Oz Federal Election 2013 - Discussion and Comments

[tgh]

The NBN will provide a RoI of around 7%. Delivering major national infrastructure and a profit to the taxpayer - it really doesn't get much better. But don't let any facts get in the way of parroting the typical tripe...​

Page 172 and it lives !
This is all hugely entertaining...
The quote above is easily the silliest sentence I have read today.... it's an oxymoron.. labor and profit.. can't happen..

 

[dajop]

This affects people who have paid lots of tax all their lives AND have already paid tax on the contributions to their superfund. How many times do you have to pay tax to support the great unwashed.

I am not really a supporter of ongoing changes in super - I take the view don't trust present or future governments - of any political persuasion to leave it alone. It is far too big and too tempting as source of revenue that can be tapped to avoid making difficult real time decisions that may be more prominent in the eyes of marginal seat voters!

But, I don't necessarily think arguments around "have already paid tax on the contributions to their superfund" are that persuasive around this particular change. Yes, tax has been paid on those contributions - but even under these changes the original contributions won't be subject to any further taxation (at least until more changes are made by someone in the future :!

If I understand correctly, any earnings on someone's super "balance" (ie dividend and interest income + realised capital gains) over $100K will now be taxed at 15%. So to use a crude and over-simplified example, if you have a balance of $1m and realise 15% one year ($150K) - yet draw down nothing - you are liable for $7500 in tax - and your balance will only increase to $1,142,500 not $1,150,000 as it currently does. If you draw down $150K, your balance will end up at $992,500 instead of the $1m it would under current rules. If you have only 10% return (ie $100K), and draw down $150K, you will end up with $850K in your account under both old & new scenarios, and not pay any tax on either the $100k you earn in the account, or the $150K you draw down. Or am I interpreting this incorrectly?

 

[drron]

The NBN will provide a RoI of around 7%. Delivering major national infrastructure and a profit to the taxpayer - it really doesn't get much better. But don't let any facts get in the way of parroting the typical tripe...

And if that was indeed true why will they not submit a business plan to the Productivity Commission for review.Your figures have as much truth as the projections of revenue from the mining tax.
Then Swanny is also predicting that his changes to super will raise 10 billion in 10 years but only affect 16000 taxpayers.
Anything coming out of Swan's mouth must be taken with a truckload of salt.

 

[dfcatch]

You have (again) conveniently missed this part:
For those aged 60 and over, super contributions at the concessional 15 per cent tax rise from $25,000 to $35,000 per year from July 1. Those aged 50 and over get the same benefit in 2014.

As I understand it - this is simply winding back restrictions recently put into place.

A worthy policy, but completely separate issue from "increasing taxes on the well-to-do".

I'm assuming your logic / the ALP argument is that by increasing super taxes on the wealthy, allows them to afford the relaxation of the contributions rule for over 60 $25-$35k contributions?

If you're making $35k contribution to super @ 9 % SG - you're not a low-income earner.

(And I don't know too many low-income earners that make additional 25-35k contributions). Or even 10k for that matter.

Increasing taxes on higher income earners is a mutually exclusive issue to that of incentivizing savings in low income earners (which the co-contribution scheme is/was a very good one).

 

[leemin]

Page 172 and it lives !
This is all hugely entertaining...
The quote above is easily the silliest sentence I have read today.... it's an oxymoron.. labor and profit.. can't happen..

It was Labor that established and later corporatised Australia Post. Last time I checked, it's done alright.

 

[Pushka]

It was Labor that established and later corporatised Australia Post. Last time I checked, it's done alright.

It has no competition.

 

[Hvr]

It was Labor that established and later corporatised Australia Post. Last time I checked, it's done alright.

It has no competition.

Internet and email has meant there needed to be huge changes to how AusPost operated. As noted previously they've actually thrived where other postal services haven't. Given we're talking about moving into the parcel business here there are lots of freight companies who could've taken advantage but for various reasons didn't.

 

[leemin]

It has no competition.

And NBN Co is/will be a wholesaler without any meaningful competition to speak of.

 

[11sjw]

No. NBN Co's corporate plan is not developed by the Treasury (you know, the same public servants that would develop the Budget under Abbott...)

However key staff within Treasury can be shifted aside. Perhaps then we won't see Record high terms of trade as a basis assumption for budgets going forward.

