Oz Federal Election 2013 - Discussion and Comments

[whatmeworry]

From what I can tell, whoever is making the argument, those that are stashing their cash in super only have to pay 15% in tax. Those that making good money, this is a benefit to them by putting their salary into super as a tax benefit. However if you are in the lower middle lower class or lower you have virtually no benefit by contributing to your super fund as you already taxed under 15%.

From what I can see, the change in rules is directed at those making the big money and lowering their overall tax liability by directing it to super.

 

[cove]

In 2013 you can only salary sacrifice 25,000 (following a slew of changes) into superannuation and people doing this generally don't want to be a burden on the pension system.
The area that needs to be tightened is where someone retires and gets rid of the super in a lump sum payout by spending enough to get the Government pension.
The current tax rate for funds inside a super fund that is compliant is 15% for everyone.
Personal tax rates go up to 46.5% and taxpayers paying this rate should be thanked rather than getting treated with disdain.
Tax crooks only pay GST which is 10% and they are the ones who need to be targeted for dodging income tax.
Any tax crook should be ineligible for the age pension for an additional 5 years and should be named and shamed in my opinion.

 

[Deleted member]

In 2013 you can only salary sacrifice 25,000 (following a slew of changes) into superannuation and people doing this generally don't want to be a burden on the pension system.
The area that needs to be tightened is where someone retires and gets rid of the super in a lump sum payout by spending enough to get the Government pension.
The current tax rate for funds inside a super fund that is compliant is 15% for everyone.
Personal tax rates go up to 46.5% and taxpayers paying this rate should be thanked rather than getting treated with disdain.
Tax crooks only pay GST which is 10% and they are the ones who need to be targeted for dodging income tax.
Any tax crook should be ineligible for the age pension for an additional 5 years and should be named and shamed in my opinion.

That $25k includes SG. Anyone spending their lump sum upon retirement probably isn't dealing with a significant amount of cash

 

[cove]

Yes GPH SG is part of the $25,000 so it has been crunched.

 

[Sprucegoose]

So who will take over the ALP once it's reduced to a phone box?

 

[cove]

That would be a great tv reality show where you fit the survivors of a political campaign into a phone box. Alternatively Tony Hancock might photoshop it for us.

 

[Pushka]

In 2013 you can only salary sacrifice 25,000 (following a slew of changes) into superannuation and people doing this generally don't want to be a burden on the pension system.
.

Cove, what happens to those whose SG component takes them past the $25,000 contributions - ie no salary sacrifice - just the SG. Not that I am in that position but am just curious.

 

[cove]

It is technically possible to get taxed at 93% if you have exceeded the limit previously. I would suggest no one try out the system a first time even.

 

[ComeFlyWithMe]

Cove, what happens to those whose SG component takes them past the $25,000 contributions - ie no salary sacrifice - just the SG. Not that I am in that position but am just curious.

Taxed at highest marginal rate.

In addition, employers are not liable to pay SG above the limit, so it would become an employer voluntary contribution (if mandated 9% overall under your contract), which they need to deduct the marginal tax, as it becomes a post-tax contribution.

 

[Pushka]

Ah, so the SG is capped at $25K. Makes sense.

 

[cove]

Looks like the "fabulously rich" may get an opportunity to pay more in tax. I do hope the politicians nail themselves seeing their ridiculously high pensions have a net present value in the range of 4 to 5 million.
Ready ,shoot, aim is working really well for Wayne Swan.
A get rid of Wayne Swan levy would work for me.

 

[medhead]

However, nick Michin is in today's Oz saying the pollies defined benefit payments are taxed as ordinary income, unlike the tax free treatment of accumulation account payments.

 

[Hvr]

Looks like the "fabulously rich" may get an opportunity to pay more in tax. I do hope the politicians nail themselves seeing their ridiculously high pensions have a net present value in the range of 4 to 5 million.
Ready ,shoot, aim is working really well for Wayne Swan.
A get rid of Wayne Swan levy would work for me.

Yes we must get Abbott and co in so they can decrease superannuation for low income earners. That's much fairer.

Seriously, anything already paid in must be preserved as per current rules but surely consideration must be made to reviewing tax deductions for future payments so that the loss in revenue doesn't adversely affect lower income earners.

