I agree with that but having a large known unknown creates more uncertainty. Showing that you are prepared to tinker with things retrospectively makes people think twice before they do anything.
Govt sets $100,000 a year super threshold
- Thread starter Terry_w
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I agree with that but having a large known unknown creates more uncertainty. Showing that you are prepared to tinker with things retrospectively makes people think twice before they do anything.
That's really the point. First, they want you to feel comfortable that it will never affect you. Could you imagine paying 40k for a car in 1970...but now it is common.
Not only this, they go after the people who have worked and saved, taken risks all their lives to provide for their retirement. The 'other' group of people have recieved benefits all their life, because they had a 'hard go'. Now when they get to pension age, since they didn't have the opportunity to save anything, we will give them even more benefits.
Tenants already consider landlords to be fabulously wealthy.Do ex-politicians currently pay taxes on their pensions?
In Canada we have it a bit different. Only people with employed income are permitted to put anything into our RRSP (registered retirement pension fund). If we have a company pension where we work, it has a formula, which decreases the amount we are permitted to contribute.
All contributions are a tax duction, and any earnings while in the plan are also tax free. We can remove any contributions we put in personally, but must pay income tax on them.Anything from our employee pension contributions are not permitted, until retirement age...again taxed at that time.
Currently it is a maximum of 18% of the previous year's income.(maximum $22,970) If we overcontribute, we are penalized 1% until it is removed.
We cannot contribute after age 71, and it must then start being removed (again by formula) until it is depleted at age 90.
As you can guess, I have stopped making any contributions, and will only start when I don't have enough rental property deductions to reduce my tax payment to zero.
I believe the idea is to change the behavior of certain individuals. Costello changed the rules a few years ago which opened an avenue for tax minimisation.
People with higher incomes salary sacrifice as much as possible into super as retirement approaches. It's taxed in the fund at 15% and nothing on the way out. There is taxation leakage as a result which treasury would like plugged.
They have also introduced measures that will open the way for mandatory annuities some time in the future.
Perhaps the next step would be changing the rules about the PPOR being capital gains free when sold. They might set a threshold there so the multi-million dollar residences of the well off attract some CGT.
People with higher incomes salary sacrifice as much as possible into super as retirement approaches. It's taxed in the fund at 15% and nothing on the way out. There is taxation leakage as a result which treasury would like plugged.
They have also introduced measures that will open the way for mandatory annuities some time in the future.
Perhaps the next step would be changing the rules about the PPOR being capital gains free when sold. They might set a threshold there so the multi-million dollar residences of the well off attract some CGT.
But that's the point. It's indexed against inflation. Just like cars. Cars aren't worth 40k in 1970 money. They are now worth 40k in 2013 money. So, that 100k now will become 280k in the future, as an example.
The slippery slope argument trotted out is complete nonsense.
It's 15%. it's a far lower tax rate than those earning that as an income. I hardly think it is an undue penalty at all. And I'll probably be paying it come time that I retire.
I can't believe the false outrage at this. I really can't.
I wonder how many of you who are screaming about this were screaming just as much back in 2006 when the Liberals "tinkered" with Superannuation to make it more generous than it was previously?
We have ALWAYS known, from Day Dot, that Super would be tinkered with by the Govt. I second the bottle of a good red and thinking about something else.
We have ALWAYS known, from Day Dot, that Super would be tinkered with by the Govt. I second the bottle of a good red and thinking about something else.
That was a mistake in the first instance. Just blatant popularism without any consideration with impacts over time.
Don't forget that there are maximum amounts that can be contributed each year to super. These effectively stop individuals from reducing their tax past a certain point (and it's not that high in the scheme of things).
I get the feeling that they (labor) are playing around the edges and careful not the hit their own voters. Super should be kept save as its peoples money which is kept for their retirement. Its the them and us approach.
I would rather people put money away and keep it in super for their retirement than the taxed funds being used to pay welfare checks/ pensions. There needs to be a long term view of how to fund retirement for the ageing population and pension payments from cent relink is not sustainable forever.
I would rather people put money away and keep it in super for their retirement than the taxed funds being used to pay welfare checks/ pensions. There needs to be a long term view of how to fund retirement for the ageing population and pension payments from cent relink is not sustainable forever.
My understanding is that it goes up for those over 50 years of age from $25k to proposed 35k for concessional contributions.
