Changes to Superannuation...?

[VYBerlinaV8]

http://www.afr.com/p/national/push_firms_to_target_super_cuts_HFBdIYM0dUdjjHbmL09fRM

Looks like we may have to deal with some changes to the superannuation system. This will no doubt have an impact on investment strategies for a number of us, including influencing decisions relating to using superannuation to purchase investment properties.

 

[HotRod]

http://www.afr.com/p/national/push_firms_to_target_super_cuts_HFBdIYM0dUdjjHbmL09fRM

Looks like we may have to deal with some changes to the superannuation system. This will no doubt have an impact on investment strategies for a number of us, including influencing decisions relating to using superannuation to purchase investment properties.

This was the prime reason I decided to get into property. The super rules are changed more frequently than Juliar's promises.

 

[Aaron_C]

Ah, more taxes. Yum.

 

[westminster]

This was the prime reason I decided to get into property. The super rules are changed more frequently than Juliar's promises.

Me too.
One of my pet hates is the govts ability to raise the age when I can access my Super. There has been talk of raising it to 70.
I think if I have enough in there to self fund my retirement then I should be able to have it, not when the govt says so.
So I won't be relying on mine to self fund my retirement. It's a bit of a shame really as mine has quite a respectable balance as I've worked for many employers who put in over 9%.

 

[austini]

The word is "may"! And the way it is looking with the likelihood of Labor being booted out of Government in September any changes may never get legislated. I wouldn't be surprised however if the Government singles out SMSF's for possible negative changes. The one possible change I think stands out is the switch from accumulation to pension mode could trigger a CGT event similar to what generally happens with Industry and Retail Super Funds.

Regardless of any changes Super is still likely to have some tax advantages versus investing outside of super depending on ones situation and tax structuring. With the increase in the tax free threshold to $18,200 (from memory) it is certainly possible to hold modest investments outside Super without paying any tax.

Family Trusts usually tends to get a mention as well when Labor is looking for more tax revenue.

Hence Trusts and Super both carry more legislative risk than investing in personal names.

Therefore we try to cover most bases by splitting investments between personal names, Discretionary Trust and SMSF.

 

[HotRod]

When I first started working, I had a financial plan drawn up with pretty graphs showing me retiring at the age of 55. I could handle working to only 55.

A few years after that it was raised to 60 (me born in 1967, there you all go now you know how old I am ).

I can now see that going to 65 in the next 5 to 10 years and then maybe to 70 to match the pension age.

Who in their sane mind wants to work until they're 70, retire and maybe live for another 10-15 years and not really be able to enjoy life because you are too old and decrepit from working for 50 years.

 

[westminster]

Who in their sane mind wants to work until they're 70, retire and maybe live for another 10-15 years and not really be able to enjoy life because you are too old and decrepit from working for 50 years.

Not me!
I'll take it all as a great 70th birthday present whilst I'm already retired.

Rod - you are still a spring chicken

 

[Savanna100]

The Government will have to get the changes through before caretaker mode starts on 27 August. That includes all the argy bargy that usually goes on when bills proceed through both houses. With any luck, it will all go slowly and they will miss out on getting changes through.

 

[HiEquity]

I've never contributed more than the compulsory amount and have pretty much disregarded the whole thing. I hated how you put your money in -then they change the rules and you can't get it out before you're too old to enjoy it. And the costs and hassles of SMSFs I just don't need. More of a headache than it's worth to me.

Also, you don't need to be Einstein to realise that it's unsustainable for this tax shelter to continue. Governments need tax revenues - if a vehicle is setup so people can avoid tax then eventually everyone will have their assets in that vehicle and govt will get no more tax. This is completely unsustainable. The only reason govts had such low tax rates on super to date is to get people to contribute to it and build up a critical mass for the industry. Now that everyone is using it they can increase taxes to a more sustainable level. It's the only possible way.

