Has the time come to tax retirement investment income?

A possible hit to retirement income earnings in Budget 2016/17 may affect you.

Calculator showing tax free for retirement investments

In the fourth of a series of articles focusing on possible changes to retirement income policy in the Federal Budget 2016/17, we consider the possible changes to tax on investment earnings.

The current rule
Currently there is no tax on investment earnings from post-retirement assets. 

Suggested changes
Both the Financial Services Inquiry (FSI), also called the Murray Report, and the Grattan Institute have suggested that a tax rate of 15 per cent on investment earnings be introduced, but that amount of tax payable should be offset by the application of dividend imputation. The Labor Party policy recommends a tax-free threshold of up to $75,000 in earnings, should a tax of 15 per cent would be introduced. This would match the 15 per cent tax in the accumulation phase of superannuation. See examples of how this might affect individuals. 

Opinion
It seems fair to maintain a no-tax environment for those living off their savings in retirement – up to a certain level. We often quote the Association of Superannuation Funds Australia (ASFA) Retirement Standard – $59,236 for a couple and $43,184 for a single – as the suggested minimum amounts required per annum to lead a comfortable life in retirement. The ASFA standard, however, is fast becoming an inaccurate measure when we factor in the average $55,000 worth of debt (often mortgages) that those aged between 60 and 69 are now carrying into retirement. Using an interest rate of 5.5 per cent, this adds about $3000 per annum to the amount needed to lead a ‘comfortable’ life and to cover average housing debts. If this amount is credit card debt, then the sums are higher and more is needed.

So it is fair to suggest that one will need about $62,236 as a couple or $46,184 as a single to lead a dignified and enjoyable retirement. It is on the basis of these amounts that we believe post retirement assets under the $75,000 threshold suggested by the Labor Party, should remain tax free. This gives all Australians sufficient leeway to protect their savings and have enough income to fund a comfortable retirement, which includes the need to service an average amount of debt for their age and stage.

Above the suggested $75,000 investment earnings per annum threshold, a 15 per cent tax seems fair, with an offset of dividend imputation.

And the real upside is that in 10 years’ time, this could be earning the Government $9.2 billion to offset increases in services needed by older Australians – there’s not much not to like about that, is there?

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    What do you think? Is no tax on retirement investment earnings fair? Or are there those who can afford to pay at least a little? And if so, where would you set the bar?





    COMMENTS

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    31st Mar 2016
    10:12am
    I think it's fair to tax retirement incomes over $75,000 pa, provided that threshold is properly indexed and the way it's calculated is fair (i.e. management and accounting costs are deductible etc. as well as any incidental costs incurred in earning income)

    I think this change should go hand-in-hand with a total rethink of the seriously flawed assets test for the pension. Instead of the usual government approach of making one careless change without consideration of the full impact, it would be good to see the government use the opportunity to review the entire system and make it fairer and more economically sustainable, while retaining sensible incentives for people to do what is in the nation's best interests - rather than punishing those who save and rewarding the less responsible and honest.
    Happy cyclist
    31st Mar 2016
    11:15am
    I agree with you Rainey, I too think taxing retirement incomes over $75,000 is more than fair and I mostly agree with your other comments.

    But I would like to say that not all people who haven't managed to save for retirement are less responsible or less honest. Many people have just not had the lucky breaks in life that the rest of us have had. Some will say that we make our own luck, and to an extent that is true, but others are saddled with bad health or other problems which mean it is very hard to get ahead. There will always be people who need that extra bit of attention from the government and I hope they will always be included in the good life that most of us enjoy in this country.
    Anonymous
    31st Mar 2016
    1:21pm
    IF taxing retirement income of and over $75,000 p.a. means NOT taxing lesser p.a. retirement incomes I, too, would not be against it. Your figures above for an enjoyable and dignified retirement income are more than generous for both singles and couples. BUT, if legislated, we don't want this to be taken advantage of by the government and have the threshold lowered in the future, AND we know by past government sly, sneaky, hypocritical, stunts that this manoeuvre can very easily take place. Once the foot is in the door the house is easily invaded.
    Anonymous
    31st Mar 2016
    4:04pm
    Happy cyclist, I'm absolutely agree that not all who haven't managed to save for retirement are less responsible or less honest. Neither are all who DID save for retirement necessarily in any way more fortunate than those who didn't. For my part, I battled hideous disadvantage, lack of education and skills, ill health, spouse ill health, a special needs child who cost a fortune, and many other setbacks. But I still saved, by working two and three jobs, growing vegetables, eating basic foods, making and improvising and going without. No lucky breaks! Quite the opposite, in fact! And I guess that's why I am so resentful of being forced to now either drain my savings away to live, or get by on about half the aged pension rate.

