entering this stage, though we are talking 30yo.
The combination of HECS and a mortgage is hurting those in the 25-34 age bracket. The high cost of child care means that nothing much is gained by Mum going back to work, while stay at home, doesn't cover everything. It's a situation where nothing can be put away for retirement. The lucky ones have grandmothers and grandfathers who step up to the plate in regard to childcare.

The both parents working, paying a mortgage and HECS, with a young family is the area of middle income welfare, we cut back much there, and there is no chance of them saving for retirement outside of the compulsory super, until they are into their late 40's to early 50's.

We, the baby boomers, have been lucky. We had no HECS, we bought houses relatively cheaply, then paid them off with the aid of inflation during the 70's and 80's. After paying off the house, we were set with a great deal of time and earning capacity to invest for the future, hence why so many posters here are doing well.
We also had relatively permanent employment, if one wanted it, another luxury the young find very hard to obtain, especially when having a mortgage.

I like this post BRTY, nice insight into what other generations are facing.

The age cohort that is facing a lot of pressure goes a bit higher than 35 probably as high as 45.
The generation after the baby boomers missed out on full community funded education, face high housing costs (rent/purchase). Need to save for their retirement whilst also contributing to the old system of intergenerational transfer for pensions. Now face supporting their kids until 30 if there are no jobs (or see their kids run up ridiculous education debts) and there will be less jobs because they can’t retire to free up positions. Tax relief for raising young families is not seen as valid and is being torn down as middle class welfare.

A dual income family making MEDIAN wages with a couple of school age kids would have to be the most squeezed group I could think of and the last budget kicked them in the balls when they were already down. I know families like this and they are doing it harder than other families I know where neither parent works.

People are screaming middle class welfare must end, but I think it is this middle class that is getting the crap squeezed out of them. Sure stop the benefits, but lighten the tax take on them so it’s not viewed as welfare.

I’ve got no issue with the transfer system looking after those that can’t look after themselves, disability, old age, temporary unemployment etc – but those that could help themselves and don’t, really annoy me because not only are they ‘stealing’ tax payers money on false pretences but they also bugger up the goodwill towards those that truly need a hand. Look here for a Moral place to cut spending.

As for raising more revenue – look at closing the loopholes where capital goes to dodge the headline progressive income rates. Its time wage earner had a little weight lifted from their back. A wage earner that needs to spend what they make to live has nowhere to hide. Capital is basically handed an invisibility cloak. Tax me more (just don’t give it to bludgers)

 

[sptrawler]

I like this post BRTY, nice insight into what other generations are facing.

The age cohort that is facing a lot of pressure goes a bit higher than 35 probably as high as 45.
The generation after the baby boomers missed out on full community funded education, face high housing costs (rent/purchase). Need to save for their retirement whilst also contributing to the old system of intergenerational transfer for pensions. Now face supporting their kids until 30 if there are no jobs (or see their kids run up ridiculous education debts) and there will be less jobs because they can’t retire to free up positions. Tax relief for raising young families is not seen as valid and is being torn down as middle class welfare.

A dual income family making MEDIAN wages with a couple of school age kids would have to be the most squeezed group I could think of and the last budget kicked them in the balls when they were already down. I know families like this and they are doing it harder than other families I know where neither parent works.

People are screaming middle class welfare must end, but I think it is this middle class that is getting the crap squeezed out of them. Sure stop the benefits, but lighten the tax take on them so it’s not viewed as welfare.

I’ve got no issue with the transfer system looking after those that can’t look after themselves, disability, old age, temporary unemployment etc – but those that could help themselves and don’t, really annoy me because not only are they ‘stealing’ tax payers money on false pretences but they also bugger up the goodwill towards those that truly need a hand. Look here for a Moral place to cut spending.

As for raising more revenue – look at closing the loopholes where capital goes to dodge the headline progressive income rates. Its time wage earner had a little weight lifted from their back. A wage earner that needs to spend what they make to live has nowhere to hide. Capital is basically handed an invisibility cloak. Tax me more (just don’t give it to bludgers)

Good post Craft, I agree, also another loop hole that requires looking at is the disability pension.
Currently the government doesn't look at a persons super balance when means testing the disability pension. I wonder why not.