 

[Deleted member]

However, nick Michin is in today's Oz saying the pollies defined benefit payments are taxed as ordinary income, unlike the tax free treatment of accumulation account payments.

And ate non contributory. And are defined and are ...... You get the picture

 

[casanovawa]

Yes we must get Abbott and co in so they can decrease superannuation for low income earners. That's much fairer.

Seriously, anything already paid in must be preserved as per current rules but surely consideration must be made to reviewing tax deductions for future payments so that the loss in revenue doesn't adversely affect lower income earners.

Whose talking about lowering super for the low income earners??

And what's this "adversely effect lower income earners"??? I was having this argument last night...

Low income earners usually pay no net tax so how they can be hurt??? Its not like any of their bundles of cash are ever going to be transferred to the "fabulously rich", they often earn stuff all and if at some point a small amount of their welfare might need to be cut because you can only have so many people sucking off the public tit, its still quite an odd definition to say they are being adversely effected because they can't get as many handouts as they used to or have become accustomed to??? That you can't access as much of something that was never yours in the first place...

When they actually start contributing to the system some decent amount i'll have more interest in their bleating...

There must be some other dodge in this super thing, i mean if its all over this $25,000 limit then Swanny will again have shown himself to be an utter retard by floating something out there that gets everyone concerned about their super (and it doesn't take much when the Govt starts sniffing around people's super) and yet for the next month or so there hung out to dry by the Govts traditional reticence to publicly rule anything in or out before the budget....

 

[Hvr]

It's been in the news for awhile but generally lost in the noise surrounding Labor.

SUPERANNUATION has emerged as an election issue, after Opposition leader Tony Abbott confirmed plans to axe a super tax break worth up to $500 a year for 3.6 million low-income earners.

Read more: Abbott to up super tax on battlers | News.com.au
​

Fairfax media offers an analysis of the subsidies for very high earners.

Superannuation is designed backwards. It gives the biggest subsidies to those who need them least. For Australians on truly enormous incomes those subsidies are obscene.


The notion the super-rich wouldn't save for their old age is laughable. The idea that without government support they would fall back on the pension and be a ''drain on the public purse'' is not only wrong but, in the context of what's handed to them, almost sick.

Read more: Stopping leakage of funds to rich is a super idea
​

 

[eastwest101]

It's been in the news for awhile but generally lost in the noise surrounding Labor.



Fairfax media offers an analysis of the subsidies for very high earners.

The trouble with the debate is that it can easily be conflated by both sides into an 'us vs them' or another defacto debate about taxation and redistribution. This is inevitable as at the top end of the income scale - Superannuation is merely one effective way of escaping prohibitive income taxes, as the federal Government tinkers with stuff around the top discretionary part of super for the "fabulously wealthy" then all it does is encourage the extremely wealthy to re-structure their tax affairs to avoid whatever the most prohibitive rate of taxation is to the least prohibitive part of taxation. So sure - you can whack the contributions tax on those over 300K from 15% to 30% if you want, or why not go to just 100% and be done with it? Because it would not collect any revenue and just creates incentives and bubbles that have to be taxed later on i.e. Negative Gearing of Property or Negative gearing to own shares.

As with other budget measures - once announced - that potentially forms a liability or a starting point/negotiation point and the government certainly don't want the people targetted (whomever they are) making arrangements to reduce their tax liability. Retrospective changes are legally possible but political suicide, but at this point what has the ALP got to lose? Any changes that protect Superannuation put in before the 01st May 2013 but allow different taxes post 01st May 2013 would also end up with the system having more complexity and encourage "gaming" to restructure family superannuation to reduce tax liability, again - more complexity = more gaming and unforseen consequences.

You could have a progressive tax system on Superannuation contributions or on balances but you would end up with all the same problems of effective marginal tax rates and unforseen problems and weird disincentives as we see in the current income tax and welfare system that we have now. Probably better to keep it simple and predicatble - otherwise people will always invent a way to invest in more secure/predictable environment.