    I'd be first to offer to sacrifice a little for those in genuine need through no fault of their own, but the majority of pensioners were far, far better off in their working life than I was and had far more luck and opportunity. And the system favours those who manipulated their affairs or spent freely - not the really needy.

    I certainly support a better deal for the genuinely needy - even if some of them are needy through their own overspending. But I DO NOT accept that someone should be punished for saving and denied the right to now enjoy a higher standard of living than those who didn't. Yes, Fast Eddie, a tax on retirement incomes over $75,000 is fair enough, but we MUST see a change of attitude towards retirees that affords them security and confidence.
    MacI
    1st Apr 2016
    11:05am
    While I agree in principle that Super earnings over a certain amount should be taxed I think Labor is pulling the wool over our eyes to a significant extent. It suits their purposes to set this up as something that only affects the rich but give consideration to the fact that the income of people’s super fund accounts can vary dramatically from year to year depending on the performance of their fund. Labor assumes, simplistically, that the $75,000 earnings will be generated by an account of $1.5 million yielding a 5 per cent return and this will affect 60,000 people. Fund earnings vary significantly from year to year depending on market conditions.

    In years when funds perform better (such as the 15 per cent return achieved in 2012 as share markets rose after the GFC), more people will be caught. In such a good year for returns balances of as low as $500,000 would be caught, drawing up to 420,000 people into the tax net.

    There are many contributors to this forum who have railed against the change to the Aged Pension Assets as it cuts out the Aged Pension for a couple at around $825K. Well I won't be holding my breath waiting for Labor to rescind this change so many of us with Super balances well below $1.5M will be affected by both changes.
    old-age worker
    31st Mar 2016
    10:37am
    Nicely put, Rainey.
    And if I may add:
    Make the changes understandable. Explain how it will affect us and the future retirees.
    Stop this BS of hiding the ACTUAL effects behind Used Car Salesman speak!
    Mez
    31st Mar 2016
    3:22pm
    Fully agree with your statement as well as the preceding ones.
    Rainey is always so sensible and level headed with his opinions and which I value especially where finance is concerned.
    Toddy
    31st Mar 2016
    10:54am
    Private super funds have to last for the rest of your life. Some years one might earn a high interest return and in other years you have a negative return. I bet that there will be no offset for the negative return ! Over 5-10 years the average return will amount to far less than $750000 per annum. Once taxed,however ,this will severly affect the long term viability of the fund and yes,more people will become reliant on the aged pension. Toddy
    Richied
    31st Mar 2016
    12:26pm
    Good point.

    If superannuation was treated in the same way as a business, a person could carry over a loss from one year to the next, and claim a tax deduction on that loss.
    Anonymous
    31st Mar 2016
    4:05pm
    Valid point,Toddy. There should certainly be scope to average incomes and carry forward losses.
    vincent
    31st Mar 2016
    11:15am
    Cut the nonsense. Give all people of retirement age the full pension and tax all income in the normal way. Include the hidden benefits as income as well ie people setting up structures to avoid showing assets or income. This gets rid of the bureaucracy associated with monitoring the current ineffective system and put everyone on an even footing. Also you are not punished for saving to fund your retirement as is happening in the current political climate
    Happy cyclist
    31st Mar 2016
    1:38pm
    Vincent, your comments make a lot of sense to me. Lets try it!
    Lescol
    31st Mar 2016
    1:40pm
    Finally a breathe of fresh air!! Thank you Vincent and I agree with you completely. This will happen and it is long overdue. cheers
    Anonymous
    31st Mar 2016
    4:06pm
    Yes, Vincent. There's a lot of merit in that idea. I'd support it. Certainly we need to restore the incentive to save.
    Oldman Roo
    31st Mar 2016
    4:58pm
    Vincent , I fully support your comments and would like to add that our Government is too blind to realize just to what level investment and the economy would increase if the aged did not have to worry about how to divest themselves of savings or taking negative measures in order to qualify for a part Pension . The aged are also the very people with a lifetime of experience and would be the wiser people in selecting successful or safe investments , eventually benefiting the economy and allowing our Parliamentarians to continue with their life of splendour .
    adbob
    31st Mar 2016
    9:36pm
    That's far too sensible - it's too similar to what every other developed country except this one (if you count it as developed) does.