 

[Julia]

I thought this had already been discussed and dismissed, Australia has one of the lowest deficits in the world as a percentage of GDP, it's just a line used by politicians to justify whatever they want.

I don't think anyone is questioning our debt to GDP ratio in comparison to the rest of the world.
Isn't the problem more the upward trajectory of our spending? The government is pointing out that with the increasing numbers of people on age pensions in the coming decades, plus the additional health resources they will consume as they live longer, coupled with fewer workers paying tax to support them, we will have a considerable problem in the future. So, instead of just opting for what will make them popular immediately with the electorate, they are attempting to address the longer term. Seems like a worthy enough aim to me.

If everyone is worried now about hardship for their children and grandchildren, perhaps consider that if something isn't done, the resulting burden that falls on those generations will be that much greater.

We've all agreed that the government has gone about the actual design of how best to fulfil their aim less well than they should, but that's pretty obviously all going to be modified before it gets through the Senate anyway. As already discussed, there's considerable room for modifying the over-generous tax concessions in Super, including the family home over X amount etc., in order to take some of the pressure off middle income earners.

Just pretending that because the present debt to GDP situation is relatively OK, shouldn't be a reason not to address the potential problems in the future imo, though I get that much of the population would disagree, even some here.

Think for a minute what would happen if the deficit was raised.

We would be borrowing even more than the present $1 Billion per month to pay the interest, for one thing.

 

[sptrawler]

sptrawler,



I thought this had already been discussed and dismissed, Australia has one of the lowest deficits in the world as a percentage of GDP, it's just a line used by politicians to justify whatever they want.

Think for a minute what would happen if the deficit was raised.

The $Aus would fall.

Manufacturing would be better off, Agriculture better off, mining better off. Higher inflation, GST income for the states better off, house prices might fall because of higher interest rates.

In reality, what solves a lot of Australia's perceived problems is a lowering of the $Aus, against the $US and especially against the Chinese Yuan. It is often called a race to the bottom, but why should we be last?

When looking at the forecasts in different companies DFS, with OZLs Khasmin yesterday being a good example, the $Aus they use for the future 2016-2018 always seems to be in the 80-85c range against the $US, not what it actually is. The other numbers are all very close to existing prices. The mining companies are clearly telling government to lower the dollar for investment to happen.

What will lowering the deficit do to the $Aus?

Everyone wants a nice, clear, easy answer to problems, often there isn't one. I do not proclaim that just lowering the dollar will provide all the answers, just that it is one of a range of aspects that need close inspection. I certainly do not have all the answers, I just wanted to point out why and how it is now different to earlier times, therefore solutions probably need to be different as well.
We seem to be giving old solutions to new problems, it's not likely to end well.

Doesn't the deficit increase the governments borrowing cost and put upward pressure on interest rates? Also more exposure to overseas borrowing, and as with European countries with high deficits, external political pressure from other countries, from whence the borrowings came.
External exposure to overseas money markets are what sent us into a tailspin after the 1987 crash i.e why compulsory super was started.
How would we be travelling now, if when the gfc hit and we had saya $600billion deficit running. That would no doubt be over $1trillion now, that would require servicing, and people think this budget is hard.lol

Wouldn't lowering the deficit, free up government money to assist in covering welfare and infrastructure costs.

In my opinion the Aussie dollar will fall, when the financial markets have finished playing with our economy, but as you say it won't end well.

 

[McLovin]

People are screaming middle class welfare must end, but I think it is this middle class that is getting the crap squeezed out of them. Sure stop the benefits, but lighten the tax take on them so it’s not viewed as welfare.

The problem is that it's the middle class that is paying for the welfare. The OECD released a report a few years ago (sorry I can't find it) that showed the typical middle class Australian family had one of the highest tax burdens in the world, but after transfers had the lowest effective tax rate in the OECD. Iirc, it was a shade over 6%.

Taking someone's money, repackaging it, and giving it back to them, is an incredible waste of resources.

 

[DeepState]

Think for a minute what would happen if the deficit was raised.

