21st Apr 2016
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The Government’s plans to overhaul super revealed in leaked script
portrait of australian prime  minister malcolm turnbull

A leaked budget advertisement script that ‘mysteriously’ found its way into the hands of the media shows that big changes to how the Government plans to tax superannuation may be on the way.

The leaked script reveals the Coalition’s intentions to crack down on high-income super tax concessions, with the hope that it will raise four times the revenue of Labor’s policy.

Labor has promised to cut the income threshold from $300,000 to $250,000, affecting 110,000 Australian superannuants, but the Coalition, it would seem, plans to reduce the lower limit to $180,000 – a proposal that will see an extra 244,000 being taxed at a higher rate. 

The change, expected to be revealed in the 3 May Budget, is estimated to net around $2 billion per year, compared with Labor’s $500,000.

The lower threshold is scheduled to commence in June 2017 once the Abbott Government’s Temporary Budget Repair Levy comes to an end which, in theory, should ease the transition for high-income earners.

Prior to 2012, all super contributions made by employers were taxed at a flat rate of 15 per cent which was seen as a huge concession for high-income earners, but unfair for those on a lower income. Only those earning $300,000 or more were taxed at the higher rate of 30 per cent.

Treasurer Scott Morrison may also refine the caps on how much employees can contribute to their super. Currently, most taxpayers can make tax-free contributions for up to $30,000 per year, or $35,000 for those over 50 years of age. With the new budget, those caps could be reduced to around $20,000 per year.

According to the leaked script held by Sky News, the advertisement states, “New and important changes are happening to Australia's Tax and Super System. These will make the system fairer and continue driving economic growth. We need superannuation to be flexible enough to work for everyone – particularly those on a low income.” It is also reported by The Australian Financial Review that these advertisements are taxpayer funded.

When asked about this proposal, senior MPs disputed the figures but did not deny the plan. The Treasurer has also declined to comment until the Budget is revealed on 3 May.

Read more at www.skynews.com.au
Read more at The Age
Read more at www.news.com.au

Opinion: Half way to a fairer super system

The Government’s plans to increase taxes on the superannuation incomes of high earners is a step in the right direction, and entirely consistent with responses to the YourLifeChoices Budget 2016 survey but how it will make the system fairer for those on lower incomes remains to be seen.

Lowering the threshold to $180,000 is not such a bad idea, although anyone earning that amount per year is unlikely to require an Age Pension, so it will hardly relieve the financial pressure on, or demand for, the Age Pension anyway. In association with lowering the threshold, the Government may be better served by applying the same rate of tax to super contributions as those on wages.

Australia Institute senior economist Matt Grudnoff pretty much hits the nail on the head: “We know that the top 20 per cent of retirees are not claiming a pension,” he said. “Giving them a (tax) discount doesn’t help take the pressure off the pension in any way.”

If high earners are still taxed at a lower rate, it would seem it is not really helping anyone. They can still make contributions to their super that are taxed significantly less than they would be on their income tax rate. So increasing the concession to a 45 per cent tax rate may make more sense.

The current, and planned, tax concessions still allow for super to be used as a vehicle for estate planning and tax avoidance – something the Government staunchly claims it is trying to minimise.

Still, this would seem to be a step in the right direction. I wonder if it’s fair to speculate that this mysterious ‘leak’ was deliberate – intended to ‘feel out’ response to such a move, in order to better refine the plan?

But the part of this plan that needs to be reviewed is the lowering of the tax-free contribution cap from $30,000 PA for most taxpayers ($35,000 for those over 50) to $20,000 PA. Doesn’t this undermine the intended outcome of making the Age Pension more sustainable? If Australians, at the peak of their earning capacity, are thwarted from making significant contributions to their nest eggs, then won’t more people be reliant on the pension in the future?

Leaving the tax-free super contribution threshold untouched for Australians earning under, say, $120,000 per year, would seem a much wiser idea. Adjusting the caps for high earners would seem more reasonable, as they have the potential to save more over time anyway. Wouldn’t giving low earners, at the height of their capacity to earn, the opportunity to contribute more into their super then minimise their chances of having to be reliant on the Age Pension in the future?

What do you think of this leaked proposal? Do you think the leak was accidental or deliberate? Are these sound plans to protect the future of retirement incomes? Are they fair for all Australians? Do you think the Government is moving in the right direction? What would you suggest to make the system even fairer?

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    COMMENTS

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    OlderandWiser
    21st Apr 2016
    10:36am
    The cap should be a lifetime cap, so battlers who can't contribute much in tough years can make up for that if they have a windfall.
    The other ESSENTIAL reform is to change the rebate to 15c less than the taxpayer's marginal rate, so lower income earners get the most benefit instead of higher income earners getting more taxpayer help to build fat retirement funds.
    As usual, the government is ignoring common sense recommendations and fiddling at the edges, with policy changes that will achieve far too little.
    Fliss
    21st Apr 2016
    11:38am
    Rainy makes a great suggestion here - simply change the rebate to 15 cents less than the payer's marginal rate. Everyone would benefit by a set 15 cents rather than the current system - virtually no benefit for low income earners & a 30 cent benefit for high income earners.
    Farside
    21st Apr 2016
    1:05pm
    Two perfectly good ideas
    Scrivener
    21st Apr 2016
    2:10pm
    So why haven't one of the major parties adopted this quite brilliant strategy?
    Adrianus
    21st Apr 2016
    2:35pm
    I don't like it. We would be winding the clock back to yesterdays rules when a member could contribute $1m or more in a year. Superannuation was originally designed as a long term forced savings plan for retirement and I believe it should stay that way.
    GreyViper
    21st Apr 2016
    4:32pm
    Sorry Frank, but you couldn't contribute $1m as there is already limits on both before tax and after tax contributions which would prevent this. I think it is a great idea and we need to lower the limit for low income earners to give them some incentive to contribute more to their own retirement.
    Rainey, you mention "if they have a windfall". Well, I think this would be considered an after tax contribution and you can contribute $180,000 per year or $540,000 in 3 years so you would be able to make a large contribution if you had a windfall! :)

