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- 10 December 2012
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They're also purely based on SG contributions and don't take into account the use of salary sacrificing or non concenssional contributions.
I wonder if the pretty graphs take into account the fairly recent DIV 293 tax which results in a 30% tax rate on contributions for income over 300K?
I suspect most over 300K will be structuring outside super to cap their tax rate at the 30% corporate rate any way. So the concession calculations to the top end are more ‘notional’ then real life.
From those graphs, it would appear it is only the top 10% that is causing an issue.
If you only view the graphs upto 90%, when you consider the system is still young, it isn't bad.
Obviously things need tweaking, however it isn't as bad as I presumed.
One has to keep in context, that super was meant to be a pension supplement not a pension replacement, it was to encourage people to save to enhance their retirement.
The side benefit for the Government, was less dependence on the pension due to means testing and a sovereign wealth fund of sorts.
It does seem perverse that the true middle class are being shafted mainly to provide the excess benefits to those 10%, which would be over 1 million individuals. The $$$ would probably help fund all of Gonski, something that would improve the long term economic potential of the country.
It's not like we're facing a $40B deficit and possibly the fastest fall in the ToT over the last 100 years that we can continue with this generosity towards those who don't really need the help, yet we're talking about cutting back on the increase in the pension to limit costs, increasing the costs of Uni and TAFE fees. If all tax reform is on the table, why does the Govt treat super and NG as sacred white cows immutable to change?
It does seem perverse that the true middle class are being shafted mainly to provide the excess benefits to those 10%, which would be over 1 million individuals. The $$$ would probably help fund all of Gonski, something that would improve the long term economic potential of the country.
So Labor want to put a 15% tax on super earnings over $100,000. Didn't they want to do something similar when in government but backed away because it was going to be too complex?
The problem is that as a long term investment, Super has to have very good years sometimes (>15%) to make up for the negative years.
A balance of $667k will be hit by the tax in a 15% year. That's the sort of balance many ordinary people would have.
From July 1, 2017, once a person is retired and drawing on their super, the first $75,000 in super income will remain tax free but earnings above that would be taxed at the concessional rate of 15 per cent.
$75k is proposed as you point out. I still don't like that you get taxed in the good years, but presumably no tax credits for the bad years.
Not sure about having to immediately take out funds if over $2m. Could work, but might be difficult for someone with a property in an SMSF.
I still don't like that you get taxed in the good years, but presumably no tax credits for the bad years.
So a 15% tax on super earnings over $100,000.
A balance of $667k will be hit by the tax in a 15% year. That's the sort of balance many ordinary people would have.
In this hypothetical good year the $667k superannuant would pay $7.50 in tax, on $100,050.00 presuming that they couldn't find $50 of costs.
Since 75k is the actual limit being proposed, the tax on $667k in the hypothetical 15% return good year would be $3757.50.
No, it wouldn't.
Unless you realise ALL capital gains for that particular financial year (i.e. actually sell all profitable investments, rather than holding), your super fund has no deductible expenses, and you receive no franked dividends as part of your return.
It's also worth noting that limit would presumably be per member. So, for a couple there would be able to receive up to $150,000 in earnings completely tax free within your fund. Still very generous!!
That would only be if both members had similar amounts.
What about funds where the male member has the much larger sum? As is usually the case.
Balancing the sum takes time, if at all, due to contribution and age constraints.
You are correct, I guess my point is, there will no doubt be strategies you can implement to take advantage of the tax free amount.
Tax free earnings of up to $75k each within the super environment, combined with the tax free threshold for each member of a couple outside of super means you can still accumulate plenty of wealth for retirement, and pay very little tax.
No, it wouldn't.
Unless you realise ALL capital gains for that particular financial year (i.e. actually sell all profitable investments, rather than holding), your super fund has no deductible expenses, and you receive no franked dividends as part of your return.
No, it wouldn't.
Unless you realise ALL capital gains for that particular financial year (i.e. actually sell all profitable investments, rather than holding), your super fund has no deductible expenses, and you receive no franked dividends as part of your return.
It's also worth noting that limit would presumably be per member. So, for a couple there would be able to receive up to $150,000 in earnings completely tax free within your fund. Still very generous!!
Don't forget the sting in the tail of SMSFs etc when you finally fall off your perch ( I'M getting close) your adult beneficiaries will pay tax on the untaxed amount they receive at their marginal tax rate.
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In Our SMSF in Pension mode all unrealised & realised C/Gns & Fr/Credits are counted in each years income.
As we have been in pens for over 15 years we have no losses carried fwd ( Not done I'm told), we lost about 35% in GFC.
Some years we have losses and some gains, will they even these out.
Don't forget the sting in the tail of SMSFs etc when you finally fall off your perch ( I'M getting close) your adult beneficiaries will pay tax on the untaxed amount they receive at their marginal tax rate.
Does the proposer of this new tax not realise good Generals lead from the front, not a mention of cutting their pensions + Perks.
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