Superannuation Discussion + market volatility

[SYD]

Respectfully disagree.

You can be a self-fundee retiree for 30+ years, enjoy the health services, security and infrastructure etc of the state for really very little tax.

The money invested in super is taxed concessionally. The growth (which is a result of your investments not toil) is taxed favourably in accumulation and not at all in pension mode

You may have paid your taxes while you were working but the deal for most self-funded retirees is very generous in Australia.

Yep!

There is this misconception that there’s some sort of “Death duties” on super but it’s just the ATO coming after those concessions that aren’t rightfully bestowed upon the living.

TBH, when I’m gone it’s not my problem but if I had for warning, I’d just take a chunk out of super tax free and that would pass through my estate tax free. Simples.

 

[Flashback]

Yep!

There is this misconception that there’s some sort of “Death duties” on super but it’s just the ATO coming after those concessions that aren’t rightfully bestowed upon the living.

TBH, when I’m gone it’s not my problem but if I had for warning, I’d just take a chunk out of super tax free and that would pass through my estate tax free. Simples.

As it currently stand.... based on current tax law....... of course it could all be different by the time you die! The recent changes to inheritance tax in the UK are a great example of that.

 

[Pushka]

Yep!

There is this misconception that there’s some sort of “Death duties” on super but it’s just the ATO coming after those concessions that aren’t rightfully bestowed upon the living.

TBH, when I’m gone it’s not my problem but if I had for warning, I’d just take a chunk out of super tax free and that would pass through my estate tax free. Simples.

And as that article said that's what could happen with planning but sometimes we don't get the chance to do that.

 

[Brissy1]

TBH, when I’m gone it’s not my problem but if I had for warning, I’d just take a chunk out of super tax free and that would pass through my estate tax free. Simples.

Or have an ACD with a POA.
But... what if those chest pains were just heartburn!

 

[tgh]

A trust structure neatly moves the goal posts.
The beneficiaries choose when to draw down and what tax will be paid

 

[Quickstatus]

My understanding is that concessional contributions + growth is classified as non-taxable. Its only non-concessional contributions (i.e money that has already been taxed at marginal rates) that is classified as non-taxable

What am I not getting here?

recent changes to inheritance tax in the UK are a great example of that.

Jeremy is not happy

 

[andye]

What am I not getting here?

Non-concessional can also include money that goes into super but comes from your bank account even if taxable at 0%. Includes lump sums (commutations) from super, lottery wins etc

 

[SYD]

A trust structure neatly moves the goal posts.
The beneficiaries choose when to draw down and what tax will be paid

Quite good for families etc but not worth the effort for those without immediate family.

 

[OZDUCK]

What am I not getting here?


Jeremy is not happy

It was rather amusing to see him attending the rally complaining about changes to Death Duty rules on farms to stop tax axoidance when he had apparently previously boasted about buying his farm as a tax avoidance measure.

 

[Quickstatus]

Non-concessional c

I understand NC contributions. It's the bit before that about concessional contributions.

 

[OATEK]

I have several super accounts, 1 DBS and 2 income streams (IS). The second IS account was created to receive funds from the first IS. The first account with say 700k, is now $150k. The rest has been withdrawn over a number of years, and then become non-concessional or after tax contributions to the second IS. My Taxed vs Non-taxed components have shifted from 60:40 to 90:10. So at this point only 10% of my super will be taxed if passing to non-dependents.

Now as has been discussed, you can't just roll money into an existing IS. So the transfer and contribution caps come into play, and each withdrawal is allocated proportionally on taxed/untaxed, so the "washing" as someone put it is progressive over time. At one stage the bring forward rules allowed me to pull out $300k in one year, but this was three years worth so the next transfer awaits expiry of that period. So after 30/6/24 I can pull out non-concessional contributions up to the cap of $120,000. I will then finish up with a very small account of around $30k that has a taxable component, and an account of about $700k that is fully taxed. Then it all stops at age 75.

Now this is as it has been explained to me, I am not an expert, and I have to say making BPAY payments to the fund of up to $300k was an interesting experience.

 

[dxwell]

I have several super accounts, 1 DBS and 2 income streams (IS). The second IS account was created to receive funds from the first IS. The first account with say 700k, is now $150k. The rest has been withdrawn over a number of years, and then become non-concessional or after tax contributions to the second IS. My Taxed vs Non-taxed components have shifted from 60:40 to 90:10. So at this point only 10% of my super will be taxed if passing to non-dependents.