    https://www.ato.gov.au/Individuals/Super/Super-and-tax/Tax-on-contributions/
    Adrianus
    22nd Apr 2016
    7:17am
    GreyViper, I couldn't contribute $1m regardless of the rules but I have heard of others who did. I flexible lifetime cap on contributions would return us to that.
    Radish
    21st Apr 2016
    10:36am
    Not much point in speculating...wait for the Budget to be released in 13 days.
    KSS
    21st Apr 2016
    12:27pm
    Agree Radish.
    Adrianus
    21st Apr 2016
    1:03pm
    I'm lost with the tax free contributions? I thought contributions were concessionally taxed at 15%? below $30,000 or $35,000 based on age of member?
    KSS
    21st Apr 2016
    1:38pm
    Correct Frank AND that $30,000 or $35,000 also includes the employer contribution. So the amount of 'extra' super you can have the tax concession on actually decreases the more you earn (because the cap remains the same).

    After tax contributions have no limits BUT they will be tax free at the other end when you withdraw them after retirement.
    Adrianus
    21st Apr 2016
    2:18pm
    So KSS, what you are saying is that for a 55 yo worker on an income of say $250,000 having his employer contributing $23,750 in SGC leaving him a concessional contribution level of $11,250. Or $6,250 if we make him only 45 yo. I could be wrong but Undeducted / non- concessional contributions are maxed at $180,000?
    Retired Knowall
    21st Apr 2016
    3:04pm
    Wrong KSS, after tax contributions have a limit, see ATO web site for current limits.
    I believe its, $180K per year with a 3 year bring forward rule.
    KSS
    21st Apr 2016
    3:59pm
    Frank yes if you are making concessional contributions.

    And yes again to the max $180,000 non-concessional contribution and can bring forward 3 years worth. In my world, that is 'no limit' since I will never be able to do that:-( But I don't begrudge those that can.)
    Adrianus
    21st Apr 2016
    6:17pm
    Yes KSS, it may as well be unlimited for me as well. :)
    Jackie
    21st Apr 2016
    10:41am
    Need to wait to hear what they have in mind but because they are conservatives "with silver spoons up their arse" as Jacquie Lambie described them, you can be sure their aim wont genuinely be to improve fairness or the accounts of the bottom 80%. Theyve already made things worse with their drlay/cutting of the compulsory amount, and cutting the facility Labor had to co-contribute extra payments into super, by low income earners.
    Abby
    26th Apr 2016
    8:04pm
    Jacquie Lambie should not talk she is a user ... already on Army Pension and hopes to now get Politician's Pension.
    Kaz
    21st Apr 2016
    11:17am
    I'll believe it when I see it - but the devil is always in the detail.
    Lescol
    21st Apr 2016
    11:26am
    Yet another thought bubble to test public reaction. They are tiring and typical of when lacking ideas. I very much look forward to July 2.

    An idea I offer to both; cut the nonsense. Give all people of retirement age the full pension and tax all income in the normal way. Simple. This gets rid of the bureaucracy associated with monitoring the current ineffective system and puts everyone on an even footing. Also you are not punished for saving to supplement your retirement as is happening in the current political climate. cheers.
    Farside
    21st Apr 2016
    1:16pm
    in principle this is a great idea, heck it can even be extended to the idea of a social wage for all, Unfortunately, it is difficult for government to find the consolidated revenue to afford such largesse without wholesale changes to the income tax assessment act. This idea is much closer to the original intention for superannuation to supplement the pension, not as an alternative.

    21st Apr 2016
    12:02pm
    This Bozo would sell his mother for a few bucks.
    Farside
    21st Apr 2016
    1:22pm
    Bozo ... meaning what exactly in this context. You may disagree with his politics but I'm pretty confident a "bozo" he ain't. Maybe check a mirror to see who the real bozo is in this instance.
    particolor
    21st Apr 2016
    2:47pm
    BOZO ..According to a reliable sauce ! Seeing its not in the Dictionary ?
    Bozo...An Incompetent person, especially in New "Company's"
    Bozo's have a net negative effect on Morale & Profit ! :-) :-) And everyone knows it !!.... So there ! Exactly how its written ! Now how many of those facts apply here ?? :-)
    Anonymous
    22nd Apr 2016
    9:13am
    Brian, there you go, as particular said above. Brian, before you open your gob and let your verbal diahorrea flow please do a little research into what you are talking about. That way you "may" appear to be a little bit less of an arse, like what is in YOUR mirror.
    Adrianus
    22nd Apr 2016
    10:31am
    Brian, I'm sorry to say Fast Eddie wins this argument, simply on the high volume of examples. :)
    Anonymous
    22nd Apr 2016
    12:34pm
    Don't be sorry, Frank, a spade is a spade is a spade.
    AJ
    21st Apr 2016
    12:02pm
    Super Contributions where a trade off for pay rises in your hand many years ago with the view to build up an individual fund to take pressure off the age pension. That said there should be no tax on the gazetted amount that must be paid into super by your employer as this is law and you do not have access to this money until such time you retire. Any monies contributed to super over and above the gazetted amount should be taxed at the marginal rate one down from your true marginal rate. This give every one the incentive and for those on the lowest marginal rate they would pay no tax on additional contributions to super. I have just retired and will be casting my vote based on the proposed changes to super and pensions.
    Fact Checker
    21st Apr 2016
    12:36pm
    Dear Editor, the numbers do not appear correct in this article:

    "Labor has promised to cut the income threshold from $300,000 to $250,000, affecting 110,000 Australian superannuants, but the Coalition, it would seem, plans to reduce the lower limit to $180,000 – a proposal that will see an extra 244,000 being taxed at a higher rate.
    The change, expected to be revealed in the 3 May Budget, is estimated to net around $2 billion per year, compared with Labor’s $500,000."