    Also Australia would lose its reputation as a tax haven for the rich - also a sponger's paradise - but that's by the way.

    How things change. Australia used to be called a working man's paradise - that was before women usually worked so no sexism intended.

    Work - nowadays - unless you're on a really good earner you're wasting your time.

    Do the numbers - when the 1 Jan 2017 changes come in.

    For a single person - If you've got more that $250,000 leading up to retirement - retire early and live on the difference - spend enough to work it down to $250,000 - the surplus above that amount is virtually worthless until you get to $1,000,000 plus - as all it does is disqualify you from the age pension.

    You could always get advice from a financial adviser. Up until 2007 they were telling us to have enough super to "supplement" the age pension - there were (until 2007) income stream products whose capital value only counted 50% against the assets test.

    Remember when "incentivisation" was a LNP buzzword? The only "incentivisation" around now is a binary choice - become stinking rich or sponge on the state. Working for the average Joe (JIll has to too nowadays) is a mug's game.

    The superannuation guarantee is just a payroll tax. The pot may have your name on it but you can only use it according to the government's rules - and their main aim is to have you use it to disqualify you from the age pension - which we were previously told was an entitlement - but we are now told it's welfare - and only for those who "need" it.

    Maybe just as well after all that the government banks got privatised - otherwise you'd go in to draw some money out and the teller would grill you about whether you really "needed" it or not.
    East of Toowoomba
    31st Mar 2016
    11:29am
    Are the quoted figures ($59,236 for a couple and $43,184 for a single) needed in retirement actually correct? Neither my husband nor I earned that sort of income when we worked full time and now that we are only working part time, we manage comfortably on a combined income of around $30K a year.

    As we are both under 60 years old, we have not accessed our Super yet, but I would like to reassure anyone who is worried that their Super won't be enough, you can have a full and satisfying life on a smaller income than that being promoted as "comfortable". We do.
    Tinker
    31st Mar 2016
    12:41pm
    You need to be congratulated on being able to live on less than $30K.
    It begs the point that lifestyles between retirees is different and where one couple can live on $30K others require $59K. I would say that a couple who has been used to a certain lifestyle would find it very difficult to reduce their spending to the level you indicate. Long term it would seem to me to be very difficult because over 30 years of retirement you need to replace household goods, repair houses, replace cars and pay the ever increasing costs of food, utilities, health costs etc. I just looked at my spend for the past years and could not do what you propose. What we all need is certainty so that we can plan how to use our retirement income that includes both superannuation and the age pension.
    KSS
    31st Mar 2016
    12:42pm
    "you can have a full and satisfying life on a smaller income" east of Toowoomba maybe, not in the centre of Sydney you can't! And certainly not if you have to pay rent in the private sector.
    Richied
    31st Mar 2016
    2:08pm
    The average rent in Sydney is around $500/week - $26,000/year. Admittedly that takes in Eastern Suburbs which averages $900/week, but even in outer suburbs, a 1 bedroom apartment will average $300/week ($15,600/year).

    Someone who owns has lower costs (only rates and maintenance, plus body corporate fees if in a strata scheme) but that can still hit $10,000/year in Sydney.

    Assuming a relatively modest $200/week grocery bill ($10,000/year), there's not much left out of $30,000 in any of the above scenarios for utilities or discretionary spending.
    Jess M
    31st Mar 2016
    3:33pm
    What about a few days away or even a proper holiday
    Anonymous
    31st Mar 2016
    4:09pm
    EastofToowoomba, Could you manage on so little if you incurred $200 a week in chemist bills, constant high specialist fees (from specialists who DO NOT recognize concession cards), and disability aids that have to be maintained and replaced regularly - plus household help because your disability makes it impossible for you to do many cleaning and maintenance chores?

    I think it's rather offensive to presume to dictate how others should live, when you know nothing at all about their individual needs.
    adbob
    31st Mar 2016
    9:21pm
    Of course they're not correct. It's just spin from the super industry to con you out of your money.

