Debt and Deficit - Coalition Budget Emergency

[Elroo]

As I recall there was also an education and health (or maybe it was hospitals fund) and the Rudd/Swan government cleaned them both out.

Did they you mental midget?

It's not that hard to actually look at the FF page and see they still exist!

http://www.futurefund.gov.au/

Facts at a glance
$118.40 billion
Future Fund at 31 December 2015

$3.71 billion
Education Investment Fund at 31 December 2015

$3.65 billion
Building Australia Fund at 31 December 2015

$4.29 billion
DisabilityCare Australia Fund at 31 December 2015

$3.14 billion
Medical Research Future Fund at 31 December 2015

 

[Power Raid]

I did, just added others that I have been a customer of or know for over 25 years.
I make it a purpose to support small business, never buy fresh fruit and vegies or meat at supermarket chains.
Trying to catch me out? Better you concentrate on how they will be affected (that is if you possibly can).

I would have thought the GST exemption on cheap jewellery imports vs from a retailer would impact their business

I would have thought the power bills and the rent would also impact.

are you suggesting non of those impact the business?


nice look over there BTW

 

[Power Raid]

Did they you mental midget?

It's not that hard to actually look at the FF page and see they still exist!

http://www.futurefund.gov.au/

Facts at a glance
$118.40 billion
Future Fund at 31 December 2015

$3.71 billion
Education Investment Fund at 31 December 2015

$3.65 billion
Building Australia Fund at 31 December 2015

$4.29 billion
DisabilityCare Australia Fund at 31 December 2015

$3.14 billion
Medical Research Future Fund at 31 December 2015

the education fund was $10b prior to Rudd's raid. Not sure on the other balances prior to the raid

 

[Gough]

How would you have responded to the to the GFC?

 

[Maggie5]

I would have thought the GST exemption on cheap jewellery imports vs from a retailer would impact their business

I would have thought the power bills and the rent would also impact.

are you suggesting non of those impact the business?


nice look over there BTW

Didn't sell 'cheap' jewellery, your presumption is predictable!
Power was minimal as repairs and manufacture were conducted at home.

It may seem a strange concept to you but if the community you work in is struggling financially to keep the family in food, pay for kids schooling and the mortgage, there is not a lot of extra money left. People are hurting.
Stop trying to discuss things you have no idea about, stick to your worldly waffle.

The government keeps telling the public that the have a spending problem so what do they want to do? Increase the GST, this seems to me that what they really have is a revenue problem.
Instead of looking at what they need to do to fix the economy, they take the lazy option. Useless!
Please don't reply because you really don't get it and I don't want to waste any more time with you.

 

[Rob]

In 2006 when the government choose to set up the FF the total Commonwealth unfunded superannuation was $103 billion, by 2007 the unfunded superannuation was approximately $105 billion and the FF had approximately $60 billion.

Yep, and they didn't have enough to fully fund it then either.

How much is it now?

Which accounts? The 3 separate employee superannuation funds which the Commonwealth has refused to fund.

Which they didn't have enough to fully fund. So given that (and going back to the question) - which accounts do you fund and which accounts do you not fund?

Previously answered; most employee superannuation benefits are "defined"at the time of an employees exit from the Commonwealth workforce, and increase by the CPI until they reach their preservation age. If the Commonwealth had funded the superannuation schemes employees would have been able to have their "defined"employer benefits fully funded upon exit from the Commonwealth and then earn market rates on their funds until they reached their preservation age.

You can't actually do that because you don't know exactly how much it's going to cost. If you take a pension for life, the actual cost of it is going to vary greatly. Obviously someone that dies the next day is going to cost a lot less than someone that lives until 110. Never mind that the actual amount paid by the super fund every year may we well in excess of the earnings of the money within the fund. Also take into account that for the PSS (for example), benefits are based on salary upon exit of the APS, so someone that gets a quick promotion or 2 towards their end of their careers can see their super 'balance' rise considerably. But until they retire, it's impossible to know what that balance will be.
These reasons are pretty much why the defined benefit schemes have been closed for years. They're impossible to budget for.