    Labour: 110,000 x $5.00 = $550,000. I really do not think the Labour Party policy proposes to collect $5.00 from each wealthy individual. Perhaps $0.5 Billion not $0.5 Million??
    Adrianus
    21st Apr 2016
    1:11pm
    Fair Call! It could be that these leaks are from the Labor Party?
    Farside
    21st Apr 2016
    1:28pm
    or maybe the author just sucks at math and for him $2 billion is"four times the revenue of Labor’s policy."when he meant to write 4,000 times Labor's $500,000.
    leonYLC
    21st Apr 2016
    2:05pm
    Thanks for your comment Fact Checker. It’s great to receive feedback from our members, and we’re always happy to clear up any confusion that may come about from reading our articles.

    The subject of superannuation is always confusing and, although we try to make our articles as clear as possible, super would have to be one of the most difficult issues to relate to all Australians. In this instance in particular, if you check the figures, I am referring to the number of Australian superannuants who would be affected by Labor’s policy compared to the Coalition policy – not the dollar amount, but the number of people affected...

    I hope that makes it a bit clearer for you. And thanks again for your comment.
    jamesmn
    21st Apr 2016
    1:10pm
    it does not matter to turnball or his cronie mates they have that much money they don't care about the lower paid well just wait turnball you and Scott Morrison and that idiot health minister you have got the election will be a about face for you idiots.
    GreyViper
    21st Apr 2016
    5:02pm
    Hmmmm. Not really big on the capitals or punctuation here, are we? I think I have gathered from what you are saying here that the current members of the government DON'T CARE about the lower paid. Well, I think it's unfair to say that any politician from either side of the political spectrum "doesn't care" about their people. Unfortunately, they have other problems to contend with as well. I'm sure they'd all like to give every pensioner an extra $100 a week but they simply DON'T HAVE THE MONEY! So you go and vote for Bill Shorten and he will wave his magic wand and produce a huge bunch of money out of his ARSEnal of magic tricks and the world will be rosy and the birds will sing and the sun will shine every day.
    But lets not forget that a good part of the reason that we are in the trouble that we are currently in is because of the cash handouts that our dear friend Kevin '07 splashed around and still has to be payed back ...... PLUS INTEREST!!!
    Anonymous
    22nd Apr 2016
    5:45pm
    The Libs have run up 77 BILLION more in debt in the last 3 years because they don't want to raise taxes.

    A government only makes money through taxes.

    Pity the Libs have no clue about money either. - if they don't get taxes from somewhere - they then have to BORRROW money to pay their bills - BUT HEY - what's 77 BILLION between friends!

    They are both just as dopey as each other - except the Libs keep telling everyone how financially clever they are - and their faithful followers believe them.
    Adrianus
    21st Apr 2016
    1:30pm
    Labor's $50,000 proposed drop in the income threshold captures 110,000 with a tax saving of $500m.
    This represents an average of around $4,545 per contributor.
    Whilst the Government's drop of $120,000 in the income threshold captures 244,000 contributors and $2b in tax saved. This is an average of $8,196. These figures will disappoint some posters who have been railing against very high income earners taking advantage of the system, because what it does show is that the higher the income the less advantage is taken by the contributor. It also shows that the system is working.
    Rae
    21st Apr 2016
    2:41pm
    The highest earners have often formed a corporation or company or trust and simply don't worry about superannuation at all. Private business owners are not required to contribute to super.
    Even establishing a SIV in the Caymans is a option for these people. The 110 000 would be well advised to look into setting up a company and contracting their labour to the employer. Good luck to them I say Frank as they are in demand and their labour valuable. They are smart enough to avoid the government's changing schemes and lack of policy.
    Adrianus
    21st Apr 2016
    2:58pm
    Rae, only those private business owners who are self employed are not forced into super. A sole director for example is treated as an employee under the act and always has been. These SE people would do well to put something away for themselves. Of course many in the $250,000 plus would be Doctors. It wouldn't surprise me if they are contracting their labour to a service company. I think you're right the average worker is more affected by these constant changes over the years than the high earners who are more flexible in their arrangements. The Doctors have always supported Labor policy. It would not be in Labor's best interest to go lower than the $250k?
    MICK
    21st Apr 2016
    3:38pm
    As always Frank you poison the minds of readers by trying to pin all bad on Labor whilst ignoring the gross dishonesty of your LNP mates and the deceit where this government at every turn tries to overtax average people and send huge sums of money in the direction of the wealthy.