 

[Hvr]

It will be interesting to see how the Liberal party does propose to increase revenue. After all there is only so much cost cutting you can do. And since the Liberal party has all the people who grow businesses that make this country such a great economic power we should be in for an exciting future.

Quarries and umm something else we hope. Oh and no fast internet for you! The private companies who are being paid to install the fibre will be sacked and then the Liberal party will umm do something.

 

[Pushka]

Maybe all they need to review is the spending priorities.

 

[Deleted member]

I am not really a supporter of ongoing changes in super - I take the view don't trust present or future governments - of any political persuasion to leave it alone. It is far too big and too tempting as source of revenue that can be tapped to avoid making difficult real time decisions that may be more prominent in the eyes of marginal seat voters!

But, I don't necessarily think arguments around "have already paid tax on the contributions to their superfund" are that persuasive around this particular change. Yes, tax has been paid on those contributions - but even under these changes the original contributions won't be subject to any further taxation (at least until more changes are made by someone in the future :!

If I understand correctly, any earnings on someone's super "balance" (ie dividend and interest income + realised capital gains) over $100K will now be taxed at 15%. So to use a crude and over-simplified example, if you have a balance of $1m and realise 15% one year ($150K) - yet draw down nothing - you are liable for $7500 in tax - and your balance will only increase to $1,142,500 not $1,150,000 as it currently does. If you draw down $150K, your balance will end up at $992,500 instead of the $1m it would under current rules. If you have only 10% return (ie $100K), and draw down $150K, you will end up with $850K in your account under both old & new scenarios, and not pay any tax on either the $100k you earn in the account, or the $150K you draw down. Or am I interpreting this incorrectly?

The major effect of the changes (tax on income) is when the fund is in pension phase.
This means that you no longer pay income tax on interest or CGT on capital gains.
However you are correct in assuming that income generated in pension phase will be subject to 15% tax when it is greater than $100k
If you had a SMSF I suspect that CGT on liquidated assets would NOT be treated as income , however that is still not clear .
As for the draw down vs income I suspect that you are partly right. If your account balance grows and generates $100k or more pa regardless of what you draw, then you will pay some tax.

 

[Pushka]

The major effect of the changes (tax on income) is when the fund is in pension phase.
This means that you no longer pay income tax on interest or CGT on capital gains.
However you are correct in assuming that income generated in pension phase will be subject to 15% tax when it is greater than $100k
If you had a SMSF I suspect that CGT on liquidated assets would NOT be treated as income , however that is still not clear .
As for the draw down vs income I suspect that you are partly right. If your account balance grows and generates $100k or more pa regardless of what you draw, then you will pay some tax.

You are required to draw no less than 3% I think it is, as a minimum. No doubt the current Govt will ensure that if you only draw that amount to stay under $100k they will think of another way to get you. Still, I'd love to be in that position.

 

[amaroo]

FWIW....received this "draft advice" from my advisor :-
------------------------------------------------
As you may have seen in the media the Government announced some changes to superannuation on Friday. These changes have yet to be legislated, so they may change, however we wanted to make sure you are kept informed.

Changes to Tax Paid by Funds in Pension Phase

Currently funds don’t pay tax on income supporting a pension (with some exceptions), from 1 July 2014 income relating to a pension over $ 100,000 per individual per year will be taxed at 15%.

There will also be special rules to applying to capital gains:

• For assets that were purchased before 5 April 2013, the reform will only apply to capital gains that accrue after 1 July 2024
• For assets that are purchased from 5 April 2013 to 30 June 2014, individuals will have the choice of applying the reform to the entire capital gain, or only that part that accrues after 1 July 2014
• For assets that are purchased from 1 July 2014, the reform will apply to the entire capital gain

Changes to Concessional Contributions Cap:

• From 1 July 2013 the Concessional cap for people over 60 will be $ 35,000
• From 1 July 2014 the Concessional cap for people over 50 will be $ 35,000
• By 1 July 2018 the cap for people under 50 should reach $ 35,000 through indexation

The announced rules for higher contributions for people with less than $ 500,000 in super will not proceed.