 

[Elroo]

the education fund was $10b prior to Rudd's raid. Not sure on the other balances prior to the raid

It was the Rudd government which set up the Education fund in 2008.

 

[Elroo]

Yep, and they didn't have enough to fully fund it then either.

How much is it now?



Which they didn't have enough to fully fund. So given that (and going back to the question) - which accounts do you fund and which accounts do you not fund?



You can't actually do that because you don't know exactly how much it's going to cost. If you take a pension for life, the actual cost of it is going to vary greatly. Obviously someone that dies the next day is going to cost a lot less than someone that lives until 110. Never mind that the actual amount paid by the super fund every year may we well in excess of the earnings of the money within the fund. Also take into account that for the PSS (for example), benefits are based on salary upon exit of the APS, so someone that gets a quick promotion or 2 towards their end of their careers can see their super 'balance' rise considerably. But until they retire, it's impossible to know what that balance will be.
These reasons are pretty much why the defined benefit schemes have been closed for years. They're impossible to budget for.

Yep, and they didn't have enough to fully fund it then either.

The initial $60 billion was more than enough money to fully fund the unfunded liabilities of preserved members who had exited the commonwealth. Additional money could have been deposited into the employee super fund set up to manage the superannuation savings of commonwealth employees.

How much is it now?

I know how much it is Rob, how about attempting to undertake some independent investigation of your own rather than rely upon me to help you out?

Which they didn't have enough to fully fund. So given that (and going back to the question) - which accounts do you fund and which accounts do you not fund?

Answered above at my first point.

You can't actually do that because you don't know exactly how much it's going to cost.

Yes you can and they do. As per my previous 3 or 4 posts to "defined"amount of an employees benefit is established at the point of separation from the Commonwealth.

The direct funding of the Commonwealth super funds was one of the proposals put forward by the National Commission of Audit in 2005 to Costello but for political reason they/he choose not to. It was also a recommendation of the National Commission of Audit in 2014 to draw down the FF and to directly fund the Commonwealth Unfunded super funds.

If you take a pension for life, the actual cost of it is going to vary greatly.

Um they'd (members) be liable to the same drawdown requirements of all other funded superannuation in regards pensions at retirement.

Also take into account that for the PSS (for example), benefits are based on salary upon exit of the APS, so someone that gets a quick promotion or 2 towards their end of their careers can see their super 'balance' rise considerably.

Based upon their average salary over their last 3 birthdays; and? The benefit is defined at the time of their exiting the commonwealth.

You also seem to be unaware of the MBL that applies to Commonwealth super schemes.

But until they retire, it's impossible to know what that balance will be.

No thats incorrect, the balance is defined at the time they exit the Commonwealth; i.e as mentioned the MSBS has about 100,000 unfunded preserved members whose balance was "defined", or ëstablished at the time they exited the ADF. A preserved member is someone who has not reached their retirement age and has a preserved amount stuck in the Commonwealth super fund. Simply funding the accounts of these 100,000 unfunded members would be rather simple to do except for the political will.

http://www.smh.com.au/business/bank...arnings-on-trapped-super-20160125-gmdo5b.html

Former public servants denied investment earnings on trapped super
Date
January 31, 2016

Former ABC staffer Nicole Salisbury is frustrated that she can't rollover her Public Sector Superannuation balance into her preferred fund. Photo: Ben Rushton

Nicole Salisbury is angry that a government run superannuation scheme growing her compulsory retirement savings at less than the official inflation rate will not allow her to rollover her balance to another fund.

"I respect that I should not be able to access my super till retirement. I just want to be able to transfer my balance to a fund of my own choice to maximise its earning capacity," she said.