    I bow to your superior knowledge Rae. Maybe run a longer version of your spiel above to help those of us whose knowledge of how the rich get around the rules is not as good as yours. I for one will be all ears. Thanks.
    Wstaton
    21st Apr 2016
    6:10pm
    Gee Frank I wish I was a average worker on $180K
    Adrianus
    21st Apr 2016
    6:21pm
    Stop wishing and make yourself more valuable.
    FM
    21st Apr 2016
    1:32pm
    We need a much simpler system whereby people make a defined contribution so that everyone receives a contributory pension at retirement age or should I say that the contribution made is recognized as entitling people to a pension. Contributions beyond that go to people's additional superannuation whether by return on investment or via an allocated pension or annuity.
    With regard to taxation, much of the money that people are calling income is in fact redrawal of already taxed income. Tax concessions on current fund earnings were designed to compensate in a small part for the pensions this generation has foregone.
    It is reasonable to have limits on how much money can be held in super funds. There were limits and still are on before and after tax annual contributions. It was compulsory to have four trustees for self managed funds. The large fund values reported are often the pooled contributions of a number of people.
    In making a determination on fund limits we need to factor in inflation over a very long term.
    Why is Australia hounding its elderly day in day out? We boast that we were not affected by the GFC. It certainly has not affected anyone else’s salary. Our politicians have the highest politician’s salaries in the world. Yet when it comes to providing for the elderly Australia claims to be the most impoverished country in the world.
    It is not the obligation of retirees to pay for the pension for other retirees. It was and is the Government’s obligation to manage the contributions made for that purpose.
    Finally why does it matter what Simon Cowan thinks? Who is he representing? Developers, bankers pushing reverse mortgages, our ‘the pension is welfare’ Treasurer? He is right of the US Tea party as there everyone gets a pension.
    BElle
    21st Apr 2016
    2:09pm
    The only way we were able to invest for our retirement was to start investing about 15 years before we were made redundant and sent into early retirement. Superannuation is not an investment strategy. We do not have superannuation as it was totally inadequate to retire on. Our investments have been made with a professional Stock Broker. Forget Financial Planners, they are only interested in how much they will make on any dealer they suggest. It's true of any financial professional that they will ensure their own income, but an ethical Stock broking firm will be far and away preferable to a poorly qualified financial planner.
    MICK
    21st Apr 2016
    3:41pm
    I sort of agree. Superannuation is a so-so investment strategy and more a tax avoidance industry for the well off.
    Only good thing about super is that it takes money out of the hands of those who have no self control and will spend it on toys and fun. We all know what the complaint is at the end of working life.
    GreyViper
    21st Apr 2016
    5:24pm
    Sorry Belle, I can't agree. I have a self managed superannuation fund and any investment that you can make I can make the same within my superannuation fund. Cash, term deposits, shares, direct property, property funds, etc but with the added benefit that you only pay 15% tax going in and once you reach 60, providing you take a regular pension as defined by the rules all earnings within the fund are tax free. I bet you can't do that with your investments through a professional stock broker.
    One thing you said is right. Superannuation is not an investment strategy. It is a tool that you can use for making other investment strategies more tax effective.
    e.g. If you put money in a term deposit you will lose a part of the earnings to tax at your marginal rate, what ever that may be. If you hold the same term deposit inside super you will pay only 15% tax on the earnings unless you are over 60 and then the earnings are TAX FREE! Also I have contributed to superannuation for over 40 years so it is important to start early to take advantage of growth over time. Not much help to most people here, I know.
    Adrianus
    22nd Apr 2016
    7:50am
    GreyViper it depends on the economies of scale. The levels of investment and the level of income.
    BElle has a point because if BElle is getting full franking credits from shareholdings BElle has the advantage of the personal income tax regime which allows a tax free threshold then progresses through the marginal rates. Whereas your super fund pays 15% tax on every dollar of income.
    I still cannot get my head around why the Hawke government introduced the 15% income tax on Super funds? I guess he and his union mates saw it coming out of the employer contribution? Who knows really? It really did disadvantage the battler.
    I know others on here want it raised.
    I would like to see it abolished but you know as well as I do how rare it is for a government to abolish a tax. Only one side of parliament abolishes taxes while the other side introduces them.
    GreyViper
    22nd Apr 2016
    12:32pm
    Frank, I hear what you are saying. In my case most of my super is in pension phase so my tax rate (I'm over 60) is 0%. Also I assume that if you are in accumulation phase then you are probably still working and so the earnings of your investments are added on top of your normal income and are therefore taxed at your TOP marginal rate. I guess if you only have a low income or no income other than your investments then your tax rate would be LOWER outside of superannuation until you reach 60. It gets very complicated, doesn't it?
    As you say, it is strange that Hawke did introduce the 15% tax rate as it is counterproductive, especially for the low income earners/battlers. Perhaps we need a tax free threshold for superannuation accounts and then maybe a tiered rate of tax but it does start to become even more complicated, doesn't it?
    Tomaso
    21st Apr 2016
    2:50pm
    We are being taxed to death plus, ALL of us, but they pollies are all secure for the rest of their lives, disgusting, will it never end, they are all useless greedy parasites....
    MICK
    21st Apr 2016
    3:42pm
    You will be if you vote back the current bunch. Especially if they have the senate. What has failed them in the past 2 years will then be a done deal.
    Retired Knowall
    21st Apr 2016
    3:01pm
    This plan is only tinkering around the edges.
    Account earnings within Super are no different to earnings from Property, Bank Accounts, Shares and employment.
    The earnings should be taxed the same, if the account has a bad year then no tax would be paid, but in most years super accounts have earned very good returns.
    Those with multi million $$$ accounts would either pay up or move their capital, but the result would be Multi Billion $$$ return.
    MICK
    21st Apr 2016
    3:10pm
    As always the devil will be in the detail. I wait to see what is offered and what outs appear. At this stage information from the Murdoch rags may not be factual anyway given the history of what passes as news from this organisation.
    If Turnbull and his cronies start talking about bringing such changes in 'AFTER THE ELECTION' I suggest voters remember the Paid Parental Leave Scheme, and this is just for starters.