At the very least - its taxing future investment that is designed to grow and then be used to self-fund retirement (and help the government out by not having a huge pension liability!) for recurrent and growing expenditure in the public system (whether that be NDIS, Education, Public service salaries or any other government program), given the demographic wall that we are going to hit in the future, why stuff around with something that we have done better than most at? (Superannuation)

Also a very healthy dose of cynicism from the general public that somehow the rules for politicians superannuation never quite match the rules that they make for the rest of us......:shock:

 

[casanovawa]

Which is why the $25,000 limit per year was put in place to stop them diverting hundreds of thousands or millions a year through that tax dodge???

And what great subsidies does it give, you pay part of your income into a super fund for each individuals future benefit which reduces the need for the Govt to fund our retirements... The funds that go in there and sit for years are hopefully usefully invested and benefit the nation as they accumulate so the people putting in $25,000 a year are potentially investing a lot more into Australian companies and infrastructure projects than the people that put in $1000-2000 a year...

If your not earning enough to put in more than $1000-5000 year what is suppose to happen, everyone else is meant to up your contributions for you are they, the money is meant to magically appear from somewhere is it??? If you earn a small income and pay a stuff all tax rate and so the tax rate of super in the future at 10% or 15% isn't that appealing or compelling, what are we supposed to do, offer you 0% tax in the future so you feel like putting YOUR money away for YOUR future... I mean where does all the entitlement stop here?? Pay 9% of your wage (or really your boss does it for you) and if you want more super, try to advance yourself a bit or hopefully find a bit extra to put away...

But why have the begrudgement of people who have been able to get a better income often through hard work and dedication than you and can pay in more super from their OWN income to hopefully reduce ANY need to ask for a Govt pension in the future?? And then put in place reasonable safeguards that the fabulously wealthy (i think we have a distorted view of this in Australia as being someone who earns about $150,000 a year) can't take advantage of it, which they seemed to have done and then stop screwing around with it at every pollies whim or budget fluctuation...

 

[medhead]

Seriously there is so much misinformation going on about the Super stuff.

First lets take the income limit the mega-wealthy or whatever. Has anyone seen the recent NATSEM modelling that includes income distribution? http://www.natsem.canberra.edu.au/s...b-R13-1-Typical_Low_and_Middle_Income_FBT.pdf
Basically the top 5% of income earners are on about $150000 or above. 95 percentiles as follows

[TABLE="width: 500"]
[TR]
[TD]Category[/TD]
[TD]95% percentile[/TD]
[/TR]
[TR]
[TD]Couple with kids[/TD]
[TD]$198700[/TD]
[/TR]
[TR]
[TD]Couple only[/TD]
[TD]$142000[/TD]
[/TR]
[TR]
[TD]Single parent[/TD]
[TD]$151400[/TD]
[/TR]
[TR]
[TD]Single person[/TD]
[TD]$94600[/TD]
[/TR]
[/TABLE]

So the numbers give a pretty good indication of the top incomes in the country. Everything that I've read says they'll target $300000+ incomes. So maybe not mega-rich, but the income is pretty up there relatively speaking.

What label would you use? Mega-wealthy certainly makes the point that most of the people up in arms about this are not going to be affected.

Then there is this discussion of incentive. At $300000 your super guarantee is $27000, currently. You pay 46.5% of your last dollar earned (or closer to 50% apparently ) Now, I'm sorry, but if the mega-wealthy would rather pay 46.5% instead of 30% I'd have to question how they become mega-waelthy in the first place. Basically, reducing the incentive to put money into super does not remove the incentive entirely.

Finally there is the low income earners and the question of their incentive. Abbott is going to remove some sort of tax benefit for low income earners on their super. Now as has been mentioned these people pay little or no tax on their income. Now if you then charge them 15% tax on their super: Yes you are adversely affecting them. You are reducing their retirement savings and you are then making them rely more on the public breast. Yes, you are taking something off them that was theirs in the first place. In exactly the same way that taxing the mega-wealthy more takes something off them that was theirs.

 

[casanovawa]

If they don't want to pay the 15% tax i suppose let them keep the money out of the system and see how it works for them... Something tells me they would spend it all and have to rely on the pension for the rest of their days and p!ss and moan about how little it is....

So what's the answer, tax them when they get the super at the lowest tax rate they were at during their lives but kept putting their super away like good boys and girls... or do the people who made something of themselves some how have to share some more of their hard earned?? Again and again etc...