Ms Salisbury, who today owns a business with her husband, was previously employed as the national marketing manager for the Australian Broadcasting Corporation's youth radio station Triple J between 1995 and 1998.

As a federal public servant she became a default member of the Public Sector Superannuation Scheme defined benefit fund.


After she left the ABC to go work in the private sector, Ms Salisbury was shocked to discover that not only could she not transfer her balance to another fund, she was automatically switched into a preservation option that denies her a share of the investment earnings paid to active members.

Last financial year the PSS paid Ms Salisbury just 1.3 per cent on the mandatory employer contributions that make up the bulk of her account. That was less than the official annual consumer price index of 1.7 per cent.

Members still employed by the federal public service received investment earnings on their employer contributions of 12.6 per cent, which Ms Salisbury was only entitled to on the smaller portion of her balance derived from her own voluntary contributions.

 

[Rob]

The initial $60 billion was more than enough money to fully fund the unfunded liabilities of preserved members who had exited the commonwealth. Additional money could have been deposited into the employee super fund set up to manage the superannuation savings of commonwealth employees.

Ah, now we're getting somewhere.

I know how much it is Rob, how about attempting to undertake some independent investigation of your own rather than rely upon me to help you out?

I said it was around a quarter of a trillion. You said that was wrong. I asked how much it was then.

Not sure why you think I was being in some way unreasonable. If you know, say it.

Yes you can and they do. As per my previous 3 or 4 posts to "defined"amount of an employees benefit is established at the point of separation from the Commonwealth.

The direct funding of the Commonwealth super funds was one of the proposals put forward by the National Commission of Audit in 2005 to Costello but for political reason they/he choose not to. It was also a recommendation of the National Commission of Audit in 2014 to draw down the FF and to directly fund the Commonwealth Unfunded super funds.

Political reasons? No, it's because they didn't have the money, and they still don't. Not all of it anyway - not even close.

Um they'd (members) be liable to the same drawdown requirements of all other funded superannuation in regards pensions at retirement.

No, it's a fixed pension adjusted annually for CPI. It is nothing like the requirements for members of an accumulation fund in pension phase, who must simply withdraw a minimum % of the fund balance.

To use an example, let's say your 'benefit' upon retirement is half a million bucks, and you choose to take a 100% pension. The actual amount is based on your age (i.e the older you are the higher the pension) - for the example let's say you get a $45k a year pension. Now the location and earnings on that half a million bucks are now irrelevant to you. If the stock market crashes, you still get your pension. If it triples in a year, you get the same. It is therefore entirely possible that even if the government fully funded your $500k, that could run out well before you die and the government have to spend more paying the shortfall. It's also possible that you die the next day and the government pockets the $500k.

Either way, it's impossible to budget for. You can try, but it's unlikely to be accurate.

Based upon their average salary over their last 3 birthdays; and? The benefit is defined at the time of their exiting the commonwealth.

You also seem to be unaware of the MBL that applies to Commonwealth super schemes.

For the PSS, it's a multiple of 10 isn't it? It's not a $$$ figure.

No thats incorrect, the balance is defined at the time they exit the Commonwealth; i.e as mentioned the MSBS has about 100,000 unfunded preserved members whose balance was "defined", or ëstablished at the time they exited the ADF. A preserved member is someone who has not reached their retirement age and has a preserved amount stuck in the Commonwealth super fund. Simply funding the accounts of these 100,000 unfunded members would be rather simple to do except for the political will.

http://www.smh.com.au/business/bank...arnings-on-trapped-super-20160125-gmdo5b.html

Apologies, I meant leave the APS as opposed to retire.

But if you're talking about old members being able to rollover into another super fund, I agree with you. They should be able to. I guess that would require a change in rules for the fund.

 

[Elroo]

Ah, now we're getting somewhere.



I said it was around a quarter of a trillion. You said that was wrong. I asked how much it was then.

Not sure why you think I was being in some way unreasonable. If you know, say it.