1. The $Aus would fall.

... higher interest rates.


2. It is often called a race to the bottom, but why should we be last?

1. Please see below a chart showing the Federal Budget surplus/deficit together with AUDUSD exchange rate and Terms of Trade.



It shows the period since the introduction of our current inflation targeting regime. When the terms of trade were stable until large demand for Australia's natural resources from China began to appear in commodity pricing, it can be seen that a move to budget surplus in the late 1990s and early 2000s occurred at the same time as a significant fall in the relative value of the AUD. Thereafter, terms of trade became a significant explanatory factor of relative exchange performance. This has occurred despite a sharp deterioration in budget position in 2009. More recently, the budget position has been gradually improved (less deficit)...and the AUD has fallen.

These observations are at odds with the statement.

Interest rates are not even closely related to the budget surplus/deficit. The following chart is the 10 year bond yield:



It shows that ten year bond yields have declined over the period despite a pattern of generally deteriorating budget positions. After the initial gains of yield reduction that accompanied a move towards inflation targeting, the bond rate stayed fairly level from the point as which the budget moved to surplus in 1997 through to when it punched through zero in 2009. A very poor budget position from 2009 to 2012 occurred during a period of further declines in the yield. As the budget position was reigned in, yields rose. During the period that the Coalition has been elected with strong messages of fiscal responsibility, rates have largely been flat.

The outcomes do not concur with the expectations expressed.


2. The RBA had been jawboning the AUD down through much of 2013. When the AUD experienced a significant fall in Q4 2013, it was accompanied by a sharp spike in tradables inflation. Given non-tradables inflation runs at a rate above the RBA target, a fall in the AUD produced an adverse consequence. If sustained, it would have required a monetary response. Gov Stevens ceased jawboning on the release of the data. In minutes and speeches subsequent to that date, reference is only made to the fact that the AUD is trading at historically high levels. This occurred despite that exchange rate rising above the points at which threats to intervene etc. were made.


Not for a moment am I saying this stuff is easy or inherently obvious.

 

[sptrawler]

1. Please see below a chart showing the Federal Budget surplus/deficit together with AUDUSD exchange rate and Terms of Trade.

View attachment 58130

It shows the period since the introduction of our current inflation targeting regime. When the terms of trade were stable until large demand for Australia's natural resources from China began to appear in commodity pricing, it can be seen that a move to budget surplus in the late 1990s and early 2000s occurred at the same time as a significant fall in the relative value of the AUD. Thereafter, terms of trade became a significant explanatory factor of relative exchange performance. This has occurred despite a sharp deterioration in budget position in 2009. More recently, the budget position has been gradually improved (less deficit)...and the AUD has fallen.

These observations are at odds with the statement.

Interest rates are not even closely related to the budget surplus/deficit. The following chart is the 10 year bond yield:

View attachment 58131

It shows that ten year bond yields have declined over the period despite a pattern of generally deteriorating budget positions. After the initial gains of yield reduction that accompanied a move towards inflation targeting, the bond rate stayed fairly level from the point as which the budget moved to surplus in 1997 through to when it punched through zero in 2009. A very poor budget position from 2009 to 2012 occurred during a period of further declines in the yield. As the budget position was reigned in, yields rose. During the period that the Coalition has been elected with strong messages of fiscal responsibility, rates have largely been flat.

The outcomes do not concur with the expectations expressed.


2. The RBA had been jawboning the AUD down through much of 2013. When the AUD experienced a significant fall in Q4 2013, it was accompanied by a sharp spike in tradables inflation. Given non-tradables inflation runs at a rate above the RBA target, a fall in the AUD produced an adverse consequence. If sustained, it would have required a monetary response. Gov Stevens ceased jawboning on the release of the data. In minutes and speeches subsequent to that date, reference is only made to the fact that the AUD is trading at historically high levels. This occurred despite that exchange rate rising above the points at which threats to intervene etc. were made.


Not for a moment am I saying this stuff is easy or inherently obvious.