My problem though with this likely move from this government is the rhetoric about only targeting high income earners again. Yet another example of the class warfare this govt persists in pursuing, from the Carbon Tax compensation to the Mining Tax to private health insurance, despite the fact that it's going down like an absolute lead balloon in the electorate. And much to the obvious disgust of many within their own party who thought the ALP was past that. They clearly haven't learnt their lesson on class warfare and will have to receive it loud and clear from the electorate in September instead. No-one is interested in it.

 

[oracle]

I've never contributed more than the compulsory amount and have pretty much disregarded the whole thing. I hated how you put your money in -then they change the rules and you can't get it out before you're too old to enjoy it. And the costs and hassles of SMSFs I just don't need. More of a headache than it's worth to me.

Also, you don't need to be Einstein to realise that it's unsustainable for this tax shelter to continue. Governments need tax revenues - if a vehicle is setup so people can avoid tax then eventually everyone will have their assets in that vehicle and govt will get no more tax. This is completely unsustainable. The only reason govts had such low tax rates on super to date is to get people to contribute to it and build up a critical mass for the industry. Now that everyone is using it they can increase taxes to a more sustainable level. It's the only possible way.

My problem though with this likely move from this government is the rhetoric about only targeting high income earners again. Yet another example of the class warfare this govt persists in pursuing, from the Carbon Tax compensation to the Mining Tax to private health insurance, despite the fact that it's going down like an absolute lead balloon in the electorate. And much to the obvious disgust of many within their own party who thought the ALP was past that. They clearly haven't learnt their lesson on class warfare and will have to receive it loud and clear from the electorate in September instead. No-one is interested in it.

Agree.

The only thing they can't get their hands on is Capital Gain until the asset is sold.

But with the way this government is going, I wouldn't be surprised if in future you might be asked to pay CGT say once every 5 years and reset the cost base, or pay a small % of CG as fee (aka like land tax).

Cheers,
Oracle.

 

[Mr. Fabulous]

There has been talk of raising it to 70.

It should be raised to 70 and the option to take it as a lump sum abolished. It's not there for you to take early retirement, it's there so that the Govt doesn't have to pay you a pension.

 

[Angel]

Agree.

The only thing they can't get their hands on is Capital Gain until the asset is sold.

But with the way this government is going, I wouldn't be surprised if in future you might be asked to pay CGT say once every 5 years and reset the cost base, or pay a small % of CG as fee (aka like land tax).

Cheers,
Oracle.

Shhh, don't give them any ideas.

 

[Aaron_C]

Surely no one here is surprised by this right? The ALP won't cut back welfare, they have initiated a class war - so of course go for the rich and their super.

I'm more surprised they haven't done it yet. This is why I have hardly anything in super - not letting these thieves take it from me.

 

[Mr. Fabulous]

Surely no one here is surprised by this right? The ALP won't cut back welfare, they have initiated a class war - so of course go for the rich and their super.

Most 'rich' people don't have a large amount in super. Besides, they would find ways around it, as they always do, as is their legal right. The people that would be most hurt by such policies are the working and middle classes - aka Labor voters. So yes, you're right - they are instigating a class war - against their own base.

This is just the latest in a long line of policies designed to increase tax revenue instigated by this Government.

 

[Dazz]

The people that would be most hurt by such policies are the working and middle classes - aka Labor voters.

In the past, this statement may have been correct....but not any more.

The working and middle classes have lifted their sights and aren't bedazzled by the union ra-ra anymore.

The working and middle classes are starting to gather some assets behind themselves nowadays and are finding a bit of financial literacy goes a long way. They are now aspirational, not working class, and hence, not all, but enough to make a huge difference (i.e. change Govts) are voting with the coalition.

You'll most likely find in years to come, this is the fundamental reason why the Labor brand is in terminal decline and shall never recover.

Forget redheads, forget union thuggery, forget corruption (I know, it's hard to) forget all of the stench coming from the NSW right, the people....and it only needs to be a 4 or 5% difference, are realising that to govern both an economy and a civil society, one needs to be financially literate.