Political reasons? No, it's because they didn't have the money, and they still don't. Not all of it anyway - not even close.



No, it's a fixed pension adjusted annually for CPI. It is nothing like the requirements for members of an accumulation fund in pension phase, who must simply withdraw a minimum % of the fund balance.

To use an example, let's say your 'benefit' upon retirement is half a million bucks, and you choose to take a 100% pension. The actual amount is based on your age (i.e the older you are the higher the pension) - for the example let's say you get a $45k a year pension. Now the location and earnings on that half a million bucks are now irrelevant to you. If the stock market crashes, you still get your pension. If it triples in a year, you get the same. It is therefore entirely possible that even if the government fully funded your $500k, that could run out well before you die and the government have to spend more paying the shortfall. It's also possible that you die the next day and the government pockets the $500k.

Either way, it's impossible to budget for. You can try, but it's unlikely to be accurate.



For the PSS, it's a multiple of 10 isn't it? It's not a $$$ figure.



Apologies, I meant leave the APS as opposed to retire.

But if you're talking about old members being able to rollover into another super fund, I agree with you. They should be able to. I guess that would require a change in rules for the fund.

Ah, now we're getting somewhere.

I said it was around a quarter of a trillion. You said that was wrong. I asked how much it was then.

Not sure why you think I was being in some way unreasonable. If you know, say it.

Do some self research rather than requiring me to lead you around by the nose!

Political reasons? No, it's because they didn't have the money, and they still don't. Not all of it anyway - not even close.

No political reasons is why it wasn't funded with the initial $60 billion then followed up with additional contributions.

Funding the employee superannuation schemes is an äbove the line"expenditure which would have wiped out the surpluses of the government.

http://www.smh.com.au/articles/2004/09/13/1094927509567.html
Future Fund a Treasurer's bag of tricks

By Alan Kohler
September 14, 2004


The shrewd genius of the Treasurer, it seems, is equalled only by the utter incompetence of his department......

Why not put any extra money into the existing super funds? Because that would come out above the line and reduce the surplus, and because once you make a contribution to a super fund, you can't get it out. Note that it's not actually called the "Future Public Service Superannuation Fund", just the Future Fund. This could, when the time comes, mean the future of anything at all.

No, it's a fixed pension adjusted annually for CPI. It is nothing like the requirements for members of an accumulation fund in pension phase, who must simply withdraw a minimum % of the fund balance.

Funding the super funds will allow; (and i've said this numerous times) preserved members to roll over their funded superannuation to fund of their choice like all/most other fund members, and therefore be liable to the same pension drawdown provisions as others.

T

o use an example, let's say your 'benefit' upon retirement is half a million bucks, and you choose to take a 100% pension. The actual amount is based on your age (i.e the older you are the higher the pension) - for the example let's say you get a $45k a year pension. Now the location and earnings on that half a million bucks are now irrelevant to you. If the stock market crashes, you still get your pension. If it triples in a year, you get the same. It is therefore entirely possible that even if the government fully funded your $500k, that could run out well before you die and the government have to spend more paying the shortfall. It's also possible that you die the next day and the government pockets the $500k.

As ive said numerous occasions those preserved members who exit the Commonwealth system would have their accounts funded and then liable to the market rates of return they'd accrue on their super over the life of the fund until they retire.

Either way, it's impossible to budget for. You can try, but it's unlikely to be accurate.

Rubbish. The National Commission of Audit on at least 2 occasions recommended the Commonwealth directly fund their unfunded employee superannuation schemes. In their last audit in 2014 they recommended the Commonwealth draw down the FF and directly fund the unfunded super schemes;

http://www.ncoa.gov.au/report/docs/phase_one_report.pdf

Page 60-61;

page 60:
The Government should move over time to a ‘funded’ model for those defined benefit schemes, where the employer contribution would be paid to the superannuation trustee,the Commonwealth Superannuation Corporation , rather than retained in consolidated revenue. This is the arrangement the Commonwealth currently follows for its accumulation schemes.