That's what I said in an earlier post.
'If you want to blame someone, blame The Leprechaun for introducing unsustainable super policy.'
But see, here's the standard knee jerk reaction from SS Liberal supporters:
'This is so unfair! How dare Labor hit the wealthy like this!'
If it had been Liberal implementing the policies, the reaction would go something a little like this:
'Well, it's just good fiscal policy. We have to claw back Labor's spending somehow. It's unfortunate, but that's life.'
I believe under the proposed changes that is you super fund balance is less than $500k there is no concessional contribution limit, anyone know if this is correct?
Incorrect.
So the alternative is that for anyone under 50 that contributes above the SG rate the govt will tax excess concessional contributions at the individual’s marginal tax rate plus an interest charge. This ensures the individual is taxed in the same way as if they had received the money as a salary or wage! There is no enticement for the sub 50's age group to provide for themselves in retirement...
No it doesn't. It means that under 50's can contribute $25,000 and claim a tax deduction. That is the 'enticement'. What other enticement were you after?
Any amount over that is an excess contribution. If the excess contribution is less than $10,000, you can apply to have it refunded, without a penalty (You just lose the tax deduction for the amount refunded.)
I'd suggest that it's only people who earn some good money who could afford to contribute above the concessional limit. The cap is $25,000 for people under 50. There's still enticement to contribute up to this amount.
Personally I would, and have, put money into properties rather than super.
No, it isn't peoples' money. It's the Government's way of swapping tax revenue to make people less dependant on pensions in retirement. In effect, the Govt. has said 'We will take less tax out of your earnings, but we are going to force you to save that money for retirement, so you aren't reliant on the Age Pension'.
Which is why the age at which super can be accessed should immediately be raised to 70 and having the option of taking a lump sum abolished, also immediately. Contributions into super need to go back to 100K per year as it originally stood and the Govt should be encouraging people to put as much into super as they can, instead of taking away incentives. But that's what happens when you put an orangutan in charge.
People need to let go of the 'retire at 65' mentality. That worked 50 years ago, when people died a few years after retirement. Nowadays, people live a few decades after retirement, so they should work longer.
Also remember the 25k is inclusive of SGC. Max SGC is approx 17k, so the most someone can tax effectively contribute if they are on a good wage (circa 170k) is 8k generating a tax saving of 2.4k.
Hardly the "gift" to the rich that it is sometimes made out to be.
No necessarily. There are many average income earners who may decide to sell an investment property they have held for many years for a tidy capital gain. It is not uncommon for this to happen close to retirement. Hence one way to reduce capital gains tax is to contribute part of the capital gain to Super. $25K (current super concessional limit) is bugger all when it comes to captial gain on a lumpy asset such as residential property.
This is where changes to Super that may appear to only be directed against the Fabulously wealthy can impact those that are be far from that.
Another reason why I have progessively moved from property to shares. It is much easier to manage capital gains tax etc as shares can be sold in parcels of whatever size one chooses.
I thought about Cap Gain on IPs in SMSF's also, or selling the NRAS IP
Can we all remember that Super is already taxed on the way in, so taxing on the way out also is "double tax".
It discourages investment and discourages working harder.
This has a negative multiplyer effect for the whole economy.
By letting people invest, it creates more wealth for the companies they invest in, or provides accomodation (if they buy property) for workers to carry out their function in society, or funds for banks to lend (if they invest in cash)
Investing should always be encouraged and rewarded with incentives, not taxed more and more.
I understand the proposed changes wont affect very many people, and the ones it does affect will be able to still cope, but it has a much wider ripple effect in the economy when people invest less........
Most young people are apathetic to investing and we need to change that, for the good of everyones future......
I vote to keep the tax free incentive as it currently stands !
Who is with me ?
It discourages investment and discourages working harder.
This has a negative multiplyer effect for the whole economy.
By letting people invest, it creates more wealth for the companies they invest in, or provides accomodation (if they buy property) for workers to carry out their function in society, or funds for banks to lend (if they invest in cash)
Investing should always be encouraged and rewarded with incentives, not taxed more and more.
I understand the proposed changes wont affect very many people, and the ones it does affect will be able to still cope, but it has a much wider ripple effect in the economy when people invest less........
Most young people are apathetic to investing and we need to change that, for the good of everyones future......
I vote to keep the tax free incentive as it currently stands !
Who is with me ?