Thanks for the explanation retired young, I followed you upto, please see below a chart, then you lost me.lol

 

[craft]

2. The RBA had been jawboning the AUD down through much of 2013. When the AUD experienced a significant fall in Q4 2013, it was accompanied by a sharp spike in tradables inflation. Given non-tradables inflation runs at a rate above the RBA target, a fall in the AUD produced an adverse consequence. If sustained, it would have required a monetary response. Gov Stevens ceased jawboning on the release of the data. In minutes and speeches subsequent to that date, reference is only made to the fact that the AUD is trading at historically high levels. This occurred despite that exchange rate rising above the points at which threats to intervene etc. were made.

The dollar will fall when/if the national income falls – The importance of importing inflation via tradables is now hugely significant.

Nationally we will have falling income and rising expenses, either there is a reduction in demand response or an inflation response. Either way (increasing unemployment/higher rates) the non-self liquidating mortgage debt is the elephant in the room.

Gov’t debt is just one piece of the pie, net foreign Liabilities is the big picture and in the last decade we were going backwards despite the resource boom and terms of trade. What a wasted opportunity.

 

[Julia]

The both parents working, paying a mortgage and HECS, with a young family is the area of middle income welfare, we cut back much there, and there is no chance of them saving for retirement outside of the compulsory super, until they are into their late 40's to early 50's.

No chance of people saving outside Super? Seems like a large and very negative generalisation to me. Certainly it's tough for people on low incomes, but I still see people doing extremely well in their 30's. Own their own home outright and have two or three IPs.
No financial assistance from family.

Perhaps it might have something to do with the fact that their holidays are camping, and a day out is a home made picnic at the beach rather than a $100 breakfast. Or the fact that always they have grabbed all the additional hours of work they can to build up funds for deposits on property. Continued studying in order to further their careers. And that they don't feel compelled to buy a new $500 phone every couple of months. Sometimes you make your own luck.

We, the baby boomers, have been lucky. We had no HECS, we bought houses relatively cheaply, then paid them off with the aid of inflation during the 70's and 80's.

Yes, and what a wonderful opportunity to make money via investment properties. Everyone was wailing about high interest rates - 22% is what I paid on my first IP - but there was a dearth of rentals, plenty of quality tenants and rents were well able to cover what seemed like high costs, even before you factored in the very large capital gains.

I remember, when I outlined my plan to try to borrow a pretty substantial amount and buy several places, my friends threw up their hands in horror. "Just put your money in the bank", they said, "interest rates on deposits are good". Sure, but inflation is dealing with most of that. Then, from the ex husband: "you'll never be able to borrow any money, let alone that much: you're just a woman."
Fortunately the bank manager was a little more enlightened.

Most people face difficult periods in their lives. There seems to me a huge variation in how we cope with such times. Do we allow ourselves to be overwhelmed by apparent insoluble hardship, lament how tough it all is, or do we look at each of these situations and consider how we might instead find a way through, turn it to our ultimate advantage?

 

[k.smith]

I hope you realise that this is a SUPERANNUATION thread

NOT a thread on PROPERTY NEGATIVE GEARING.

But hey, if you change super rules, then this is what higher income earners will do, instead of paying a guaranteed 15% (well almost ) on earnings via super.
MW

Yes, there's always that "well almost" a statement that reminds me of this


http://www.abc.net.au/news/2014-05-26/janda-tax-avoidance-name-and-shame/5478450

''.... the famous Kerry Packer maxim on taxation:

I am not evading tax in any way, shape or form. Now, of course, I am minimizing my tax, and if anybody in this country doesn't minimize their tax they want their heads read because as a government I can tell you you're not spending it that well that we should be donating extra.​

To his credit, the late Mr Packer was typically upfront about his tax philosophy.
However, most wealthy individuals are not subject to the same level of public scrutiny as the media mogul was, and, aside from a few high-profile individuals targeted by the ATO as part of its deterrence strategy, most can keep their tax details secret, especially if their minimisation techniques are legal.

The problem, of course, with Kerry Packer's attitude to tax is that those who can't or won't minimise their tax - i.e. the vast bulk of people who simply can't afford to get high-end tax advice and set up complex financial structures - end up footing the bill for the wealthy who do.

....''