This would reduce the Commonwealth’s medium to long -term liability, but lead to a significant and immediate increase in cash costs to government, estimated to be around $1.4 billion per year. If this option is also implemented in relation to the existing military scheme, this cost would rise to about $2.7 billion per year.Given the significant cash impacts of funding future employer contributions, the Government should consider allowing earlier drawdowns from the Future Fund (that is, before 2020). This would effectively offset , in part or full, the costs of a new accumulation scheme and,or the funding of defined benefit schemes in future years . This action would require amendments to the Future Fund Act 2006.

Apologies, I meant leave the APS as opposed to retire.

You mean preserved member benefits which I have mentioned for days?

But if you're talking about old members being able to rollover into another super fund, I agree with you. They should be able to. I guess that would require a change in rules for the fund

Well done it's only taken you how many days and how many posts to understand what funding "preserved member benefits"means? Here's another hint, they left the employment of the Commonwealth and they have an unfunded benefit stuck in the Commonwealth super scheme due to it being unfunded; i.e as per the article below they are receiving less than CPI increases each year due it being unfunded.

www.smh.com.au/business/banking-and-finance/former-public-servants-denied-investment-earnings-on-trapped-super-20160125-gmdo5b.html

Ms Salisbury, who today owns a business with her husband, was previously employed as the national marketing manager for the Australian Broadcasting Corporation's youth radio station Triple J between 1995 and 1998.

As a federal public servant she became a default member of the Public Sector Superannuation Scheme defined benefit fund.

After she left the ABC to go work in the private sector, Ms Salisbury was shocked to discover that not only could she not transfer her balance to another fund, she was automatically switched into a preservation option that denies her a share of the investment earnings paid to active members.

Last financial year the PSS paid Ms Salisbury just 1.3 per cent on the mandatory employer contributions that make up the bulk of her account. That was less than the official annual consumer price index of 1.7 per cent.

Members still employed by the federal public service received investment earnings on their employer contributions of 12.6 per cent, which Ms Salisbury was only entitled to on the smaller portion of her balance derived from her own voluntary contributions.

 

[Power Raid]

How would you have responded to the to the GFC?

I think you have to consider the drivers behind Rudd's actions which was quite simply......we couldn't have "the recession we had to have".

the problem with that was one was in the nations interest and the other the interest of Kevin. By overcooking the stimulus, he pushed our $ through the roof killing valuable industry.......industry that sustain blue collar work.

Worse still, as he pushed the AUD through the roof with stimulus the RBA raised interest rates to negate his efforts (thus the high AUD). Meaning we are left with high debt, a loss of valuable industry, a loss of blue collar jobs all for little gain.

There is no doubt we needed to respond to the GFC but the Harvey Norman give away, the set top boxes, the pink bats etc are examples of what not to do.

A more logical option would be to do things that encourage spending which generates long term benefit and activities that encourage employment. In regards to employment, the Feds could have come to an agreement to pay payroll tax for organisations that didn't downsize. Offering a 100% deduction for capital works under $20k for individuals and business. The other would be to have contingency capital works programs in case of down turns.........so you don't have F ups like the use it or lose it school hall program (basically having a plan rather than a response).

 

[Power Raid]

It was the Rudd government which set up the Education fund in 2008.

Costello set it up but Rudd raided it and then set up another smaller one. Gotta love politics!

 

[Power Raid]

Didn't sell 'cheap' jewellery, your presumption is predictable!
Power was minimal as repairs and manufacture were conducted at home.

It may seem a strange concept to you but if the community you work in is struggling financially to keep the family in food, pay for kids schooling and the mortgage, there is not a lot of extra money left. People are hurting.
Stop trying to discuss things you have no idea about, stick to your worldly waffle.

