Superannuation Discussion + market volatility

[exceladdict]

Does anyone have the link to the actual detail of the announcement - I'd be keen to actually read this. What I'm struggling with is this picking on SMSF's, surely this ability to claim back franking credits also exists with all assets in pension phase (e.g. retail and Industry super pension products).

Or was this just something announced to the press without significant backing information?

This is not the announcement, but is a good analysis on MacroBusiness.

Also, @Quickstatus, on the radio yesterday there was a discussion that apparently Turnbull did look into this 3-4 years ago.

 

[Quickstatus]

@exceladdict we both are reading the same stuff. Haha. see #898

As I said Turnbull and Co must be kicking themselves. And ScoMo cant say a thing because he fiddled with Super retrospectively.

 

[RB]

Yes. Totally agree. They are targeting SMSF completely.

Don't think "completely" is the correct term in any sense.
It is actually broader than SMSF. As I posted previously there has been little reporting done, but the impact on managed funds distribution of income needs to be considered. Also not all super funds have all money in just Aussie shares, not all dividends are fully franked, some investors hold their shares outside of super etc. As usual there will be anomalies & oversights

 

[Flying mermaid]

Don't think "completely" is the correct term in any sense.
It is actually broader than SMSF. As I posted previously there has been little reporting done, but the impact on managed funds distribution of income needs to be considered. Also not all super funds have all money in just Aussie shares, not all dividends are fully franked, some investors hold their shares outside of super etc. As usual there will be anomalies & oversights

it is much broader than SMSFs, although obviously hits them heavily, particularly those in pension mode. Doesn’t hit the APRA funds, as they have tax liabilities to offset.

I still think it needs to be grandfathered for those retired or maybe those over a certain age, as used to happen in the past. Australia probably can no longer afford these policies, brought in when we were swimming in money before the GFC. So by all means change it, but recognise that for those who are already retired, they can no longer go back to work to make up the difference.

We are in the fortunate position of being able to make changes to our investment mix, to offset these changes (at the cost of more risk), but the less you have the bigger the hit.....

 

[RB]

it is much broader than SMSFs, although obviously hits them heavily, particularly those in pension mode. Doesn’t hit the APRA funds, as they have tax liabilities to offset.

I still think it needs to be grandfathered for those retired or maybe those over a certain age, as used to happen in the past. Australia probably can no longer afford these policies, brought in when we were swimming in money before the GFC. So by all means change it, but recognise that for those who are already retired, they can no longer go back to work to make up the difference.

We are in the fortunate position of being able to make changes to our investment mix, to offset these changes (at the cost of more risk), but the less you have the bigger the hit.....

All fine but the tax liabilities are unlikely to to be the same so some impact. I guess you could also question if it is good policy when a potential Govt policy change sees people think they need to change their risk profile.
Personally I will be surprised if the mooted changes are adopted in their entirety so too early react

 

[CaptJCool]

it is much broader than SMSFs, although obviously hits them heavily, particularly those in pension mode. Doesn’t hit the APRA funds, as they have tax liabilities to offset.

I still think it needs to be grandfathered for those retired or maybe those over a certain age, as used to happen in the past. Australia probably can no longer afford these policies, brought in when we were swimming in money before the GFC. So by all means change it, but recognise that for those who are already retired, they can no longer go back to work to make up the difference.

We are in the fortunate position of being able to make changes to our investment mix, to offset these changes (at the cost of more risk), but the less you have the bigger the hit.....

A good article in Macro-business

The refund of franking credits was the cream on the cake plus double some, it's similar to the crafting of financial arrangements to access at least $1 of age pension to access the free health care card.

I note negative geared property post retirement is not given as a tax credit. Those losses are carried by the owner concerned ...

So who pays the taxes when this all happens ?
..



I like the infographic on here. Superannuation Policy for Post-Retirement - Productivity Commission

At 85 we spend from taxes ave $55,000 per person per year and most these people are on super / age pension tax free and concessional non-super income with normal tax-free threshold plus SAPTO who pay no income tax.

