Superannuation Discussion + market volatility

[Quickstatus]

Just rec'd my tax bill for going over the transfer balance cap. It is 15% of what I earned on the excess exceeded for 01/07/2017 - 22/01/2018. It was a high earning phase. i'd like to hear if people are successfully appealing.

Actually you get taxed on the combined total of the notional earnings of the excess amount compounded daily plus excess transfer
The formula for calculating the notional earnings is fairly punitive. Currently the ATO is assuming you are earning 9% pa calculated and compounded daily on the excess!!!!!

 

[CaptJCool]

Just rec'd my tax bill for going over the transfer balance cap. It is 15% of what I earned on the excess exceeded for 01/07/2017 - 22/01/2018. It was a high earning phase. i'd like to hear if people are successfully appealing.

THE 2006 Costello Howard decision to exempt everyone over 60 from paying income tax except former public servants has finally been recognised as an over-reach...

For someone to be over cap, they are in a fortunate wealth position, and the EXCESS DOLLAR is still generously taxed at just 15%. Compare this to the average hard-working Australians who is paying at least 20% and the comparable tax on $180,000 is $57,800, that's a tax rate of 32.1% on EVERY DOLLAR.

IN A ROUGH calc of the above $180,000 the total tax is $6,000, which is 3.3% on EVERY DOLLAR

Now of course I would expect to pay less seeing the capital value is being drawn down, but for the no super age pensioners to contribute, (which BTW they do via GST), it's the old "We better hope the richer gal or guy can stump up the money for our aged care, hospital bed and pension cause we can't".

SO who's going to pay ?

BTW no GST ON INTERNATIONAL TRAVEL

PS That calculated daily earning rare of 9% is determined how ?

 

[Quickstatus]

PS That calculated daily earning rare of 9% is determined how ?

See formula above....

I suspect that the majority of personal taxpayers and nontaxpayers will in their lifetime receive more in transfer payments (welfare, health, education etc) than they will ever pay in tax. This is the greatest structural issue confronting most latter-day economies.
And the government is running a Ponzi scheme (by growing the number of taxpayers) to pay for todays largesse.

Can you point to where there is ever a policy that said everyone over 60 is exempt from paying income tax?

Yes no GST on international travel. No issue there. What would happen if there was?.

 

[Pushka]

I think the $25,000 SG and SS cap is going to impact me but sadly not the 1.6 million one. I’d love to have that problem.

Still paying tax and over 60. Oh well.

 

[OATEK]

I think the $25,000 SG and SS cap is going to impact me but sadly not the 1.6 million one. I’d love to have that problem.

Still paying tax and over 60. Oh well.

I was caught with the $25k SG cap when my last employer was a bit slow in paying my monthly contributions, and I had 11 in one year, and 13 in the next. Waiting for the official notice from the ATO, but I know its coming.

 

[CaptJCool]

See formula above....

I suspect that the majority of personal taxpayers and nontaxpayers will in their lifetime receive more in transfer payments (welfare, health, education etc) than they will ever pay in tax. This is the greatest structural issue confronting most latter-day economies.
And the government is running a Ponzi scheme (by growing the number of taxpayers) to pay for todays largesse.

Can you point to where there is ever a policy that said everyone over 60 is exempt from paying income tax?

Yes no GST on international travel. No issue there. What would happen if there was?.

Apologies. Given this was a super discussion I assumed the comment was over 60s on super.

So I wasn't explicit.

This is an excellent summary of current state of play
Tax-free super for over-60s, except for some

In light of all this and the capital necessary to earn an age pension for a couple, kinda makes me wonder why I bothered what with all the means testing going around. Oh, that's right, I can expect to live longer to enjoy more overseas journeys than those who have an exempt million dollar home and enjoy age pension, home care packages and a no income tax stay near home in their later years.

 

[QF WP]

We have been listening to the Royal Commission. Sad times for those who were fleeced by financial planners that’s for sure. Not all financial planners are incompetent.

I think the main thing is that for the vast majority who are compliant, there are many hoops to jump through. Unfortunately there are "shorcutters" in all many aspects of life

Thus the reason I have been a little quiet in this thread lately. Today was my highest day of calls from clients (5), but I have only had 18 in total since the start of the Second Round of the RC.

The disappointing thing is that all of the large financial services businesses have had issues - and AMP's looks like the worst. CBA had their CEO resign after his testimony in the First Round. With Catherine Brenner's resignation as AMP Chairman this morning and Brian Salter as AMP Chief Counsel, it brings to 3 that have gone from AMP. I am still expecting another one who was complicit in the decision making on the "fee for no service" decision making to finally doff his cap and go.

I've had the "pleasure of reading about 80 pages of testimony from the first weeks' hearings. Sobering and difficult to hear about the internal "fee for no service" issue when they were not following their own rules set for us. They won't have a "holier than thou" attitude any more.

 

[Pushka]

I was caught with the $25k SG cap when my last employer was a bit slow in paying my monthly contributions, and I had 11 in one year, and 13 in the next. Waiting for the official notice from the ATO, but I know its coming.