Now as has been discussed, you can't just roll money into an existing IS. So the transfer and contribution caps come into play, and each withdrawal is allocated proportionally on taxed/untaxed, so the "washing" as someone put it is progressive over time. At one stage the bring forward rules allowed me to pull out $300k in one year, but this was three years worth so the next transfer awaits expiry of that period. So after 30/6/24 I can pull out non-concessional contributions up to the cap of $120,000. I will then finish up with a very small account of around $30k that has a taxable component, and an account of about $700k that is fully taxed. Then it all stops at age 75.

Now this is as it has been explained to me, I am not an expert, and I have to say making BPAY payments to the fund of up to $300k was an interesting experience.

$300k in EFTPOS cards with cc earn? :0

 

[andye]

$300k in EFTPOS cards with cc earn? :0

The strong feedback I've had is that anything involving points earn is a big no-no for super. I.e direct from bank account only

 

[OATEK]

I have several super accounts, 1 DBS and 2 income streams (IS). The second IS account was created to receive funds from the first IS. The first account with say 700k, is now $150k. The rest has been withdrawn over a number of years, and then become non-concessional or after tax contributions to the second IS. My Taxed vs Non-taxed components have shifted from 60:40 to 90:10. So at this point only 10% of my super will be taxed if passing to non-dependents.

Now as has been discussed, you can't just roll money into an existing IS. So the transfer and contribution caps come into play, and each withdrawal is allocated proportionally on taxed/untaxed, so the "washing" as someone put it is progressive over time. At one stage the bring forward rules allowed me to pull out $300k in one year, but this was three years worth so the next transfer awaits expiry of that period. So after 30/6/24 I can pull out non-concessional contributions up to the cap of $120,000. I will then finish up with a very small account of around $30k that has a taxable component, and an account of about $700k that is fully taxed. Then it all stops at age 75.

Now this is as it has been explained to me, I am not an expert, and I have to say making BPAY payments to the fund of up to $300k was an interesting experience.

Someone has been reading this forum! This today from the Actuaries Institute:
Usefully, the report also aims to scrap some of the system’s more notorious loopholes such as the “recontribution strategy” where savers can cut future tax bills by taking money out of super before putting it back in again.
Also proposing a tax of 10% on all earnings in super.

https://www.theaustralian.com.au/business/wealth/lift-retiree-taxes-for-the-sake-of-young-australians-actuaries-institute-report/news-story/11f7f6cf6281ab368e85bab6ef2e6eca

 

[lovestotravel]

Someone has been reading this forum! This today from the Actuaries Institute:
Usefully, the report also aims to scrap some of the system’s more notorious loopholes such as the “recontribution strategy” where savers can cut future tax bills by taking money out of super before putting it back in again.
Also proposing a tax of 10% on all earnings in super.

https://www.theaustralian.com.au/business/wealth/lift-retiree-taxes-for-the-sake-of-young-australians-actuaries-institute-report/news-story/11f7f6cf6281ab368e85bab6ef2e6eca

Nothing good comes with these types of changes

 

[Pushka]

Someone has been reading this forum! This today from the Actuaries Institute:
Usefully, the report also aims to scrap some of the system’s more notorious loopholes such as the “recontribution strategy” where savers can cut future tax bills by taking money out of super before putting it back in again.
Also proposing a tax of 10% on all earnings in super.

https://www.theaustralian.com.au/business/wealth/lift-retiree-taxes-for-the-sake-of-young-australians-actuaries-institute-report/news-story/11f7f6cf6281ab368e85bab6ef2e6eca

The vultures are looming. They say it's fairer. Ah no, not for those already in pension phase having already paid 15% in accumulation.

 

[MARTINE]

The vultures are looming. They say it's fairer. Ah no, not for those already in pension phase having already paid 15% in accumulation.

It was ever thus
‘The road to hell is paved with good intention’
Shakespeare

 

[Pushka]

It was ever thus
‘The road to hell is paved with good intention’
Shakespeare

Nice saying. Let me amend that a little.

"The road to hell is paved with good intention to supplement someone else's bottom line, but not mine."

 

[burmans]

The vultures are looming. They say it's fairer. Ah no, not for those already in pension phase having already paid 15% in accumulation.

Can’t see this particular change happening but I do think there will eventually be changes!

 

[andye]

Can’t see this particular change happening but I do think there will eventually be changes!

I think change inevitable too but the politics would be hard. As super matures, there will be lots of people with very high pension account balances which are paying zero tax on growth

I would note that the money that has already been taxed at 15% is definitely your money.

The growth in pension phase however, has not been taxed at any stage and the proposal would presumably only apply on dividends and at time of sale of an asset (share/bond/property) etc. I dont think the actuaries are floating a tax on notional growth which was one of the issues holding up the $3M higher rate legislation.

If sonething similar did come to pass, I expect it would push some people to withdraw their super at retirement to avoid paying tax (however financially unwise that might be).