    Leon: Applying the same rate of tax to super as wages will have the result of people not putting money into super. Why would they. Better to offer some incentive, say a 10% discount to their appropriate (top) marginal rate.
    I agree with you to leave average workers thresholds alone. Ultimately I am not sure what benefits super prived over the pension anyway. You subsidise super...which costs. So why not just pay the pension and let people save for top-ups with superannuation which are limited to a small amount? Rich people will of course make their own arrangements. Always do.
    KSS
    21st Apr 2016
    4:01pm
    "So why not just pay the pension and let people save for top-ups with superannuation which are limited to a small amount?"

    So save a 'small' amount and spend the rest? Define 'small amount'.
    MICK
    21st Apr 2016
    5:11pm
    How long is a piece of string? Small is a relative term and depends on a person's wealth. To be set by community consultation. But if a pension is going to be paid this may be as little as $100,000. You are asking the wrong person though.
    Mike
    21st Apr 2016
    3:32pm
    Russia sold Alaska to the US for a measly $12m and became the worlds laughing stock, Scott Morrison sold a hugh chunk of Australia to the Chinese, our biggest dairy, plus our biggest cattle station. plus other hugh chunks of farmland. Our kids cant afford to buy a house because of Chinese investment buying. This is all one way, we will get no benefit, all our food production will go of shore to China. WHAT WILL OUR KIDS EAT. Hockey called disabled rorters whilst he himself together with his cronies was RORTING the travel allowance. Bronwyn Bishop was filling her pockets as fast as she could and was protected by Abbott and Christopher Pyne. 560000 retires affected by changes to assets test, after working hard and saving all working their lives have vowed NEVER to vote for the BLASTED Liberals ever again. Why would anyone ever vote for those Liberals ever again.
    Retired Knowall
    21st Apr 2016
    4:06pm
    The Dairy was owned by the Kiwi's.
    Play Fairly
    21st Apr 2016
    10:54pm
    Mike, you are absolutely right about everything you have said. Also, 'Retired Knowall', you may not be aware, but there are several Victorian dairy farms that have been purchased by Chinese entities. Also, Tasmania's largest dairy producer (Van Diemens) has been sold to the Chinese. These purchases are SOLELY for supplying milk to China. Also, a Chinese enterprise is building a factory to produce powdered milk....also to send back to China. How has all this been allowed to happen??? I bet our stupid leaders have welcomed this with open arms, and have probably even allowed the Chinese companies to bring in their own labour force from China. Nobody is too worried about the reduced supply of milk available in Australia for Australian consumption. I think we should be.

    Same goes with the sale of the Kidman stations. If the sale goes ahead to the Chinese, all beef produced is for supplying the Chinese market.
    Live cattle overseas exports out of Northern Australia, combined with drought, have already caused cattle shortages and high prices on the domestic market. Selling the Kidman stations will see the overall cattle supply for our own consumption decrease further, and even higher beef prices for Australian families.
    Retired Knowall
    22nd Apr 2016
    10:11am
    If you had a property or an enterprise and put it up for sale, would accept a lower offer from an Australian bidder because the highest offer was from China?
    Play Fairly
    22nd Apr 2016
    2:49pm
    'Retired Knowall' NO WAY IN THE WORLD would I sell a vast parcel of productive Australian grazing land to a foreign entity, who intend to export all beef produced back home to their own country. Beef shortages on our domestic market are already occurring. Live cattle exports and droughts have caused this. Further shortages = further price increases for beef. Don't know about you, but most Australians enjoy a good steak. I don't fancy paying a fortune for mine.