    Remember the situation they've conned most people (when Hockey's changes come in) into is that you've got enough super to disqualify you from the age pension but the earnings on it are less than what the age pension would have been.
    East of Toowoomba
    2nd Apr 2016
    8:25am
    Thanks for your feedback. I can happily state that we own our home and vehicles outright and we are in good health (without health insurance) which is why $30K pa is enough for now, but I take on board that our situation could change dramatically due to poor health or other unplanned financial disaster. I don't know if it is sustainable, but so far so good.

    Given that most people aren't so fortunate and that we don't know what the future holds, I don't think our Super will be enough to sustain us for more than about 10 years and after that, who knows? May have to sell the house or take in boarders or something down the track, especially if there's no age pension available.
    MICK
    31st Mar 2016
    12:15pm
    There are very well to do people rorting at present. The loopholes need to be closed and income which is substantial needs to be taxed. We all need to understand that some taxpayers avoided paying the real rate of tax as they 'transferred' their income into superannuation. After years of paying only 15% tax on substantial incomes they now get a tax free income. This is a special deal organised by the big end of town. Same as pollies have organised their own superannuation deals. So what is the definition of corruption at work?
    In all of this we need a sliding scale of taxation on retirement benefits rather than the normal outcome where right wing governments go after hand to mouth Australians whilst they steadfastly refuse to fix the greedy rorts of the top. There is still the refusal to tax multinationals and the superannuation tax shelter for the rich remains untouched. If the current government is reelected these will continue irrespective of the lies which we are told in the leadup to the next election.
    Rae
    31st Mar 2016
    5:07pm
    mick the business people have never paid their fair share of taxes.

    They claim all manner of living expenses of income and get the income down as low as possible. It has always been that way.

    AS I've said before the Italian government is so broke it recently stopped owners of luxury cars and boats and sent tax agents to investigate. Most could not explain where the income for the mansions and luxury items came from.

    I suspect the same would happen here. The restaurant owner living on the harbour with the porche and yacht declared an income of $20 000 a year and paid no tax.

    Of course they justify that because they pay staff who do have to pay tax so believe it is all okay.
    Anonymous
    31st Mar 2016
    6:54pm
    Rae, that's an argument that makes me furious - ''I employ staff who pay taxes.''. Yes, they employ staff, who work for 1/2 what they produce so the owner can make more and more money, and then the greedy business owner expects the public to accept that these underpaid staff should pay the business owner's tax bill for him as well. And then the greedy business owner objects to his underpaid workers getting aged pensions, claiming they should have saved for their own retirement (out of the miserably inadequate wage he paid them which was taxed at high rates because he wouldn't pay.

    I know not all business people behave or think that way, but too many do, and it's time for a major change of both tax policy and attitude.
    maxchugg
    1st Apr 2016
    12:19pm
    This is a first, I'm agreeing with Mick.
    However, after much hullabaloo about international businesses paying no tax, a lot of talk appears to have been followed by no action. it's just so much easier to pick on soft targets for revenue raising than to tackle the big boys who will meet the ATO in court with an army of accountants and QCs.
    Another problem is that we admit refugees who arrive with large families and with no hope of finding employment, therefore being a constant drain on the welfare budget.
    The moralists will wring their hands, but giving priority to those who have the potential to find employment and thereby contribute towards the funding of their retirement is the only way of ensuring that the pension system will survive.
    Slashman
    31st Mar 2016
    12:24pm
    The problem with Labors Policy is it is a bit deceiving. The tax of 15% applies to earnings in excess of $75k not balances of $1.5m as suggested. In the examples they supply the guy who has a balance of $800k in super earned $40k at 5% return and therefore pays no tax. In reality if he earned 10% or more (which many did) he would have paid tax. I would support their policy if they say tax applies to a Super Balance of $1.5mio, provided the fund actually earns $75k in any one year.
    Pat
    31st Mar 2016
    12:28pm
    Rather than having a pension assessment system with taper etc which needs a large beurocracy to manage, why not give everyone the pension then tax people on the total income they receive including the pension. The tax could still start at say $75000 tax free per couple. Tax could be applied on anything after that. A deeming system could be used for assets which would take out the variability of how it is invested. This would probably be cheaper to apply. Also leaves Centrelink to work on providing assistance to those that need it. What do you think?
    Lescol
    31st Mar 2016
    1:49pm
    Another breath of fresh air. Thank you Pat and I agree with you. All persons receive the full age pension but ALL income from $1 is taxable,. This development is long overdue. cheers
    gxh
    31st Mar 2016
    12:47pm
    Just to clarify - it's stated that there is currently "no tax on investment earnings from post-retirement assets". As the article no doubt intends but it could state more clearly - those assets have to be in the superannuation system, and were subject to contribution limits and possibly taxation when contributed, as well as taxation during the accumulation phase (albeit at a concessional rate). Income by retirees derived from other investments (that is, not in superannuation) is taxed in the ordinary way (and I take it that no-one is suggesting the tax-free threshold of $75,000 should apply to retirees' income from all sources, not merely superannuation).

