Labor super policy- risky but makes sense
Labor's superannuation tax changes unveiled on Wednesday lay down some important markers about its intended presentation to voters in 2016 – specifically in terms of super but more broadly in terms of the equity ground on which it wants to fight.
There's a 15 per cent rate of taxation on annual superannuation income above $75,000 in the retirement phase, and a lowered income trigger for the application of a 30 per cent rate on payments on the way in during the contribution phase – it would cut in at $250,000 in income instead of the current $300,000. Neither margin is indexed for inflation, meaning they will become tougher over time. Because of this aspect, this is a stronger policy than it first appears and stronger than the one Labor took to the last election,
Australia’s income tax system is a progressive one. We pay higher rates of taxation the more we earn. There are five tax brackets:
$0 - $18,200 – 0%
$18,201 - $37,000 – 19%
$37,001 - $80,000 – 32.5%
$80,001 - $180,000 – 37%
$180,001 + – 45%
In last year’s budget the government added a (temporary) 2% debt levy for those earning over $180,000, so in effect the top tax bracket is now 47%.
Into this mix we also add the Medicare levy. This is now 2%, and it applies to all of your income. So if you earn $200,000 you pay 2% – $4,000 – on all of it.
$4000 is a lot of money to pay for a Medicare levy.
Yes and it covers you for so little . Plus you have to take out private health cover or pay more tax ..
On top of those taxs you have to give up another 9.5 of your wages in forced savings.
Its a con you will never save enough to compete with the pension. How much better if this 11,5 per cent of your wages went into an account which had no tax on earnings and could accumulate at a faster rate . And you could cover yourself . And take out catastrophe insurance.
The other tax which is ridiculouse is payroll tax . A tax on jobs ..Small Business the biggest employers have to carry 17.5 per cent of add on costs plus cannot compete with the public service on paid parental leave.
What all politicians have not caught up with is that people want to run their own lives ..this shows in so many ways where people are voting with their choices .
Union membership is down to 13 per cent of workers in the private sector . With unions no longer needing membership fees for income but are tax free businesses.
SMSFs are now the biggest area of Superannution ...
with now over 50 per cent of the poulation receiving goverment ( taxpayers) hand outs it is time for a revolution in thinking of what govt is for..,
It’s never good if you start wondering if the treasurer really understands how Australia’s taxation system works. And yet we have reached that point. On Monday, for the second time in six months, Joe Hockey incorrectly suggested Australians pay half their income in tax. It is an error so egregious that it suggests he either doesn’t understand how income tax works, or that he is purposefully misleading the public.
It is the latter. Joe Hockey is a liar.
It is never good to call someone a liar..
on Geofs own figures the top rate is now 47 plus a Medicare tax of 2 per cent equals 49 per cent . This is without the 9.5 per cent of your wages you loose for forced savings .
Joe Hockey would do well to use the Governments own ASIC -MONEY SMART Calculator on $150,000 wages and after only using Salary Sacrificing and without other Tax Minimisation effective rate is 37%.
Since when has sacrificing your own salary into your own retirement savings to be taxed at 15 per cent then the earnings taxed again , tax minimisation . The taxs on Super savings simply reduces the pool available by some 30 to 40 per cent and means you will have to rely on other taxpayers in your retirement .
Tax free super benefits the top 20% earners in the country more than anyone else. In other words it most benefits the very wealthy in this country. They will only be paying 15% tax on investment earnings above $75,000. If they had their money in the bank and were earning $75,000 plus in interest per annum they would be paying higher tax on it than 15% so they will still benefit by keeping their money in super.
Geo, I think a lot of people don't understand that the tax is on super investment earnings and not on the amount one draws from super to live on. Since many couples draw an income of $50,000 or $60,000 per year, $75,000 doesn't sound much higher if they are confused with this misunderstanding. Labor would do well to explain their policy with greater clarity.
When you refer to the top earners you are referring to those who work and pay tax at the top rate ..
the wealthy have no interest in super ...
yes please do explain Labors policy it means more votes for the coalition ...