    However, my main reason for not wanting to see the Kidman stations sold to foreign interests is that our diggers fought and gave their lives to keep Australia for Australians.
    Adrianus
    22nd Apr 2016
    3:01pm
    Play Fairly, you realise that China has abandoned the one child policy? It will take no time at all for their population to get out of hand. Who is going to feed them? If a business owner in Australia is sick and tired of drowning under a mountain of red and green tape surely he is allowed to sell up?!
    If not to the Chinese then to whom?
    Best to get a dollar for it now rather than have it taken from you later when hunger rules over logic.
    The Diggers would be the first to offer food to other nations.
    GreyViper
    21st Apr 2016
    4:22pm
    Leon,
    You say "Currently, most taxpayers can make tax-free contributions for up to $30,000 per year, or $35,000 for those over 50 years of age. With the new budget, those caps could be reduced to around $20,000 per year." Correct me if I'm wrong but there is no such thing as "tax free" contributions. All contributions are taxed at 15% going into the fund. That was certainly the case when I was contributing to my super a few years ago. At that stage the contributions limit was $100,000 if you were over 50 and in my last few years of employment I was contributing nearly all of my salary to super to build up my pool in superannuation for my retirement. I am now a self funded retiree.
    I think the figure of $20,000 per year is ridiculously low. If you work for 40 years you will only be able to contribute $800,000 and at today's low interest rates that is way too low to sustain a decent standard of living in retirement. It should be much higher, especially for higher income earners. I also think that a tiered rate of tax dependent on your income would be a good idea and for low income earners perhaps no tax to be paid to try and encourage them to contribute to their own retirement.
    Retired Knowall
    21st Apr 2016
    5:08pm
    Only concessional contributions are taxed at 15% at this time.
    Non concessional or After Tax contributions do not attract an additional contribution tax.
    I agree that the concessional figure is too low, it should be lifted to around $50k and taxed at a higher rate (30%) on contribution.
    Also account earnings should be taxed the same as any other investment, some may argue that the rate should be lower, but taxed never the less.
    Super is not the preferred investment vehicle for the super rich even though it has been used extensively due to past lax rules.
    Due to increased Sovereign Risk I believe capital will flow increasingly from present funds.
    MICK
    21st Apr 2016
    5:14pm
    I am sort of agreeing with you Knowall. Some common sense which ends the feeding frenzy from the big end of town.
    GreyViper
    21st Apr 2016
    5:32pm
    Thanks Retired Knowall for that correction. I was referring to concessional contributions which are the ones that the $30,000 and $35,000 limits capply to but I did say ALL. My error. :)
    Rodent
    21st Apr 2016
    5:13pm
    For all those who may not understand the Super Contributions Tax rules, one of the best sources of info is - Super Guide, by Trish Power. There are multiple articles on these subjects, Don't forget that Super Contribution caps include the Employer Contributions, ie the current 9.5% of the Employees behalf
    Lescol
    21st Apr 2016
    5:20pm
    Yet again we are involved in a silly matter. A better solution - cut the nonsense. Give all people of retirement age the full pension and tax all income in the normal way. Simple. This gets rid of the bureaucracy associated with monitoring the current ineffective system and puts everyone on an even footing. Also you are not punished for saving to supplement your retirement as is happening in the current political climate. cheers
    MICK
    21st Apr 2016
    9:14pm
    Agree.
    Lescol
    21st Apr 2016
    5:20pm
    Yet again we are involved in a silly matter. A better solution - cut the nonsense. Give all people of retirement age the full pension and tax all income in the normal way. Simple. This gets rid of the bureaucracy associated with monitoring the current ineffective system and puts everyone on an even footing. Also you are not punished for saving to supplement your retirement as is happening in the current political climate. cheers
    Retired Knowall
    22nd Apr 2016
    10:14am
    You are half way there Lescol,you need to include Assets into the mix.
    OlderandWiser
    22nd Apr 2016
    10:14pm
    Not sure what you mean by ''need to include Assets in the mix'', but the assets test is the problem. It's punishing savers and responsible planners and discouraging moves toward self-sufficiency. It's ridiculously illogical and economically destructive!

    Means test income if we must, but don't punish people for saving. That's idiotic! Many assets don't return well and some are not saleable in the current environment, so people can be left with no income to live on, nothing to sell to release capital, and therefore living in poverty. People who went without to save are worse off than pensioners, and gaining zero benefit for all their years of sacrifice - which provides a powerful disincentive for younger Australians to plan and save for old age. The current system also encourages over-investment in housing, thus adding heat to an already overheated property market and giving retirees yet another avenue to exploit the pension system despite having substantial personal wealth.

    If income were tested, deemed income were included where money is deliberately locked up to escape an income test, and there were education and support programs implemented to help retirees invest more wisely, but the assets test was abolished, the pension bill could start to fall as there would be solid incentives for people to build personal wealth and move toward self-sufficiency. As it is, a THOROUGHLY STUPID change to the taper rate now offers people who are earning maybe 5% or much less on their savings a 7.8%+ reward for reducing their savings. How DUMB can you get?

    Lescol's proposal makes good sense. Pay everyone the same pension and then tax income in the normal way. There would be massive savings on administration, no incentives to cheat or circumvent provisions intended to restrict pensions to the needy, no disincentives to saving and building wealth, and adequate revenue from taxation. The other option is abolish the assets test and test income only, with deeming provisions to stop people deliberately investing in non-returning assets.

    The bottom line is that the nation gets wealthier when it's people get wealthier. You can't improve the nation's balance sheet by driving retirees into hardship and sending a message to the populace to STOP SAVING. Our pension bill will skyrocket, because people are being rewarded richly for reducing their wealth and increasing dependency. Sadly, the idiots in power are too brain-dead to understand that concept.
    Old Man
    21st Apr 2016
    5:55pm
    Ho Hum..............this is a tactic that has been around for decades. Carefully leak what is in the budget to gauge opinion and if it works, leave it in. If there is too big an outcry, leave it out. The other tactic is to leak that an excise on say, tobacco or alcohol, will increase by 45% but the actual figure is to be 25%. Instead of bitching about a 25% increase, we all agree that there has been a 20% reduction.