The government keeps telling the public that the have a spending problem so what do they want to do? Increase the GST, this seems to me that what they really have is a revenue problem.
Instead of looking at what they need to do to fix the economy, they take the lazy option. Useless!
Please don't reply because you really don't get it and I don't want to waste any more time with you.

So finally we have it. I suggested 4 items that create issues for small business and you knocked out 3 for that business, leaving just 1.

Thanks Maggie

 

[Moo]

I'd like to see the GST raised and applied to everything, however the bribes you would have to pay to all groups, govts, lobbyists and special interests would probably mean you'd end up with SFA.

For starters why don't we hit ....

Separation of church and state ....end religious tax exempt status, that should be what ....a billion at all levels? .....if they directly spend on charitable givings, then let them claim it, however the fact they don't pay things like rates on commercial properties - ridiculous.

Negative gearing ....we're not going to hit this sacred cow, however can we modify it where you limit the % of the loss that can be claimed in the residential market on a slow and sliding scale / only allow 100% write off against capital gains. The easing is hardly likely to cause a run out of gearing (it is just too good a deal) and so housing supply isn't go to evaporate and it wouldn't hurt the upward pressure on the housing market. Easing is going to save around 1 - 1.5 billion ....? around a billion if you took a 10% approach

If this proves to be the case in regards to slowing upward pressure on the residential market, look at phasing out any govt provided assistance for home owners ....it's not the govt's role to be interfering in any private markets.

Couple any capital flight from gearing coupled with better tax incentives for actually investing into productive schemes imagine just how much capital in this nation is just sitting in capitals (see I made a funny) and how it could actually be invested in something that produced.

Finally and just a WA plug ......take gambling revenues into account and treat them in the say way that mineral royalties are assessed....this would be a half a billion to WA and even if you disagree with our whinging arses on GST carve up, the fact we don't have pokies is a good one and it reduces the positive fiscal reward for poke states just continuing to license more and more of them.

There you go ...I've saved 2-3 billion and I haven't even raised a sweat.....however I am probably on the path to excommunication and will be drummed out of the entrepreneur club.

 

[Elroo]

Costello set it up but Rudd raided it and then set up another smaller one. Gotta love politics!

Nothing of the sort occurred.

Costello set up the higher education endowment fund with an initial $5 billion. Rudd closed it down and trasferred it to a new Education Fund along with another $4 billion from the 2008/09 budget.

 

[Moo]

Nothing of the sort occurred.

Costello set up the higher education endowment fund with an initial $5 billion. Rudd closed it down and trasferred it to a new Education Fund along with another $4 billion from the 2008/09 budget.

It must of been a great year of fiscal management to fund 4 billion dollars and not simply debt finance it.

 

[Power Raid]

Didn't sell 'cheap' jewellery, your presumption is predictable!
Power was minimal as repairs and manufacture were conducted at home.

FTR I referred to cheap jewellery on because it was in line with the GST threshold. In regards to expensive jewelry, it is difficult for local businesses to compete with overseas. I'm not sure why its the case.......can you shed light on that?

ie an IWC yatch club in Oz is $16k-20k but $5k-10k overseas. Same said with diamond rings which would sell for $10k-$20k finished in Oz could be bought rough for $300-$700 and cut professionally for $20-$30. Most people who can afford the top end travel and would be aware they could buy tickets overseas, stay in a nice hotel, buy the goods and still have change from the cost of buying here.

 

[Power Raid]

Nothing of the sort occurred.

Costello set up the higher education endowment fund with an initial $5 billion. Rudd closed it down and trasferred it to a new Education Fund along with another $4 billion from the 2008/09 budget.

you're right. I must have gotten the ~$10b from the full package

http://www.theage.com.au/news/business/costellos-clever-carrots/2007/05/08/1178390308675.html

"The endowment fund would be along the lines of the Future Fund, with $5 billion of this year's surplus going into it and the capital protected."

The fund, a Costello initiative, is part of a $9 billion budget education package, which also includes $700 tuition vouchers for children with literacy and numeracy problems, grants for teachers attending summer schools, and the lifting of the cap on local fee-paying students at universities."

