Govt sets $100,000 a year super threshold
- Thread starter Terry_w
- Start date
If I read China correctly, he is saying that the Cyprus situation represents an extremity scenario where national wealth can be sourced from savings account to fund a sovereign budget crisis. Substitute Cyprus with Australia and there is an analogy with the Gillard Labor government's approach towards its budgeting problem with the retirement funds of its people.
That's a bit harsh. There are many people in the community who work hard and do valuable work that contributes to our society but don't get paid a motza for it. I'm pretty sure some of those folk would be weary from carrying around those high income earners on their backs for their entire working lives. They also deserve a comfortable retirement.
Anyhow I agree with Keating on this.
"The superannuation system was designed to augment the age pension."
"It was never designed to make possible the shelter of income for those able to contribute increasing levels of precautionary savings and their associated compound earnings," Mr Keating said.
"The sustainability of the retirement income system demands that that balance be maintained. Howard and Costello were too generous in dismantling the reasonable benefit limit scheme in favour of an open-ended regime."
I can't see that. Treasury public servants have told Government that the current rate of super concessions will be unsustainable in the long term so the scheme needs rebalancing.
If it was indeed valuable they would get paid a lot of motza for it. You can't have it both ways.
Very correct. Furthermore, in both countries, the governments are changing the rules and shifting the goalposts AFTER its citizens have made a decision with their savings based on current rules.
How ridiculous! Just because I don't agree with your point of view doesn't mean I don't get it. All this thread is, is a bunch of one eyed Right Wing Faction of the Laberals supporters having a whinge. If it was the other way around, then we'd see the Left Wing Faction having a whinge about exactly the same thing.
100K a year tax free (Per person) That is a heck of a lot of money for today if you have paid off your home loan and have no outstanding debts!
so if your a couple, you could effectively boost your partners account if your over the 100K per annum, in order to reduce your tax on the higher account?
This would mean a couple could earn 200K a year tax free!
in 10-20 yrs time im sure everyone would LOVE that it was only taxed at 15% above 100K... because we all know the gov will change and there will be more taxes at higher rates due to our aging population.
so if your a couple, you could effectively boost your partners account if your over the 100K per annum, in order to reduce your tax on the higher account?
This would mean a couple could earn 200K a year tax free!
in 10-20 yrs time im sure everyone would LOVE that it was only taxed at 15% above 100K... because we all know the gov will change and there will be more taxes at higher rates due to our aging population.
Rowena
You raise a good point. The proposal says that those funds in pension phase will be taxed at 15% on any income over $100k. So if an SMSF has two members (two partners e.g. husband and wife) then the splitting strategy you discuss would not be effective.
However if the couple had one SMSF each then I assume each SMSF would be subject to the new rules. This could provide an opportunity for the couple to have an SMSF each subject to the new rules.
Only just thought about this and as more details come out it might be a strategy that is worth adopting. It will mean setting up an SMSF for each member.
You raise a good point. The proposal says that those funds in pension phase will be taxed at 15% on any income over $100k. So if an SMSF has two members (two partners e.g. husband and wife) then the splitting strategy you discuss would not be effective.
However if the couple had one SMSF each then I assume each SMSF would be subject to the new rules. This could provide an opportunity for the couple to have an SMSF each subject to the new rules.
Only just thought about this and as more details come out it might be a strategy that is worth adopting. It will mean setting up an SMSF for each member.
So a professional poker player is more valuable to society than an aged care nurse?
And you raise a valid question rowena, mike.
Will this legislation have grouping provisions?
I imagine this legislation will group all superfunds together, but am not yet clear on that point.
Otherwise members can simply setup additional superfunds and flip money around to suit their needs.
Clearly the major driver of this legislation (in my opinion) is getting this country back to surplus with a 'whatever it takes' approach.
The government has cocked up our economy and cash position that much that they seek to do whatever they can to bring things back.
Where does it end though? They can start at the $100k threshold which is fairly high, that is fine.. but then unfavourable treasury numbers will come back in and some wally in Canberra will lower the $100k threshold to $50K and then to $25k.
Just like what happened with concessional contributions.
Bunch of plonkers if you ask me.
Cheers
Bern
Will this legislation have grouping provisions?
I imagine this legislation will group all superfunds together, but am not yet clear on that point.