    Apart from the differences in returns year-by-year (as noted by Toddy), will the tax be paid by the super funds or the retirees? If individual retirees are liable for the tax on the pension they receive, presumably they'll just set their pension amount at less than $75,000. If the super funds pay the tax, they'll have to allocate the earnings of each fund (whether or not paid out in a pension) between all the members taking into account the income levels of each member; how do they collect this information? There will be obvious costs in doing this, which ultimately will mean lesser returns.
    Anonymous
    31st Mar 2016
    4:13pm
    Good question, gxh. The requirement for a pension at 5% of the fund balance would help to some extent to stop retirees reducing tax by drawing less. But you are right that it the fund pays, it will mean higher admin costs.
    MB100D
    1st Apr 2016
    2:32pm
    The tax would apply to the EARNINGS of the Super account, not the pension paid to the recipient.
    If you have 2 million in your account, you would pay tax on every dollar over $75,000 that your account earned.
    In a good year if your account managed 10% return, you would pay 15% tax on $125000, i.e. $18750, less any imputation credits.
    If your 2 million account only made 2% return, that would equate to earnings of only $40,000, so no tax would be payable.
    It has nothing to do with the drawdown amount, this only effects the capital balance.
    KSS
    31st Mar 2016
    12:54pm
    Well having just looked at those ASFA figures I serious doubt anyone who was involved putting that together actually lives in the 'real world'.

    Here's an example: they say people spend 0.32 cents a week on CDs and music. Well by my calculation it would take you over 78 weeks to save up for ONE $25 CD. Good Luck with that!

    Well if that is a luxury you can live without, how about a new washing machine at a conservative $750 in nearly 74 weeks time? better start saving now!

    Oh and don't even think about buying a gift for your grandchildren, that's not in the budget at all.
    Richied
    31st Mar 2016
    2:01pm
    The ASFA figures are based on averages across all people. Some people will never buy a CD or music, but simply listen to currently owned or to the radio. Others will buy 10 a year or $250.

    I doubt anyone is going to buy a new washing machine every 74 weeks. I suggest an average machine will last ten years - or $5000 of saving.

    Some people won't have grandchildren (so won't spend there), but others will. As you pointed out, that's not included, but you can take from some other bucket.

    And holidays - the numbers seem quite low if you'like overseas travel, but assuming an average of an overseas trip every five years and the numbers stack up.

    The numbers seem to imply about $27,000 for 'security' items like house expenses, plus $16,000 per person for food and general (discretionary) living expenses. Balancing that discretionary amount is the challenge.
    Sundays
    31st Mar 2016
    4:04pm
    I compared the ASFA figures with our own budget and they were pretty close. Yes, if you want overseas holidays, you will need more. Likewise there needs to be some rainy day money for unexpected events. I thought the food and car running costs were on the high side, so there was some room to buy presents.
    Joan
    31st Mar 2016
    2:27pm
    I don't normally comment, but this will include all the politicians too.
    Maybe that's why I don't comment, because they are protected.
    Tombo
    31st Mar 2016
    2:55pm
    Absolutely right, Joan. The terms of the Parliamentary Contributory Super Scheme, under which long-serving members of parliament are paid up to 75% of the salary of the highest salary they have held, must be amended. Needless to say we are talking figures of well over $75,000 a year - double or triple in some cases- being paid to some retired parliamentarians (and in some cases well before normal retirement age). The change should apply to both past and present members of the scheme. In addition, the extremely generous Public Service defined benefit schemes would also require appropriate adjustment to ensure comparable treatment with private sector defined contribution schemes.
    Sundays
    31st Mar 2016
    4:14pm
    Public servants pay tax on most of their defined benefit pension at present with only a small portion being tax free. There is a small 10% tax offset. They can never covert their pension back to a lump sum and apart from a reversionary pension to their spouse if they have one (67%) there is no capital to leave their estate. People receiving allocated pensions currently pay no tax and also have the capital. I'm not saying the defined benefit pensions are not good but they were also partly funded by people working and paying compulsory after tax dollars (no salary sacrifice) for years.
    Rae
    31st Mar 2016
    5:24pm
    The Public Service defined benefit scheme was NOT generous.

