Govt sets $100,000 a year super threshold

[dan c]

So in your opinion, taxing 15% on contributions (money coming in), taxing 15% on earnings (money earned within SMSF) and now taxing 15% on withdrawals (even in pension phase after $100K threshold) seems fair?

It's NOT a tax on withdrawals. It's a tax on earnings, in pension phase.

Previously, the 15% tax on earnings ceased when the fund went into pension phase. Now, if those earnings are over $100,000, there is a 15% tax on the earnings over $100,000.

So it is not a 45% tax, it is not a disincentive, and it will have absolutely zero effect on 99.5% of the population.

 

[dan c]

That's just one scenario which can be taken further...
What if your fund returns 0% growth or negative growth in that year? Well you have just lost the $25,000, which is unlikely but possible, right?

I agree. But the risk of negative growth is just the same outside of superannuation as well. If you instead invest your $25k in shares outside of super, they also may reduce in value.

Or if you paid company tax you would pay 30% tax but have access to earnings and decisions where to invest rather than be told that perhaps you can see that money after, 55 or no 60, or maybe we will be living linger so now 68, and as suggested above 70 years, and more likely in the future,

That's quite often the decision factor to invest in super, especially for younger people. I will get a nice tax deduction, but I can't access this money for however many years. But as you have said, it is there for your retirement, so people know that going in.

I agree the age can be changed as we live longer, but that's why there should be some incentive for SMSF as that's the risk we take for our entire life! YOU DO NOT HAVE ACCESS TO THIS MONEY FOR A LONG TERM!!!!!!!

Geez, there is an incentive, as described earlier. The concessional tax treatment is still an incentive, and it hasn't changed with these latest announcements.

 

[Ed Barton]

Super is still a very very good tax haven to invest in for retirement and it is very very unlikely it will ever be worse than investing personally. You just need to understand that retirement age (and most of the other regulations) are fluid. When I started contributing you could get your hands on it at 55 and get the pension at 65 (60 if I had a sex change). Now I can't get my hands on it till I'm 60 and can't get the pension till I'm 67. By the time I retire I expect it will be 65 & 70 and not wholly available as a lump sum.

If you're happy to retire when the government says you should then invest everything in super. If you want to retire earlier, then have a mix of personal investment and super.

Personally, I have enough outside of super to retire and live a good life. So I chuck in the max to super to take advantage of the tax advantages. But I don't fool myself that I might be well into retirement before I can get my hands on that money.

I'm not sure if MIW has a limited understanding of the regulations or was just thrashing around about possible future changes??

 

[lizzie]

A tax free income for the age group that sucks the most resources (aside from the corporate vampires) from the taxpayers? Why shouldn't they be expected to contribute to their Govt. sponsored slush fund?

Tax free retirement pensions should never have been allowed.

I don't look it as a tax free pension ... I see people on self funded retirements as saving the government.

They don't draw a pension - they don't get pension subsidies on medical scripts and transport and utilities and rent and whatever else - they usually have private health cover.

Personally I think they are saving the government at lot more than 15,000/yr and would like to see the ability to contribute tax free raised to $50k a year when over 50.

 

[lizzie]

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.

Totally agree and what I was going to post when I made it to the end of this thread ... especially get rid of the lump sum and revert it to a pension based on amount in the fund lasting until average age.

Perhaps have an out where a lump sum can be taken to fund medical requirements.

 

[truong]

I see superannuation as a big Government trap.

First they give us an empty jar. Then they force us to keep our candies in there. Then they entice us to put more and more of our candies in the jar.

When the jar is full they tell us: “But who’s said these candies are all yours? Some are ours and now we’ll take them back. And don’t complain, you owe us many more candies than that. Be lucky that we gave you the jar”.

If it isn’t a trap then it feels like a trap.

 

[geoffw]

First they give us an empty jar. Then they force us to keep our candies in there. Then they entice us to put more and more of our candies in the jar.

When the jar is full they tell us: “But who’s said these candies are all yours? Some are ours and now we’ll take them back. And don’t complain, you owe us many more candies than that. Be lucky that we gave you the jar”.

If it isn’t a trap then it feels like a trap.

But if we hadn't put the candies in the jar, they would have taken some of the candies away from us. And in the end, the candies in the other little pile would have been a smaller quantity than the ones we would have put into the jar.

 

[AlmostBob]

and if you put NO candy in the jar, they give you candy

 

[Crabnet]

First they give us an empty jar. Then they force us to keep our candies in there. Then they entice us to put more and more of our candies in the jar.

When the jar is full they tell us: “But who’s said these candies are all yours? Some are ours and now we’ll take them back. And don’t complain, you owe us many more candies than that. Be lucky that we gave you the jar”.

If it isn’t a trap then it feels like a trap.

98% of the Australian population are forced to put candy in that jar but don't earn enough to be able to add extra. The other 2% probably don't need the jarred candy anyway because they have boxes of candy stored elsewhere. However some of them carry on like babies if you touch their candy. Wah! Wah! Wah!