And yes, this thread is about Superannuation. So why, with such growth of high enders contributing into super why are they opting to pay 15% on their super if they can negatively gear and pay zilch?

http://www.smh.com.au/business/bank...exploiting-superannuation-20140522-38po9.html

''...Analysis by Fairfax Media of Australian Taxation Office statistics shows almost 9200 self-managed super funds have a balance of more than $5 million, a rise of 76 per cent in the past three years, and the number of funds with over $10 million has doubled.

 

[Ves]

Most people face difficult periods in their lives. There seems to me a huge variation in how we cope with such times. Do we allow ourselves to be overwhelmed by apparent insoluble hardship, lament how tough it all is, or do we look at each of these situations and consider how we might instead find a way through, turn it to our ultimate advantage?

Probably more relevant to a thread on temperament, but....

Marcus Aurelius - The Meditations (from Book V)

Now it is true that these may impede my action, but they are no impediments to my affects and disposition, which have the power of acting conditionally and changing: for the mind converts and changes every hindrance to its activity into an aid; and so that which is a hindrance is made a furtherance to an act; and that which is an obstacle on the road helps us on this road.

 

[k.smith]

No chance of people saving outside Super? Seems like a large and very negative generalisation to me. Certainly it's tough for people on low incomes, but I still see people doing extremely well in their 30's. Own their own home outright and have two or three IPs.
No financial assistance from family.

Perhaps it might have something to do with the fact that their holidays are camping, and a day out is a home made picnic at the beach rather than a $100 breakfast. Or the fact that always they have grabbed all the additional hours of work they can to build up funds for deposits on property. Continued studying in order to further their careers. And that they don't feel compelled to buy a new $500 phone every couple of months. Sometimes you make your own luck.


Yes, and what a wonderful opportunity to make money via investment properties. Everyone was wailing about high interest rates - 22% is what I paid on my first IP - but there was a dearth of rentals, plenty of quality tenants and rents were well able to cover what seemed like high costs, even before you factored in the very large capital gains.

I remember, when I outlined my plan to try to borrow a pretty substantial amount and buy several places, my friends threw up their hands in horror. "Just put your money in the bank", they said, "interest rates on deposits are good". Sure, but inflation is dealing with most of that. Then, from the ex husband: "you'll never be able to borrow any money, let alone that much: you're just a woman."
Fortunately the bank manager was a little more enlightened.

Most people face difficult periods in their lives. There seems to me a huge variation in how we cope with such times. Do we allow ourselves to be overwhelmed by apparent insoluble hardship, lament how tough it all is, or do we look at each of these situations and consider how we might instead find a way through, turn it to our ultimate advantage?

I know that some of us that post here are doing OK... I am gauging that there is not anyone here who is really poor and perhaps most here do not fall into the multi $$kk bracket. But the fact that we are even having this discussion is imo an indicator of our degree of capability and also perhaps resilience. You obviously have the skills to make a success of your finances. Despite my absolute MIS fiasco, I have knuckled down and made repairs to mine. But for some, it is really hard. I had contact with a lot of investors after the MIS schemes collapsed, and it taught me (amongst a huge lot of other things) that overcoming the "difficult periods" in our (financial) lives comes down to so many variables - Health (both physical and psychological) intelligence, family relationships and support, employment, their bank balance, communication skills...etc.. I know of some who committed suicide. Many suffered from acute depression and anxiety. So not everyone can get back up on the perch.

I wonder whether the next generation of thirty year olds will do so well ?

http://www.abc.net.au/news/2013-08-30/janda-home-ownership-and-future-aged-underclass/4924862

''...The latest round of home price rises, which is most evident in Sydney, is mostly driven by investors, now including a substantial cohort of self-managed super funds.

These investors provide the competition that prices many first-home buyers out of the market and forces them into being long-term, perhaps lifetime, private renters.

The number of these investors has ballooned from 1.3 million at the end of last century to more than 1.8 million in 2010-11, the latest year for which Tax Office statistics are available.

What has also ballooned is the subsidy these taxpayers claim from the public purse: from posting rental profits of $700 million in 1998-99, investors now claim rental losses of almost $8 billion on their income tax returns....''

The whole article is rather illuminating imo..