    There was no discount on tax and the employer never ever paid the 9% guarantee.

    So if you are going to equal it out you would probably have to pay the public servant quite a bit of money.

    If you had paid in the same amount of after tax income into funds for the same amount of time you would have millions or at least 8 houses to rent in Sydney.

    It seems generous to those who didn't pay that kind of forced savings fortnight after fortnight but if you do the spreadsheets the truth is there to see in sheer facts.
    BElle
    31st Mar 2016
    2:53pm
    Not sure just what you are referring to. We do not have Super Funds as we were paying exorbitant management fees, that far out weighed any tax benefit. We have private investments that we manage ourselves, and a part pension commensurate with our asset holdings. If we excessed the basic pension tax income allowance, and the offsets do not compensate, we pay tax. We have been retired 16 years and had little or no Superannuation to speak of in any instance. Income from any source is taxed in some way. If you are in a "tax free" environment you are paying management fees and taxes, whether you are aware of them or not. I still do not agree that private income should be treated as a "pension". We have worked saved and invested in the country for 54 years and paid our taxes. We supported previous generations in relatively generous government pension with our taxes and other sources of government income. The next generation(s) don't want to do the same as we took for granted, that our taxes paid welfare payments. Future generations will be the beneficiaries of subsequent generations. What they pay in taxes, duties, rates etc. will benefit them and their contemporaries, not previous generations. Fair go for pensioners if you would be so kind.
    Keith64
    31st Mar 2016
    3:09pm
    Subject to gxh's correction that this comment is limited to superannuation account earnings only, I think that this is an excellent article and endorse the argument of both Patrick and Vincent that, as is the case in NZ, all person's 65 + should be paid the pension and allowances and that these sums should be treated as income and taxed in the normal manner. It would simplify or possibly eliminate the role of Centrelink with regard to pensions and throw the burden of making any necessary adjustments on to the ATO.
    Anonymous
    31st Mar 2016
    5:09pm
    Keith64, I think this would be a much fairer system and easier to administer, and it would certainly eliminate a lot of stress older people suffer.

    I don't pretend to know how the cost would compare with our current system, but I suspect it would be economically beneficial in the long term by removing the huge disincentives that currently exist to saving for retirement. Under the current system, with the stupid recent changes to the assets test, people are losing up to $48 per year of their savings for every $1000 they saved over a given limit. How can anyone justify such a dumb idea? Obviously we are going to see fewer people saving for retirement and many of those who did splurging on luxuries to reduce their savings balance.

    Of course it still begs the question in regard to super funds whether the fund pays or the individual - and if the fund, how much extra admin costs will that create?

    I'm not sure about the question of limiting to superannuation accounts only. Currently, privately held assets (i.e. personal savings) are effectively ''taxed'' via the unfair pension means test. This is clearly wrong, as those savings were accrued through personal sacrifice and were not tax advantaged in the earning phase. However, I don't see that it's unreasonable to tax the income those savings earn. Everyone else pays tax on interest earned. Should retirees be exempt?

    Ultimately, I think the solution must involve eliminating the cruel and unfair assets test altogether and taxing income only, and if a means test continues, applying it only to income (but with deeming where sensible to ensure assets aren't deliberately locked up as non-returning to avoid the test). But the idea of a universal retirement pension combined with a fair tax certainly has a lot going for it.
    niemakawa
    31st Mar 2016
    9:00pm
    Kate, re the following :

    The current rule
    Currently there is no tax on investment earnings from post-retirement assets.

