Superannuation, the ultimate government cash cow?

[sptrawler]

Anyway, I'm over it super IMO, has gone the way of the dinosours .LOL

 

[Wysiwyg]

I've always wondered why, someone in Government, hasn't taken the moral high ground and said "what we are doing is wrong".
"Why should some of us have a lifetime indexed "tax free' pension, while we continually impose punitive measures on everyone else".
Then I wake up, as I've probably fallen out of bed, in shock.

Like business managers that award themselves bonuses and salary increases. A god given right that just keeps taking and taking.

 

[sptrawler]

Do any of our learned members remember the minimum / maximum rules, that applied to allocated pensions pre 2007, before "better super" rules started.
I'm just playing mental games with myself, as usual, and trying to remember what the criteria was.

 

[PZ99]

Does this help ?

http://www.budget.gov.au/2006-07/overview2/html/overview_01.htm

 

[sptrawler]

No that was the proposed changes, I'm trying to find the minimum/maximum draw down rates that applied pre 2007.
I usually have a really good memory for numbers, but can't recall the figures.
I was hoping Junior or Craft might remember, or know an accountant that does

 

[awg]

The proposed changes by Labor are one of the most vicious cash grabs I have come across, enough to change my vote, because it will affect me.

Luckily my SMSF only provides a part of my income, but nevertheless, my own situation shows how bad it will be for others less well of than me, and I am not especially wealthy (in an income sense)

I always draw min pension, last year ~27k, ~$3700 IC

As a result of my other income, I have an annual Personal Income Tax bill

If my understanding of what is proposed is correct, my SMSF, which is in Pension phase, will, instead of having that ~$3700 remitted back to my balance, will be retained by the ATO

If I was reliant upon my SMSF Pension alone, that would be a huge and unsustainable hit, (needing a change in investment strategy)..not so easy for Pensioners with CBA shares etc.

(My SMSF balance is more than twice the average super balance upon retirement for a man)

I believe a "limit" of how much could be claimed would be fairer, possibly with some grandfather provisions

 

[Bill M]

The proposed changes by Labor are one of the most vicious cash grabs I have come across, enough to change my vote, because it will affect me.

Absolutely, and the Labor Party is lying saying that it will only affect a minority. It will affect every single person why owns shares. It will indeed be the biggest theft of money from retirees. This next article explains it well, (my bolds):

---
If you are in pension mode, and paying no tax on your income, the whole $300 in franking credits are returned to you as a cash rebate. A person still in superannuation accumulation phase pays tax at 15 per cent, so they would get up to half of franking credit back, or $150.

If the ALP’s plan comes to fruition, you can kiss those cash refunds goodbye. Which will be a bitter pill to swallow for many retirees who may own a few shares through their pension fund, and who rely on generating some additional income via dividend franking credits to supplement their age pension payment income.

That dividend income is not a handout. It is simply the rebate on the tax that has already been paid by the company.

https://www.investsmart.com.au/inve...medium=email&utm_campaign=free-midweek-260318
---

 

[sptrawler]

Absolutely, and the Labor Party is lying saying that it will only affect a minority. It will affect every single person why owns shares. It will indeed be the biggest theft of money from retirees. This next article explains it well, (my bolds):

---
If you are in pension mode, and paying no tax on your income, the whole $300 in franking credits are returned to you as a cash rebate. A person still in superannuation accumulation phase pays tax at 15 per cent, so they would get up to half of franking credit back, or $150.

If the ALP’s plan comes to fruition, you can kiss those cash refunds goodbye. Which will be a bitter pill to swallow for many retirees who may own a few shares through their pension fund, and who rely on generating some additional income via dividend franking credits to supplement their age pension payment income.

That dividend income is not a handout. It is simply the rebate on the tax that has already been paid by the company.

https://www.investsmart.com.au/inve...medium=email&utm_campaign=free-midweek-260318
---

Well Bill I hope you are right, but from the way I have read it if your only income is from shares, you get nothing back.
So that will mean people in pension phase, people in accumulation phase, wife's that have shares in their names, people who own shares out side of super and it is their only income.
The real classic is, retail super funds wont be able to offset their tax liability with the franking credits, so their members will lose.
But apparently Labor is going to exempt industry( union ) funds, and allow them to use the credits, so Billy and the crew should be o.k for jobs post politics. Well that's how I have read it, I may be wrong, but if Im not it will cost a lot of people money.
Someone correct me, if I'm wrong.

 

[Toyota Lexcen]

4 corners tonite show on super I believe

 

[Wysiwyg]

Superannuation Statistics
Superannuation assets totalled $2.6 trillion at the end of the December 2017 quarter. Over the 12 months from December 2016 there was a 10.1 per cent increase in total superannuation assets.