Having nothing in the pot to hand out doesn't help anyone, despite the best intentions.

People are realising that placing ex-union officials with no business skills whatsoever in charge of the biggest business in the country is just wrong. The results speak for themselves. They simply cannot manage money, regardless of the overseas factors.

People are realising that a Govt's job (it has many, but the primary one) is to bring in as much revenue as possible....importantly from increasing the total pie, not taxing more the existing pie, then sit down and intelligently allocate the myriad of areas that are all screaming for more funds.

There is a million and one baby chicks waiting to be fed. There are only so many worms. The mother bird is pretty quickly knocked off is she is rubbish at finding extra worms, or is rubbish at allocating them to the awaiting chicks once she has found them.

 

[westminster]

It should be raised to 70 and the option to take it as a lump sum abolished. It's not there for you to take early retirement, it's there so that the Govt doesn't have to pay you a pension.

I don't intend on asking or getting a pension so why can't I have my Super before 70 if its enough for me to draw an income from. I have 14% Super contributions and I'd like to actually get to it before I'm doddering around.

Never mind though as I gave up on Super a long time ago for my retirement plan. I will self fund retire before Super and grow old disgracefully.

 

[Mr. Fabulous]

I don't intend on asking or getting a pension so why can't I have my Super before 70 if its enough for me to draw an income from. I have 14% Super contributions and I'd like to actually get to it before I'm doddering around.

As I stated, it is not there for you, it is there so the Govt. doesn't have to pay or can minimise the payment of a pension. Granted, you may not ever need to be paid a pension, but most retirees do, so like it or not, you get lumped in with everyone.

If you don't think that's fair - tough luck, life isn't fair. You play the cards you're dealt. If you're 'doddering around' at 70, then that is because you didn't look after yourself physically when you were younger. I suggest a change in diet and some exercise.

 

[Mr. Fabulous]

The working and middle classes have lifted their sights and aren't bedazzled by the union ra-ra anymore.

Yeah, and when they're getting paid below subsistence wages by their greedy corporate slave masters and working longer hours, they'll only have themselves to blame. I know you don't like the unions Dazz, and that's your prerogative. But it can't be denied that unions have done a lot for the working man over the last century and change.

Are there corrupt elements in the unions? Sure, as there are in all areas of life. But as my dad says 'If it wasn't for unions, we'd still have ten year olds working 16 hour days 7 days a week for pennies' and he's not even a union man. But he's right.

You think I'm being overly dramatic? Look at the sweatshops in the third world.

 

[Dazz]

as my dad says 'If it wasn't for unions, we'd still have ten year olds working 16 hour days 7 days a week for pennies'.

I hear that a lot from the Labor supporters. Might of had some truth to it in this country back in 1907, but I reckon we've got the pendulum swinging just a tad the other way now. It's what could only be described as "beyond fair" nowadays.

This handing down that type of story is the very thing that I alluded to last week on this forum. The myth is perpetuated down the generations...never questioned, until the lad gets a bit of get up and go in him and starts his own business up, then realises the employees have it pretty good compared to the business owners who actually provide the jobs.

You think I'm being overly dramatic?

Yes mate - just a tad.



As for the super question, I wouldn't put anything past this mob. They are hopelessly broke and hopelessly incompetent when it comes to managing the Budget. Everything is on the table.

It will take 20 years to mop this mess up they've only taken 5 years to create. The buckets and mops and bleach are being prepared yet again.

 

[westminster]

As I stated, it is not there for you, it is there so the Govt. doesn't have to pay or can minimise the payment of a pension. Granted, you may not ever need to be paid a pension, but most retirees do, so like it or not, you get lumped in with everyone.

If you don't think that's fair - tough luck, life isn't fair. You play the cards you're dealt. If you're 'doddering around' at 70, then that is because you didn't look after yourself physically when you were younger. I suggest a change in diet and some exercise.

Ouch - bit harsh on the diet and exercise slam for someone you've never met.

I fully expect that by the time I'm close to retirement age it will have moved again to 75.