Changes to Excess Contributions Tax
From 1 July 2013 any excess Concessional contributions can be withdrawn from the fund and taxed at the individual’s marginal rate plus interest. This replaces the current once- only option to have the excess taxed at individual marginal rates if the excess was $ 10,000 or less.
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* as always......not to be relied upon as advice

 

[Pushka]

FWIW....received this "draft advice" from my advisor :-
------------------------------------------------
As you may have seen in the media the Government announced some changes to superannuation on Friday. These changes have yet to be legislated, so they may change, however we wanted to make sure you are kept informed.

Changes to Tax Paid by Funds in Pension Phase

Currently funds don’t pay tax on income supporting a pension (with some exceptions), from 1 July 2014 income relating to a pension over $ 100,000 per individual per year will be taxed at 15%.

There will also be special rules to applying to capital gains:

• For assets that were purchased before 5 April 2013, the reform will only apply to capital gains that accrue after 1 July 2024
• For assets that are purchased from 5 April 2013 to 30 June 2014, individuals will have the choice of applying the reform to the entire capital gain, or only that part that accrues after 1 July 2014
• For assets that are purchased from 1 July 2014, the reform will apply to the entire capital gain

-----------------------------------------------------------------------------------------------
* as always......not to be relied upon as advice

This, is interesting. They plan to bring in Capital Gains Tax on pension paying superannuation funds! Is this for funds only paying out $100K in pensions, or all funds!

Not planning on buying any more CGT type things in our Super as it's a little late but this stuff is quite scary.

 

[medhead]

This, is interesting. They plan to bring in Capital Gains Tax on pension paying superannuation funds! Is this for funds only paying out $100K in pensions, or all funds!

Not planning on buying any more CGT type things in our Super as it's a little late but this stuff is quite scary.

The language is a bit woolly in what you quoted but the $100k is earnings of the fund not the amount paid out as a pension.

 

[Pushka]

The language is a bit woolly in what you quoted but the $100k is earnings of the fund not the amount paid out as a pension.

Seriously? Wow, that is even worse. This isn't just for high earners then (aka those nasty RICH people). It is quite possible for a fund to have over $100,000 earnings in a year - crikeys, we did that when we sold a block of land we had in our Super Fund. And it was a tiny fund at that stage - we just happen to have made a great investment. (Hindmarsh Island Marina, bought just before the bridge was built and sold just after it was and before the drought) We had to pay CGT as it was in the accumulation phase, but we would be so pi$%ed off if we had to pay CGT in the pension phase.

So, what if a fund had several members? Is the $100K apportioned out per member?

 

[medhead]

Seriously? Wow, that is even worse. This isn't just for high earners then (aka those nasty RICH people). It is quite possible for a fund to have over $100,000 earnings in a year - crikeys, we did that when we sold a block of land we had in our Super Fund. And it was a tiny fund at that stage - we just happen to have made a great investment. (Hindmarsh Island Marina, bought just before the bridge was built and sold just after it was and before the drought) We had to pay CGT as it was in the accumulation phase, but we would be so pi$%ed off if we had to pay CGT in the pension phase.

So, what if a fund had several members? Is the $100K apportioned out per member?

I have no idea how it works. Just saying that funds with earnings over $100k will be taxed at 15 percent. Doesn't the fund have to attribute the correct portion of the fund to the relevant member? I don't expect my super account to be hit with 15% tax even through my super fund will be earning well over $100k. Surely the same principle applied to SMSF?

I'm really not sure how that makes any difference in you CGT example. If the fund had to pay CGT, that's 15% anyway.

 

[Pushka]

I have no idea how it works. Just saying that funds with earnings over $100k will be taxed at 15 percent. Doesn't the fund have to attribute the correct portion of the fund to the relevant member? I don't expect my super account to be hit with 15% tax even through my super fund will be earning well over $100k. Surely the same principle applied to SMSF?

I'm really not sure how that makes any difference in you CGT example. If the fund had to pay CGT, that's 15% anyway.

Funds don't pay CGT in the pension phase. But with the proposed legislation they will. That was my point. (In my case we had to pay it as we weren't in that phase so yes it made no difference )

I suspect the proposed legislation hasn't really been thought out properly.

 

[dajop]

Just saying that funds with earnings over $100k will be taxed at 15 percent.

I think even this statement is not accurate! It's not funds with earnings over $100k that will be taxed at 15 percent, it's earnings in funds over $100K that will be taxed at 15 percent, there's a $15K difference between the two. The first $100k in earnings appears to be tax free. It's only the earnings over $100K that get taxed.