Compounding, the eighth wonder of the world. Government the only organisation that can walk in and say, give me some of that.

 

[Bill M]

4 corners tonite show on super I believe

Thanks for the heads up, just watched it. Not a lot of new stuff there, same old rips offs of small businesses ripping off teenagers and not paying their Super, yet some people say we don't need unions or other heavier regulations to pull them into line. Also the fees and charges some Super Companies charge are way over the top. Funny how most average Joes didn't even know what super fund they were in.

What else, we have the 4th largest pool of money set aside for retirement in the world they said. $2.5 Trillion.........Not bad for little old Australia.

We needs to pull up the crooks, and stop thieving peoples money.

No mention about Labors new tax though. But there was some mention on tonight's news that they are already back to the drawing board to talk about exemptions for low income/super balance retirees with that grand new imputation tax refund theft idea. They never seem to think these ideas out properly.

 

[qldfrog]

Compounding, the eighth wonder of the world. Government the only organisation that can walk in and say, give me some of that.

and I would add mandatory contribution the 9th one!!!

 

[awg]

its a s.o.b filthy conniving POLITICAL dog act, because Labor KNOW the vast majority of SMSF owners will be Liberal voters. They would have been LAUGHING GAYLY as they discussed this over the policy table.

predict it will make mess of bank shares..can you say the word SELL

Does the retention of IC apply to super funds, or is it only individual SMSF holders ?

 

[McLovin]

And to think the boomers call millenials self-entitled!

 

[elbee]

I am a little disappointed in the way Labor have managed the story around stopping cash refunds of franking credits but fully support that decision (eventhough I am currently a beneficiary).

The concept of paying a tax refund when no tax has been paid is illogical from an economic, taxation or social welfare perspective. Not surprisingly Australia is the only jurisdiction where this occurs.

It is important to realise that because a benefit is currently received it does not mean that the benefit has been earned, deserved or is an entitlement.

The dividend imputation system was designed to prevent double taxation and works by taxing both company profits and the dividends paid out of those profits to shareholders, but allowing a credit to shareholders of the company tax already paid.

Cash refunds of franking credits are a welfare payment. They are not "your money". They are tax the Commonwealth has properly received on company profits.

When those credits are allowed to shareholders with no taxable income there is effectively no taxation paid by anyone on that part of company profits flowing to those shareholders. The tax collected from the company is refunded by the Commonwealth to the non-taxable shareholder. Whether that revenue should be directed to that group or redirected elsewhere should be a matter for debate.

With an ageing population and an ever increasing pool of superannuation assets the amount of company profits paid out to non-taxable funds, and thus producing no net tax to the Commonwealth, is growing and will soon be unsustainable.

Whilst I agree with the concept that profits should not be taxed twice, the use of the dividend imputation system as the means to achieve this is questionable. I believe only Australia and NZ remain with full-fledged imputation systems with several European countries having experimented with but then abandoning the system in part or full.

The major objection to dividend imputation is that it reduces the effectiveness of taxation incentives, including the lowering of the company tax rate, to capital holders.
Any reduction in tax paid by the company is offset by a reduction in value of the tax credit received by the capital holders on their dividends.

Some jurisdictions achieve the objective of avoiding double taxation by excluding dividends paid out of taxable income from the assessable income of shareholders.

 

[awg]

Cash refunds of franking credits are a welfare payment. They are not "your money".

agree in part with your statement, but applying that logic, ANY super concession
is a form of welfare.

Change is inevitable, but this seems to target a SMSF holders " unfairly"
Its been "my money" for many years, and I hope it continues to be..

 

[sptrawler]

Isn't it funny, labor want to take away the franking credits from SMSF's, and the Royal Commission is finding the superannuation system is ripping members off.

So for the "man on the street", the super funds will screw you, and if you want to run your own, the labor Party will screw you. LOL
Don't you just love it, the age pension is looking better and better.

 

[PZ99]

The age pension is looking worse and worse. Because the Liberal Party screwed it last year.

Just ask those 200,000 recipients that had their entitlements reduced, and the 100,000 recipients that lost their entitlements altogether.

If you're a worker and you don't have a truckload of money, save your super pennies for a rainy day. The Liberal party want you to work until 70 before you get the age pension.

And don't count on any of the above getting rolled back under any future Govt either.

 

[tech/a]

Neither Govt are serious about Super.
If they were they wouldn't be so stingy with what you could
put into it.
Rich retirees spend. Rich off spring spend if retirees don't live long enough to spend it.

 

[HelloU]

flipside

those changes allowed an additional 50,000 low asset peeps people to get the full pension....payed for by those 100,000 peeps who lost part pension (cos they had over $500,000 in the bank).

all about moving the deck chairs............when there are not enough chairs, then no matter where u place them, someone is missing out.