Yep, pretty sure it is. I added a link above for those interested.
I've read about 8-10 Budget update publications from most of the major super providers and administrators and didn't see it mentioned.
Yep, pretty sure it is. I added a link above for those interested.Yes, the Small Business CGT Cap.....I believe that was always a separate cap over and above non-concessional and concessional. There was no mention of that, so I assume it's still in place.
I just look at things in terms of raw numbers, and there isn't much difference. An adviser who can teach their clients to do the same has won most of the battle.Yes, with some decent financial advice, most people will be able to structure their arrangements such that it's not a major disadvantage. It's a peace of mind thing also, as superannuation is the structure designed to house retirement assets.
My general point though, is that if $1.6mill is an acceptable limit, folks within a few years of retirement should have some transitional arrangement in place to allow themselves to move their assets into super. The rules have been changed significantly and in my opinion, it's a bit harsh making it retrospective.
Particularly for the types I mentioned earlier who might have balances under $500k and are over 50 - i.e. single mums with now adult children who are downsizing homes, self-employed, people who had marriage breakdown etc.
Budget 2016: Super tax crackdown to prompt spike in SMSF property borrowing
Accountants and wealth advisers predict a spike in risky property borrowing by self-managed super funds because of tougher superannuation rules.
Wealthy savers and self-funded retirees were angered by the harsher-than-expected crackdown on super in the 2016-17 budget on Tuesday night.
Most of the changes, including a $1.6 million limit on the amount that can be transferred from a super accumulation account into a retirement account (where earnings are tax free), are due to take effect from July 1, 2017.
A new lifetime limit on non-concessional (after tax) contributions of $500,000, backdated to 2007, took effect on budget night.
Experts tip the changes will force self-managed super funds (SMSFs) to load up on debt.
"There is still plenty of incentive for people, especially farmers and small business owners, to want to own property within their self-managed super fund," Findex advice standards manager Braith Morrow said.
Under the new rules, rather than being able to fund that investment through their own equity, many will be forced to take on more debt to do so, he said.
"There will certainly be a spike in SMSF borrowing as an unintended consequence of the new super rules."
Risk on the rise
Mr Morrow said higher leverage ratios would expose SMSF owners to greater risk in the event property prices dipped.
For the most part super funds are prohibited from borrowing. The exception is a special provision known as limited recourse borrowing arrangements only allowed in the SMSF sector.
"Less opportunity to put money into super will encourage small business owners and others to borrow to build capital in their fund," SMSF Owners' Alliance executive director Duncan Fairweather said.
"This is not a bad thing if they invest in quality assets and have the capacity to service the loan, but it isn't fair they are being forced into this position."
UBS Wealth Management executive director David Rolleston said there was a risk the new rules would exacerbate an already growing problem.
"I am particularly worried about the growing number of people in their 50s and 60s approaching retirement who think owning geared residential property in their SMSF is a good idea," Mr Rolleston said.
Regulators alert to risk
The Reserve Bank of Australia has been worried about the rising number of SMSF owners taking on debt to invest in property since at least 2013.
More recently the Australian Taxation Office has cracked down on SMSFs who don't qualify for bank finance turning to related-party loans to buy property.
Last year the government rejected the financial system inquiry's call to ban the practice. The inquiry, led by former Commonwealth Bank chief executive David Murray, found that while overall leverage in the SMSF sector was low its fast growing popularity posed an emerging "systemic risk".
In rejecting the ban Treasurer Scott Morrison said there was "no immediate evidence" to justify it but said the government would keep a "watching brief" on the practice.
The latest available ATO data shows SMSF borrowing remains on the rise.
Yep, that's a pretty good example.So in theory a couple could structure a $2.2 Million portfolio like this and pay no tax at all, is that correct? That's how I work it out anyway.?
Thanks Ves, then it isn't too bad is it?Yep, that's a pretty good example.
As far as I can tell,the new super regime is not all that bad at all.Anyone with a few too many millions in pension phase,can schlep the excess back into an accumulation account and pay a flat tax rate of 15%,(maybe a bit less with franking credits) and just 10% CG tax.Take it out Now,and you can never get it back in...to what will still remain,one of our very best tax shelters.Copping 15% tax seems a better deal than risking it all on something else,like negative gearing.And how much longer will either side of politics be leaving that one,alone? At least after this latest budget,we can be fairly confident,it's settled for another decade or so.I'll never see another Howard or a Costello in my lifetime.Anyone crying their eyes out,today can blame those two.
Hypothetical.
Ves and others, am I right?
A couple who are both 60 or over.
Each have 100K in concessional contributions and 500K in non concessional contributions in their super.
Together it = $1.2 Million
They have a further 500K each outside of super. They do not wish to risk their returns on the 500K each more than the bond market. So lets say they get 3.5% running yields on that $1 Million.
Compulsory 4% super drawdown on $1.2 million = $42,000 P/A
3.5% on their out of super $1 Million = $35,000 P/A
Total $77,000 P/A.
As their super is untaxed after 60 all is good. The $17,500 each they make outside of super is also untaxed as it is under the tax threshold.
So in theory a couple could structure a $2.2 Million portfolio like this and pay no tax at all, is that correct? That's how I work it out anyway.?
I'm a bitwith this example in relation to the budget.
Will earnings in pension accounts from which pensions are paid before age 65 (TTR pensions?) now become subject to a 15% tax or not? Or is that before age 60?
The only thing I can pick from the super changes, is the $1.6million cap, will ensure in most cases the money will be spent.
Which probably isn't a bad thing, the alternative doesn't bear thinking about.
At a personal level, I'm not troubled by the proposals. Sure, I may have to readjust where I place my funds in order to not trigger the $1.6M cap but I'll probably invest outside of the superannuation structure.
I already do and even though I consider my gross income (consisting of an account-based pension plus dividends) to be quite high, as a result of franking credits, I still get a tax refund which is a little bizarre in my view.
Other people, however, have had their immediate plans disrupted and it must be disconcerting to them. However, I hope and assume, as happens with every change in taxation arrangements, they will adjust their financial situation to accommodate those changes. I reckon it's the only way otherwise you could just sit in a puddle of despair which is not a good way to live.
Anyways, off to have fun in the UK next Wednesday, so take care y'all.
See Michael Pascoe, has popped his head up, to make a headline.
http://www.smh.com.au/business/the-economy/more-superannuation-changes-to-come-20160512-got6fr.html
Shame his article is about as useful as t*** on a bull, as usual.
The info our learned members, post on this forum, is far better value. IMO
Hi,
I am looking for some advice to a simple question (and Yes I only ask simple questions)
Q) If you were 58 years old (presently unemployed and not employable) additionally you cannot claim any pension, etc until you are 67, do you think putting $15-20.000 into your superannuation would be a good idea rather than having it presently sitting in a bank account?
If you did, would you have to pay tax on it now, or when you claim it?
Or is there a better alternative - not including the share market directly?
Any feedback would be much appreciated
Regards
PB
Hi,
I am looking for some advice to a simple question (and Yes I only ask simple questions)
Q) If you were 58 years old (presently unemployed and not employable) additionally you cannot claim any pension, etc until you are 67, do you think putting $15-20.000 into your superannuation would be a good idea rather than having it presently sitting in a bank account?
If you did, would you have to pay tax on it now, or when you claim it?
Or is there a better alternative - not including the share market directly?
Any feedback would be much appreciated
Regards
PB
Yes, it's that desperate "Queensland to raid public servant super to pay down debt" #qldpol #auspol afr.com/news/politics/…
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