    1.Does this apply to ALL assets acquired pre-retirement and post-retirement?
    2. Does this mean that at the moment investment earnings, on say , property, shares, bank accounts are not taxable?
    3. If not then there is no need to include such income/earnings in a taxpayer's annual tax return?
    MB100D
    1st Apr 2016
    2:44pm
    All income outside of Super is taxed at the concessional rate.
    e.g. You own and investment property that is positively geared and it returns $10,000.
    You own a Share portfolio that returns $40,000 in dividends,
    You have $100,000 invested in bank accounts.
    You have a Super account with $2,000,000 earning lets say 6% = $120000.
    You only pay Tax on the earnings from your rental, Shares and Bank accounts,less Franking Credits, their is no tax on the Super earnings of $120,000
    FM
    31st Mar 2016
    11:07pm
    Hi niemakawa
    all income other than that from a super fund is taxed as normal.
    For the average person superfund earning are very low at the moment and the draw downs are of income that is already taxed. On their own most average super fund earning would not make the tax threshold. Counting a windfall from taxing super earning might be counting one's chickens.
    niemakawa
    31st Mar 2016
    11:26pm
    Thanks FM. That's what I thought, except the heading was some what misleading.
    MB100D
    1st Apr 2016
    2:59pm
    You might be surprised, you only need a return of over 7.5% to catch all the Super accounts with balances over $1 million.
    Currently according to ASFA, there are over 210,000 accounts with more than $1 Million, of those 140, have more than $1.5 million and 70,000 have in excess of $2.5 million.
    A relatively small number receive super incomes of more than $300,000 per year.
    Taxing super earnings of any amount over $75,000 sounds like a good start.
    Chris B T
    1st Apr 2016
    11:51am
    Why should there be any Tax on savings, regardless of being before retirement or after.
    You want people to save and pay there own way, Taxing savings is not helping.
    Most savings come from pre Taxed earnings.
    old-age worker
    1st Apr 2016
    2:34pm
    Chris.
    Re tax on savings, the savings aren't taxed. The interest on savings is taxed because if the mega-rich put enough money in the bank they could live, tax free on the interest. Just like any other income.
    Mind you, you'd have to have a LOT of money in the bank these days to earn enough interest to live on!
    MB100D
    1st Apr 2016
    3:01pm
    You might be surprised, you only need a return of over 7.5% to catch all the Super accounts with balances over $1 million.
    Currently according to ASFA, there are over 210,000 accounts with more than $1 Million, of those 140, have more than $1.5 million and 70,000 have in excess of $2.5 million.
    A relatively small number receive super incomes of more than $300,000 per year.
    Taxing super earnings of any amount over $75,000 sounds like a good start.
    Chris B T
    1st Apr 2016
    4:03pm
    How many times do you want to be Taxed. Earnings are Taxed and saving Interest income is Taxed and spending this money is Taxed by GST.
    Super Rich or Tax on Supper should have been The Tax Bracket at which the earnings where at the time of earnings.
    This catch me if you can for the high earners and is a disincentive for those on the lower earnings to save, when Taxing interest income from savings.
    By spending more than saving there will be more people relying on the age pension.
    buby
    4th Apr 2016
    10:34am
    personaly, i don't think super be taxed. they tax the hell out of you when your working, then when you accummulate your super, then they wanna tax you again. OH hell, thats So BS!!! if you have managed to save it why shouldn't you live well.
    I mean If some of us knew how to take it off shore like many of the policitians i'm sure we would. Everybodies doing it. I mean i personally don't have that sort of wealth, and i don't have super. ppl like myself struggle on. Lucky i have some small savings, and i manage to get my needs met. but i don't have a home, i rent, which is another hell i must indure, within this society.
    but ok i digress, if you been smart enough to save it, you should be allow to keep it.
    I mean the banks too don't give you that much on your savings, just a small amount to make you happy. And some of us have to be content with that. Eh bloody gov, greedy buggers
    ex PS
    4th Apr 2016
    2:49pm
    It is fairer to tax income over $75,000.00 than to indiscrimantly asses a family home as an assett. If we are looking at penalysing people for planning for their own futures at least looking at incomes will not discriminate against battlers and the rich.
    E?L
    16th Apr 2016
    11:55am
    NO ,, the time has come to cut all Pollies salaries, perks and all after Pensions and Perks ( which should never have been given in the first place). A Pension if needed after reaching Age pension age, the same as all our normal workers.


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