Otherwise members can simply setup additional superfunds and flip money around to suit their needs.
Clearly the major driver of this legislation (in my opinion) is getting this country back to surplus with a 'whatever it takes' approach.
The government has cocked up our economy and cash position that much that they seek to do whatever they can to bring things back.
Where does it end though? They can start at the $100k threshold which is fairly high, that is fine.. but then unfavourable treasury numbers will come back in and some wally in Canberra will lower the $100k threshold to $50K and then to $25k.
Just like what happened with concessional contributions.
Bunch of plonkers if you ask me.
Cheers
Bern
The press release is confusing. It says
"capping it to the first $100,000 of future earnings for each individual."
So you would assume it applies to $100k per individual. But the same press release says
"That means that an individual with around $2 million in superannuation (assuming a 5 per cent rate of return) currently receives more government assistance than someone on the maximum rate of the single Age Pension."
So they have assumed that $2m x 5% is the benchmark. But is that $2m per individual which means a two member fund can actually have $4m in super with a 5% return ?
If that's the case then it isn't too bad at all. $4m in super for a couple is pretty good. But like I said the press release isn't clear and guess we have to wait to see the details.
"capping it to the first $100,000 of future earnings for each individual."
So you would assume it applies to $100k per individual. But the same press release says
"That means that an individual with around $2 million in superannuation (assuming a 5 per cent rate of return) currently receives more government assistance than someone on the maximum rate of the single Age Pension."
So they have assumed that $2m x 5% is the benchmark. But is that $2m per individual which means a two member fund can actually have $4m in super with a 5% return ?
If that's the case then it isn't too bad at all. $4m in super for a couple is pretty good. But like I said the press release isn't clear and guess we have to wait to see the details.
That is the biggest load of nonsense.
I'm not going to sit around thinking that "well, better not have a large super fund. I'll be taxed at well under half the rate I was when I was working and earning 6 figures".
It's like saying, well I could earn 300k a year, but I'll pay more tax so I'll become a secretary on 50k a year. Or I could get that property with great rental returns, but I'll have to pay tax on the income that it earns.
It ain't going to happen. It's just mindless rhetoric.
Yeah, social workers, teachers, nurses, garbagemen, cleaners, waiters, cooks, bakers, mechanics, none of these people provide a valuable service to society. They should all just put down their tools and not work at all. Our society would do just fine without them.
Just to also throw out there too...
so if it is a combined account, and it assuming the threshold is applied X 2 100K thresholds, What happens if a partner dies... The 4 mil combined account would then mean the partner left would then be subject to tax immedialtely or that financial year. (so I see government loop holes here for getting their tax).
Would one way avoiding this is then going to the split account option, in order to avoid this situation, as the partner that dies, then their money would be paid out - however then you would have to look at what death taxes you would have to pay (i guess this depends on state and federal laws too!).
but many things to consider..
so if it is a combined account, and it assuming the threshold is applied X 2 100K thresholds, What happens if a partner dies... The 4 mil combined account would then mean the partner left would then be subject to tax immedialtely or that financial year. (so I see government loop holes here for getting their tax).
Would one way avoiding this is then going to the split account option, in order to avoid this situation, as the partner that dies, then their money would be paid out - however then you would have to look at what death taxes you would have to pay (i guess this depends on state and federal laws too!).
but many things to consider..
Hi Mike, it's per individual. From Super Guide:
If your superannuation pension earns more than $100,000 a year in earnings then expect to be hit with 15% tax on your pension earnings above $100,000. The threshold applies to each individual rather than to each pension/income stream.
Also, it should be pointed out here, that the tax applies only to earnings above $100,000, not the whole amount.
A false argument. Those people get paid a wage and are not working for nothing. They accept the wage they are paid which is set by the Government bodies anyway. If they were worth more they would get paid more. I am sick of people assuming that just because you provide assistance to someone as part of your job then therefore you are automatically a revered person who 'deserves' special treatment. Those people you list are just doing a job.
Seeing as most people who play poker lose money you've just proved my point.
No it isn't. You said 'if they provide a valuable service they would get paid more'. Are you saying that the professions I listed (and could list hundreds, if not thousands, more) don't provide a 'valuable service'?
Depends on your viewpoint but I take issue with the assumption that no matter what people are paid, 'it is never enough'. I would say those jobs have utility but utility does not equal to value in my books.