    I agree with Radish(WA) that we should settle back, watch the lies from whoever is speaking at the time, ride out the scare tactics and wait for the actual numbers to be released. Those numbers will either be good or bad depending on how you vote or which newspaper you read. My cynicism has taken many years to get to this stage.
    Lescol
    21st Apr 2016
    6:16pm
    No, we definitely can not accept rumors. Instead, say 'no' - that not acceptable! Only. all people of retirement age receive the full pension and tax all income in the normal way. Simple. cheers.
    Pamiea
    21st Apr 2016
    7:37pm
    A corrupt government. Why dont they stop family trust rorts. We all know the kids dont get the money. Stop all money and benefits for politicians once they retire. If they haven't earnt enough during their working life tough titties. Anyone who votes Liberal needs their head read - seriously!!
    MICK
    21st Apr 2016
    9:16pm
    Certainly true with the current batch of rats.
    Not Senile Yet!
    22nd Apr 2016
    4:24am
    They raided the Billions held in trust to supplement the Aged Pension payments for the Baby Boomers.....and built a Big New Parliament House in Canberra!!!
    Now they plead poor.....really?????
    Super is a complete waste.....as the Government keeps changing the rules....complicating it even further!!!
    It was never suposed to be taxed at all.
    Now the tax concessions favour the wealthy....who never claim a pension anyway????
    Just used to dodge paying tax!
    Get rid of ALL tax concessions and get rid of all tax on Super!
    Retired Knowall
    22nd Apr 2016
    10:26am
    Can't agree, you need to tax the earnings of Super accounts in the pension phase.
    Imagine a Super account with over $2M in a balanced account earning say 6%, that would be $120,000.
    If you tax everything over say $80,000 at 30%, that would raise $12K,and leave the account holder with an $108K, which is more than what's considered a comfortable amount.
    Adrianus
    22nd Apr 2016
    11:21am
    Retired Knowall given your assumptive example, yes $108k does sound like a high income and the member balance of $2m does sound high and maybe it's an easy target. But consider that additional taxes on retirees will get them onto welfare much faster. As is the case with your example with your member, assuming he is 60, being on a full aged pension by his late 70s and totally dependent on welfare in his early 80s.
    Your $108k of income in the first year sounds high but it has already depleted the capital by $50k (assumed 2.5% CPI).
    Having no tax in pension phase is a valuable incentive which helps keep the welfare bill down.
    Retired Knowall
    22nd Apr 2016
    1:19pm
    By my calculations the above account would have grown by $77K by the time the recipient was 70 based on minimum drawndown of 5% and a growth of 6%.
    Remember tax would only be applied to the earnings over $80K and if the account had a bad year and only made 80K, no tax would be payable.
    In fact using my rubbery example figures, by the time the recipient is 80 the account balance with the minimum drawdown would be $2.035M with an income of $142,495 paying only $12.642K tax.
    These calculations are only one example, the tax rate, and earnings ceiling are just a suggestion and don't include inflation adjustments.
    My calc only went to an age of 87 where the account had reduced to $1,678,675.7,
    Retired Knowall
    23rd Apr 2016
    8:16am
    Mosy account holders aged 65 and over are in pension phase, with a substantial part of their income derived from their superannuation. Incomes of those who are relying on superannuation in retirement are generally below
    $80,000 a year (and often well below this amount). Only retired individuals with more than $1.5 million in
    superannuation have an income of more than $100,000 a year.
    A relatively small number of retirees receive superannuation income streams in excess of $300,000 a year with some retirees receiving multi-million dollar income streams tax free
    At this time, most high account balances are in self-managed superannuation funds (SMSFs) and many are
    in pension mode. In 2012-13 the 24,000 retired members with account balances in excess of $2 million
    received around $5.2 billion in income stream payments. A further 51,700 retired members with account
    balances between $1 million and $2 million received around $4.9 billion in payments. The totals above are a
    small portion when you compare the 232,000 retired members with account balances below $1 million who
    received a total of $8.9 billion in income stream payments. Income streams approaching or in excess of $1
    million a year appear to be more related to tax planning and estate planning than for reasonable retirement
    expenditure needs.
    Adrianus
    23rd Apr 2016
    8:51am
    Those figures are interesting Retired Knowall. I understand your point in relation to the application of an additional tax on high fund income. I have seen so many changes to the rules over the years and these changes almost always cost in the way of increased administration. That may not concern a SMSF with less than 4 members but what about the big master trusts and Industry funds? Rather than have a new tax, I would like to see the churning of super dollars stopped. The only way I can think of stopping this is to tighten the definition of "gainfully employed." Anyone can grab a lawnmower or clock on at the office to pick up Director's fees in order to substantiate enough income to prove the required minimum hours personal exertion per month.
    Rather than add more taxes why not massage the rules to return to the "sole purpose test?"
    Retired Knowall
    23rd Apr 2016
    10:55am
    Yes I agree, that's another option, but whatever outcome they choose the aim should be as follows:
    1) Income earnings in Super above a comfortable level should be taxed at an appropriate rate.
    2) The extra government income should be applied to assist low income earners to boost their retirement income.
    3) Modify the education curriculum to include Financial Planning to empower the next generation to make sound financial decisions and change the current attitudes towards pensions. The goal of everyone should be to become self funded.
    Bonny
    23rd Apr 2016
    7:15pm
    Statistics can be very misleading. You don't need to have $1.5 million in a super fund to have an income of over $80,000. I was shown a SMSF with $500,000 balance that generated $125,000 income for the year.
    Retired Knowall
    23rd Apr 2016
    8:08pm
    Your $500,000 SMSF would need to return 25% to get that return, not out of the question, but not normal.
    The average high growth return over the last 10 years is around 8.5% annualised.
    But this is my point exactly, in your case the SMSF would be taxed at earnings over $80,000 in the pension phase.
    BTW you have stated in comments below that $20,000 PA over 50 years only generates a balance of 1 Million, your SMSF would have generated a balance of over 12 Million using a rate of 8.5% average growth.
    Basic maths don't lie.
    OlderandWiser
    22nd Apr 2016
    10:15pm
    I understand Morrison has confirmed that superannuation tax changes are 'definitely not happening''. Interesting how the rumour mill works, and sometimes doesn't!
    Bonny
    23rd Apr 2016
    9:50am
    Biggest problem here is that $20,000 pa over 50 years is only $1 million. $1 million in fifty years time is not going to provide much a of retirement. Even $30,000 over 50 years is $1.5 million. Not too sure I'd like to only have $1.5 million in 50 years to fund my retirement either. That idea to limit super to $20,000 is a very stupid decision.