I CANT do that working., take a second income stream and apply a second tax-free threshold. It gets loaded on top at the higher marginal rate
Neither, upon taking super as a defined benefits recipient will it be tax-free and were it over $1.6 m transfer cap ($100,000 pa) will it be tax-free and way too high to entertain accessing age pension nor health care card.

What we could also notice is what works for couples doesn't for singles (lower income Test) and some will lose age pension when their partner dies....

The positive part with the age pension figures is they have currently flatlined so despite 1,206,000 turning 65 between Censuses, Of the net 670,000 (570,000 died) only 264,000 went on age pension

Note the govt kicked a pile of high asset folk off it, taper rate change from $3 to 1 to $1.50 to 1 plus savings on defined benefits scheme being dropped from 50% to 10%, and won the 2016 election.

Figures Age pensions paid. Number over 65
June 11. 2.225 million. Census 3.012 mill. 73.8%
Sept 13 2.359 million
Sept 14 2.423 million 1.43 mill on full rate
Sept 16 2.556 million. 1.49 mill on full rate Census 3.676 mill 69.5%
Sept 17 2.489 million 1.55 mill on full rate. 67.7%

Source DSS (data.gov.au) & Census

About 1.28 million turn 65 by the next Census so that adds around another 720,000 -730,000 onto the potential applicant list... ouch. 280,000 extras...

So who's going to pay for all this ?

 

[lovetravellingoz]

A good article in Macro-business

The refund of franking credits was the cream on the cake plus double some, it's similar to the crafting of financial arrangements to access at least $1 of age pension to access the free health care card.

I note negative geared property post retirement is not given as a tax credit. Those losses are carried by the owner concerned ...

So who pays the taxes when this all happens ?
..

View attachment 120445

I like the infographic on here. Superannuation Policy for Post-Retirement - Productivity Commission

At 85 we spend from taxes ave $55,000 per person per year and most these people are on super / age pension tax free and concessional non-super income with normal tax-free threshold plus SAPTO who pay no income tax.

I CANT do that working., take a second income stream and apply a second tax-free threshold. It gets loaded on top at the higher marginal rate
Neither, upon taking super as a defined benefits recipient will it be tax-free and were it over $1.6 m transfer cap ($100,000 pa) will it be tax-free and way too high to entertain accessing age pension nor health care card.

What we could also notice is what works for couples doesn't for singles (lower income Test) and some will lose age pension when their partner dies....

The positive part with the age pension figures is they have currently flatlined so despite 1,206,000 turning 65 between Censuses, Of the net 670,000 (570,000 died) only 264,000 went on age pension

Note the govt kicked a pile of high asset folk off it, taper rate change from $3 to 1 to $1.50 to 1 plus savings on defined benefits scheme being dropped from 50% to 10%, and won the 2016 election.

Figures Age pensions paid. Number over 65
June 11. 2.225 million. Census 3.012 mill. 73.8%
Sept 13 2.359 million
Sept 14 2.423 million 1.43 mill on full rate
Sept 16 2.556 million. 1.49 mill on full rate Census 3.676 mill 69.5%
Sept 17 2.489 million 1.55 mill on full rate. 67.7%

Source DSS (data.gov.au) & Census

About 1.28 million turn 65 by the next Census so that adds around another 720,000 -730,000 onto the potential applicant list... ouch. 280,000 extras...

So who's going to pay for all this ?

Which is why I have long been of the belief that the super situation, combined with pensions and entitlements are all going to be continued to be tightened. ( Which is why I wanta bitt ofa buffer when I do retire)

The Age Tsunami is simply too big for it not to be.

Encouraging super has been a great success and the country, and individuals, will all be the much better for it. But if you take a Big Picture view there are elements of it that are too generous.

 

[tgh]

Some sensible comments here, although they do block my view of the trough a little when others are up to their ears.. anyway…..
Planning to quit business quite early I had many many spreadsheets modelling how I might survive.
LJH's brilliant ploy has seen my fund continue to grow even with drawing a substantial "pension".
Carking it with a fund bigger than the beginning was not the idea, and to that end I agree with some changes.
Otoh.. soooooooooo many of Shortens "battlers" have their snouts in the trough.. why should I be punished for self sufficiency ?