 

[Mr. Fabulous]

I don't look it as a tax free pension ... I see people on self funded retirements as saving the government.

They don't draw a pension - they don't get pension subsidies on medical scripts and transport and utilities and rent and whatever else - they usually have private health cover.

Personally I think they are saving the government at lot more than 15,000/yr and would like to see the ability to contribute tax free raised to $50k a year when over 50.

lizzie, if you're game, have a look at the Centrelink website one day, at what is available for retirees. You would be amazed at what self-funded retirees are eligible for. I know a lot of people bang on about how useless financial planners are (and I mostly agree), but a good FP that knows their way around Centrelink issues will be worthwhile speaking to as the amount they can get retirees, if structured correctly, will outstrip their fees by a wide margin.

 

[truong]

But if we hadn't put the candies in the jar, they would have taken some of the candies away from us. And in the end, the candies in the other little pile would have been a smaller quantity than the ones we would have put into the jar.

No argument about that. Most of us would be further ahead with the jar than without… until they help themselves so much to our candy that it becomes all moot. You wait and see.

However some of them carry on like babies if you touch their candy. Wah! Wah! Wah!

You’re mistaken. I’m not one of the so-called filthy fabulously rich, Abbott-voting mob. No wah wah from my part. And I do accept the need for the rich to pay more than the poor.

But having invested into super under one rule I hate being treated under another when the time comes for me to enjoy the fruit of my investment. As I said, it may not be a con but it feels like a con.

 

[Mr. Fabulous]

As I said, it may not be a con but it feels like a con.

I had a female friend once, who used to always say 'I feel this... I feel that...' and I would say to her 'You know, just because you 'feel' something is a certain way, doesn't necessarily make it so. Time to come back and join us in the real world'.

Another time, I was having a discussion on this very forum with a woman about the so-called gender wage gap. When I provided her with clear evidence that there is no wage gap, her response - and I kid you not - was 'Well, I feel that there is one, so there is one'. That's what she actually said.

 

[Francesco]

and if you put NO candy in the jar, they give you candy

Exactly. If you put no candies for the old age requirements, you are assumed needy and someone else will have to give you candies. So, the message to rational decision makers is that they should spend in the meantime as saving up entails sacrifice and opprobium of being labelled as rich.

The safety net in the currently Lucky Country will catch all who do not save at a cost per person of up to $800,000 in net present value. Let the amount sink in. It is equivalent to paying up to $800,000 lumpsum per person at the year of retirement, age 65 in place of future expenses to the tax payers. As average superannuation savings of a man at retirement is about $100,000 (and less for woman on average) it will probably require more than ownership of 2 investment properties and accummulated capital gain of up to $700,000 from them to achieve self reliance from government reliance.

 

[Francesco]

I had a female friend once, who used to always say 'I feel this... I feel that...' and I would say to her 'You know, just because you 'feel' something is a certain way, doesn't necessarily make it so. Time to come back and join us in the real world'.

Another time, I was having a discussion on this very forum with a woman about the so-called gender wage gap. When I provided her with clear evidence that there is no wage gap, her response - and I kid you not - was 'Well, I feel that there is one, so there is one'. That's what she actually said.

I can sympathise with her if she is trying to make the point that a woman has to put in more effort than the man to receive the same pay, such as working more unpaid hours.

 

[Mr. Fabulous]

I can sympathise with her if she is trying to make the point that a woman has to put in more effort than the man to receive the same pay, such as working more unpaid hours.

What on earth are you talking about?

 

[dan c]

Exactly. If you put no candies for the old age requirements, you are assumed needy and someone else will have to give you candies. So, the message to rational decision makers is that they should spend in the meantime as saving up entails sacrifice and opprobium of being labelled as rich.

I'm not sure about that. I think rational people would like the tax deduction that contributing to super offers.

And they would also like to live a comfortable retirement, rather than one reliant on the aged pension. A rational person wouild also think there are worse things to be called than 'rich'.

 

[dan c]

... and opprobium of being labelled as rich.

Great word, by the way.

 

[Aaron_C]

I can sympathise with her if she is trying to make the point that a woman has to put in more effort than the man to receive the same pay, such as working more unpaid hours.

That's rubbish. In this society you get paid what you are worth. No one cares if you have 10 kids if you bring in revenue.

 

[kathryn d]

That's rubbish. In this society you get paid what you are worth. No one cares if you have 10 kids if you bring in revenue.

Now that is a bunch of rubbish.
People get paid what is written on the wage scale, not what an employer wants to pay them.
If that statement was actually true, supply and demand would be all that is required...and no government intervention.

 

[kurnol]

I have read the whole thread looking for an answer to this question (it was asked but no reply)
If myself and partner start a SMSF today (both 46)
use our $200,000 of current super as a deposit on an invest property for the fund, house valued at $600,000.
Over the next 15 years we pay the max amount of voluntary contributions plus the rental income clears the loan amount.
We both retire, the fund sells the house now valued at $1.5M do we pay 15% CGT on that?

thanks in advance.