    As I have said many times the rich people I know do not invest in super like other people do.
    Adrianus
    23rd Apr 2016
    10:29am
    Bonny, I just did a quick calculation.
    A 21yo with no fund balance, on the average wage contributes $20,000 pa and retires at 67 with a balance of $868,000. Assumes earnings at 5.7% less fees and taxes, no life insurance costs.
    Assumes CPI at 2.5% and rise in living standard at 1.5%pa.
    Projections over a long term are suspect but if this is the case then todays 21yo hard worker/saver is going to qualify for a full age pension. Given these circumstances being a possibility, in all probability there will be no aged pension. We simply will not be able to afford it!
    It is stupid to stifle the wealth creation ability of our young people. Especially when you consider that we also expect the youth of today to support todays aged. Now some posters want them to support not only todays aged but themselves by tying one hand behind their back.
    Retired Knowall
    23rd Apr 2016
    11:04am
    Bonny you are forgetting the magic of compound interest. Apply 5.5% growth and see what you get.
    Retired Knowall
    23rd Apr 2016
    6:47pm
    You too Frank have forgotten the magic of compound interest. Applying the average growth in a Capital Stable account over your time frame would provide an account balance of over $4.5M.
    The only problem is getting the young to contribute to Super, particularly if they are low paid. Thats where the Govt. needs to support the low income earners by raising the Tax Free threshhold and ensure the savings are invested into a National Super Scheme
    Bonny
    23rd Apr 2016
    7:06pm
    After fees, tax and inflation 5.5% growth would not have much magic and certainly no where near $4.5 million account balance at retirement.

    I have told my kids not to put any extra into super but to invest there money elsewhere as the golden age of super has well and truely tarnished.

    I would prefer to pay a bit more tax then invest in super today.
    Retired Knowall
    23rd Apr 2016
    7:58pm
    Your original comment that puts the figure at $1M over 50 years, just highlights your ignorance of basic maths and basic financial principals.
    $20K / PA over 50 years at 5.5% growth after fees and taxes (average Capital Stable return over the last 10 years) will return $4,648,672.5
    Do the maths, it's not that hard, get your kids to show you.
    Adrianus
    23rd Apr 2016
    8:49pm
    RK,
    "Applying the average growth in a Capital Stable account over your time frame would provide an account balance of over $4.5M." I don't doubt that.
    You are correct regarding the $4.5m. I should have been clearer.
    My calculation includes many variables :)
    Including fees, CPI, cost of living increases, taxes, growth rate. It also converts the actual dollar amount back to the value of today. This is important to know if we are asking a 21yo to save for his own retirement while he is paying for the retirement of our generation.
    So while $20,000 pa of contributions may sound like a lot it is the equivalent of a 67 yo retiring today with $868,000.
    At that level of contribution they will need to do a lot better than 5.7%. With that in mind we need to continue with the current level of concessional contributions at $30,000 with a view to increases at the CPI rate.
    Retired Knowall
    24th Apr 2016
    8:05am
    You are right Frank, based on our calculations the Govt. needs to have the courage to do the following.
    - Increase the Tax Free thresh hold to $35,000.
    - Capture the increased disposable income of low income workers and apply it to a National Super Scheme.
    - Tax the Super Income of High Earning accounts from a level (say $85K)which is considered a comfortable level. Remember most high income earners have an average of only 40% of their disposable assets in Super.
    - Change the education syllabus to include sound Financial Management to enable future generations to be able to better handle their affairs. It's too late for the Baby Boomer's that haven't prepared. There needs to be a total psychological shift from the Welfare mentality we have created.
    I doubt this will happen as we have a political system that is self centred and approaching the morally bankrupt USA system.
    The only thing the average person can do is Play By The Rules at any point in time to ensure you are ahead of the game.
    Bonny
    24th Apr 2016
    2:45pm
    I did do the maths and you are right if the 5.5% growth is after taxes etc but if the growth is 5.5% before taxes etc then there is not much magic.

    However what is the present value of $4,648,672 in 50 years time? That depends on what inflation rate we have over next 50 years. There would have to be relative low inflation for it's present value to be any where near the $1 million level. Therefore $20,000 pa is not going to be enough for most people to live well in retirement.
    Retired Knowall
    25th Apr 2016
    1:01pm
    You really need to get yourself educated Bonny, if you intend to post comments as it just demonstrates your ignorance of basic financial principals. Inflation affects Both Income and Expenditure so in 10 years income may double and so should the contribution as a percentage of income to Super.
    Keep your money out of Super, the Govt needs all the help it can get.
    Chris B T
    25th Apr 2016
    8:50am
    The Government wants greater control and taxing of superanuation.
    My Question is Why Isn't Super included in the Governments Guarantee of savings, like with the Banking sector even though it is only $250k per deposit in savings.
    Seems to be a cash "Cow" situation.
    Make it more fairer by changing the Back-To-Front benifets as it is now as stated by many.
    Not Senile Yet!
    26th Apr 2016
    1:50pm
    People who earn more than $100,000 do not need a tax concession for their Super.
    It should only be applied to those who earn less than $100,000......as they are the ones who need it!!!!!
    As for the rest of Super....the same rules should apply to ALL Superannuation.....regardless of fund or Profession....and that includes our MP,s!
    Lump Sum payouts should also be restricted to those that are ILL or DISABLED and can no longer work!
    All other Super including SMF SUPER should have the same rules and kept to Retirement.....then paid as an Annuity Only.....with exceptions allowed to pay down debt or Mortgage!
    SUPER should Tax Free after Retirement whether on a Pension or Not!
    Retired Knowall
    26th Apr 2016
    5:00pm
    So you're happy with someone paying no tax on their Super annual payout of $300K ?


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