 

[Pushka]

I understand all this for people who have had the luxury of SG for all their working lives. I and many here haven’t. It didn’t kick in until we were into our mid thirties plus. Sandwich generation. Because at the other end the pension entry has been closed off. It needed to be of course but all we want is a grandfather clause for those already in pension phase.

 

[lovetravellingoz]

We all want the best for ourselves, and the proposed change will certainly hurt me more than many as I have quite a number of shares outside super, but when you examine it, it was a benefit that opened in 2010 that was more generous than it should have been. It may never get up or course, and it it does I would be sure that it will have been modified somewhat yet.

When I turned 18 my father gave me some sage advice. "When you vote, vote for what is best for the country rather than just yourself." Sometimes if something is wrong it needs to be addressed. If there is a problem, it needs to be faced. The Age Tsunami is still coming. The current things in place will help, but are not enough to hold it back.

PS. And no I have not had the benefit of SG for all of my working life. Though do not forget that most of the SG is the persons own hard earnt $$$ that is forced into super. It is not just some form of "extra" apart from the reduced taxation rate.

 

[Pushka]

We all want the best for ourselves, and the proposed change will certainly hurt me more than many as I have quite a number of shares outside super, but when you examine it, it was a benefit that opened in 2010 that was more generous than it should have been. It may never get up or course, and it it does I would be sure that it will have been modified somewhat yet.

When I turned 18 my father gave me some sage advice. "When you vote, vote for what is best for the country rather than just yourself." Sometimes if something is wrong it needs to be addressed. If there is a problem, it needs to be faced. The Age Tsunami is still coming. The current things in place will help, but are not enough to hold it back.

PS. And no I have not had the benefit of SG for all of my working life. Though do not forget that most of the SG is the persons own hard earnt $$$ that is forced into super. It is not just some form of "extra" apart from the reduced taxation rate.

I remember when the SG was brought in that we did not reduce our staff salaries but we added that relevant percentage on top of their salary. So in that instance it was a deferred pay rise. I think that was the way we had to do it at the time.

 

[RB]

Bit of a timeline of retirement & super
Chronology of superannuation and retirement income in Australia – Parliament of Australia

 

[lovetravellingoz]

Bit of a timeline of retirement & super
Chronology of superannuation and retirement income in Australia – Parliament of Australia

I like this one from 1961:

Superannuation funds exempt from tax if they held required amounts of Commonwealth Bonds.

Then later taxation came back...

 

[Flying mermaid]

All fine but the tax liabilities are unlikely to to be the same so some impact. I guess you could also question if it is good policy when a potential Govt policy change sees people think they need to change their risk profile.
Personally I will be surprised if the mooted changes are adopted in their entirety so too early react

Far too early to make changes but doing some heavy thinking. We are totally self funded - no parts or health care cards.

 

[cove]

I am still pleased with running my SMSF myself using Esuper doing the admin at $799 a year for the two of us. I loved the tax refund that recently landed into the fund bank account.

 

[Pushka]

Far too early to make changes but doing some heavy thinking. We are totally self funded - no parts or health care cards.

I’m on the cusp but the lack of grandfather clauses is worrying. One election away. I think we have a few months unless Libs get a sniff.

 

[lovetravellingoz]

I am still pleased with running my SMSF myself using Esuper doing the admin at $799 a year for the two of us. I loved the tax refund that recently landed into the fund bank account.

Did you use them to set up a Company as the Trustee? To have a Company as Trustee seems to be recommendation of most people.

 

[Buzzard]

I think what hurts the most is that the pollies never seem to suffer harsh super changes that are forced on us plebs.

 

[Pushka]

I think what hurts the most is that the pollies never seem to suffer harsh super changes that are forced on us plebs.

Albanese was asked about that this morning on radio. He said that as an employee their contract for Super was protected. Yeah.

 

[Flying mermaid]

Albanese was asked about that this morning on radio. He said that as an employee their contract for Super was protected. Yeah.

Some animals are more equal than others....