You should be fine. It was 35k last FY.

 

[There'sOnlyOneJimmy]

Straight from horses mouth about transfer balance cap indexation. STAY BELOW THE CAP FOLKS!!!

View attachment 124492

I’m a bit rusty on some of the equine dialects... but, If I’m understanding the horse correctly, it seems to indicate that the indexation will only apply to the UNUSED PORTION of the $1.6mill cap (“...the amount of your available cap space.”)
If that’s right, then it seems like there’s not a lot of point holding back (say) $1,000, because the indexation effect on that will be pretty insignificant in the whole scheme of things...

 

[OATEK]

You should be fine. It was 35k last FY.

Sadly not, The 11 and 13 are the main issue. I was contributing close to the limit over the two years, so will go over in one of them.

 

[Quickstatus]

I’m a bit rusty on some of the equine dialects... but, If I’m understanding the horse correctly, it seems to indicate that the indexation will only apply to the UNUSED PORTION of the $1.6mill cap (“...the amount of your available cap space.”)
If that’s right, then it seems like there’s not a lot of point holding back (say) $1,000, because the indexation effect on that will be pretty insignificant in the whole scheme of things...

Yes that is correct. A little wiggle room but not significant. Only a minor play for those with super in excess of transfer balance cap which may be >2mil in 10-15 years

 

[tgh]

should we all buy AMP tomorrow ?

 

[cove]

In Perth on June 30th,2017 I was ready to drive up the street to the ANZ to make a pension payment if it proved necessary. Over here the stock market closes around 2.10pm. On that day we were just under the $1.6 million each so no drive was necessary.
It is only 15% tax but I don't need that unless the rules change again, again and again.

 

[Buzzard]

should we all buy AMP tomorrow ?

I think there is still a long way to the bottom. I would sooner buy TLS or ANZ. Even NAB in the $28 range would be a better buy than AMP IMHO.

 

[oz_mark]

Thus the reason I have been a little quiet in this thread lately. Today was my highest day of calls from clients (5), but I have only had 18 in total since the start of the Second Round of the RC.

The disappointing thing is that all of the large financial services businesses have had issues - and AMP's looks like the worst. CBA had their CEO resign after his testimony in the First Round. With Catherine Brenner's resignation as AMP Chairman this morning and Brian Salter as AMP Chief Counsel, it brings to 3 that have gone from AMP. I am still expecting another one who was complicit in the decision making on the "fee for no service" decision making to finally doff his cap and go.

I've had the "pleasure of reading about 80 pages of testimony from the first weeks'"hearings. Sobering and difficult to hear about the internal "fee for no service" issue when they were not following their own rules set for us. They won't have a "holier than thou"attitude any more.

I am just glad I dumped AMP (and National Mutual) and its entire dealer network as a customer about 30 years ago.

The biggest lie of all is that they put shareholders before customers. What rubbish. They put their own bonuses before everything.

Unethical, immoral bunch of snakes.

 

[PLANT]

What are people thoughts on IOOF Pursuit Select superannuation account?
Fees and earnings????
These guys caught up in any of the Royal Commission?

 

[QF WP]

@PLANT , I don't believe it has been announced which companies or witnesses are yet to front the Royal Commission in Round 3 of the Hearings, due to start on 21 May. See here: Public Hearings.

IOOF in recent years (2011 to 2017) have bought a number of businesses from ANZ ( including OnePath, RI Advice, Millenium3, FSP and Elders) as well as smaller dealer groups like Shadforths, Lonsdale, Plan B and others.
IOOF offloads ANZ super, advice arms for $975m
https://www.ioof.com.au/__data/assets/pdf_file/0014/132008/Investor_presentation.pdf
IOOF closes My Adviser, Plan B after moving on two thirds of planners
(just to cite a few stories)

Remember that the majority of damage done by appearing at the RC and having a negative outcome, is brand and reputational.

 

[burmans]

The second paragraph below should concern some too!

If you have more than one super pension account in the retirement phase, the cap applies to the combined amount in all of those pension accounts.

The value of other pensions or annuities must also be counted towards your cap – for example:

• a super pension you are receiving, or start to receive, from a deceased spouse’s super account
• pension income you are receiving from a former spouse’s super pension as part of a family court settlement.

 

[JohnK]

I am just glad I dumped AMP (and National Mutual) and its entire dealer network as a customer about 30 years ago.

The biggest lie of all is that they put shareholders before customers. What rubbish. They put their own bonuses before everything.

Unethical, immoral bunch of snakes.

Isn't this true for most financial institutions?

I struggle to understand how a fund can lose money but still pay executive bonuses.

I don't remember the full story but do remember the US government bailouts in 2008-2009 and some financial institutions were using the money for the bailout to pay executive bonuses. Disgusting.

 

[oz_mark]

Isn't this true for most financial institutions?

I guess we'll find out as the Royal Commission unfolds.