 

[Maggie5]

http://www.news.com.au/national/bre...l/news-story/ca6f0466daa51569b20cbdeac165af68
"The Newspoll, published in The Australian on Wednesday, shows 62 per cent of voters in favour of the government raising the tax rate on superannuation contributions by high-income earners, while 27 per cent were opposed and 11 per cent undecided."
Figures are not surprising which goes to show, Government has options.

 

[Moo]

Name, shame & consumer boycotts is perhaps the only way crap like this will be dealt with.

http://m.smh.com.au/business/the-ec...ollars-in-australian-tax-20150519-gh5b6q.html

 

[JoseMourinho]

http://www.news.com.au/national/bre...l/news-story/ca6f0466daa51569b20cbdeac165af68
"The Newspoll, published in The Australian on Wednesday, shows 62 per cent of voters in favour of the government raising the tax rate on superannuation contributions by high-income earners, while 27 per cent were opposed and 11 per cent undecided."
Figures are not surprising which goes to show, Government has options.

Anyone earning over 300k is already taxed at 30% on their concessional contributions, increasing it to 35% will make little to no difference.

No wealthy person will ever put themselves in a situation where they earn more than 300k per year let alone 180k per year.

I've only had 1-2 clients in the last 3 years that have paid Div 293 Tax (earning over 300k in a financial year) mainly due to redundancies.

 

[Power Raid]

http://www.news.com.au/national/bre...l/news-story/ca6f0466daa51569b20cbdeac165af68
"The Newspoll, published in The Australian on Wednesday, shows 62 per cent of voters in favour of the government raising the tax rate on superannuation contributions by high-income earners, while 27 per cent were opposed and 11 per cent undecided."
Figures are not surprising which goes to show, Government has options.

make the change, as it will make some people feel good but unsure if it will collect much tax.

Only someone lazy or a fool would put large chunks into super and wear the tax. They'd be better off simply setting up an entity overseas in a jurisdiction where there is no CGT, having an investment board overseas and investing in assets in Australia with bank accounts in Australia. By simply using this as their "super" and not drawing until retirement, they can pay zero tax. Achieved by becoming a non-resident for a period when drawing down the funds and then returning or simply wear the tax over the years as they draw down the income.

So perhaps we need to change our non-resident tax laws at the same time, otherwise we will kill our own super industry for very little gain.

 

[JoseMourinho]

By simply using this as their "super" and not drawing until retirement, they can pay zero tax.

That is only limited to capital gains. Any income they make from dividends = Taxable Income in Australia.

The main problem with investing in Australia is that we pay a higher dividend ratio than other countries which means that taxable income issue comes up and it could be more beneficial putting it into Superannuation being taxed at 15% instead of 32.5%.

 

[Power Raid]

That is only limited to capital gains. Any income they make from dividends = Taxable Income in Australia.

The main problem with investing in Australia is that we pay a higher dividend ratio than other countries which means that taxable income issue comes up and it could be more beneficial putting it into Superannuation being taxed at 15% instead of 32.5%.

yep, spot on

 

[Rob]

make the change, as it will make some people feel good but unsure if it will collect much tax.

Only someone lazy or a fool would put large chunks into super and wear the tax. They'd be better off simply setting up an entity overseas in a jurisdiction where there is no CGT, having an investment board overseas and investing in assets in Australia with bank accounts in Australia. By simply using this as their "super" and not drawing until retirement, they can pay zero tax. Achieved by becoming a non-resident for a period when drawing down the funds and then returning or simply wear the tax over the years as they draw down the income.

So perhaps we need to change our non-resident tax laws at the same time, otherwise we will kill our own super industry for very little gain.

That probably won't get you out of paying tax here legally - CFC and Transferor trust laws mean that pretty much all passive income derived by your offshore entities remains taxed here.