Maybe not Pete. My son-in-law is a very high earner and happy to pay the tax rate he does. He has a strong social conscience and high integrity. Not all high earners are greedy.
Superannuation in Australia is crazy you save to compete with government not to get a pension . To stop you achieving this the Govt tax your savings at every step , To avoid this trap and look after your own affairs where you can save and increase your returns on your investments many are turning to self employment. And are arranging their own retirement.
This emerging worker profile is starting to become very big. And it's a demographic that doesn’t think or behave like traditional employees.
For example, the US survey shows that 86 per cent of self-employed workers are satisfied with their work. This is much higher than work satisfaction figures for those employed by others. Most self-employed workers understand and accept the challenges they face regarding uncertain income, job security and planning for retirement.
The bigger majority of self-employed workers want to continue working independently. While most data shows that they are an older demographic, this survey shows 21 per cent are below 32 years of age. What’s also emerging is that today’s self-employed are represented strongly in high skill sectors, debunking myths about the downtrodden, low-skilled worker being forced into self-employment.
In Australia 28 per cent of the private-sector workforce are self-employed. [NB: This is based on 2004 figures.1]
Of all businesses in Australia, 97% have between 1 and 19 people working in them.
Trade Union Membership
It's interesting to compare trade union membership to self-employment. In August 2011 13 per cent of workers in the private sector
ALMOST one-in-two super-fund members have lost or not claimed superannuation and are missing billions of dollars of retirement income.
A massive $19 billion in unclaimed super is wasting away in fund managers' accounts, churning up fees and administration costs, instead of being added to retirement savings.
A Westpac survey says 46 per cent of Australians are missing out on billions of dollars.
Westpac Bank executive Rob Coombe said yesterday that, in Victoria alone, there was almost $4.7 billion waiting to be claimed - including many millions in lost super from some of our poorest suburbs.
"So many people are missing out on money that is rightfully theirs and that could make a significant difference to their lives once they retire," he said.
Mr Coombe said the figures showed how much Australians had "lost touch with their own super".
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Assistant Treasurer and Superannuation Minister Bill Shorten said connecting people with their unclaimed super was a priority of the Federal Government.
The Victorian area with the largest amount of lost super includes the suburbs of Brandon Park, Glen Waverley and Wheelers Hill.
http://www.news.com.au/finance/superannuation/massive-19-billion-in-unclaimed-superannuation/story-e6frfmdi-1226083838944
My own Son involved in the construction industry lost wages to super contributions and has been informed their is no money left , all eaten up by fees ,
Super is a con on our lowest paid .. They loose wages to try and compete with govt on a pension which they will never achieve..
But they're battlers, right? Morrison says 70 per cent of them earn $80,000 a year or less. But there's a trick: the figures he quotes come from the Property Council, which has sourced them from Tax Office data on "taxable incomes".
Of course, negative gearers attempt to cut their taxable incomes to just below $80,000. Why wouldn't they? That is the point of the exercise. Anything above $80,000 faces a marginal tax rate of 37 cents in the dollar or more. Anything below faces 32.5 cents. A graph in the government's tax discussion paper shows an unusual bunching of taxable incomes just below $80,000.
Many manage to cut their taxable incomes much further. Astonishingly, one in every 12 tax filers reporting a taxable income of $10,000 or less claims a negative-gearing tax deduction. Given that no sane bank would lend to anyone whose income was really that low (especially for the purpose of losing money), it is a fair bet most earn much more.
Many are retirees, whose income from superannuation isn't counted as taxable income. Some are on an awful lot more than $10,000 a year.
And your point is?
Keep insulting the western suburbs, it will keep it voting Coalition .
2m in Super on your figures will give you a hundred grand a year . This of course assumes 2 per cent more than bank deposit rate . If you take Bank deposit rate it is only 60,000 a year . Doesn't even reach Labors decision of how much of my own money I have saved I can draw down .
Super in Australia is a con .