Labors Super changes

[Crankyhawk]

Here's the detail

If it previously attracted a concessional 15% tax, it now attracts a concessional 30% tax

I think Kwality is more talking about restrictions on taking super out (specifically wanting ability to use for a family home which is one of the few things I would support it’s use for though I have concerns about it inflating house prices)

 

[dockerfemme]

I think Kwality is more talking about restrictions on taking super out (specifically wanting ability to use for a family home which is one of the few things I would support it’s use for though I have concerns about it inflating house prices)

I think Kwality is talking about taxing unrealised capital gains. This is not 15% vs 30%, it is 1 calculation method with a 15% rate vs another completely different calculation method with a 30% rate.

An analogy for the second calculation method is if you decided to increase tax on people who owned more than a certain value of rental properties. You take the value of their properties at June 30th last and the value of their properties at June 30th this year. If that total value has increased then you apply a tax and they have to pay even though they have not sold those properties. If the total value has decreased they get a tax credit that can only be applied to increases that may occur in subsequent years.

Taxing unrealised capital gains does not occur in Australia until now and I have not seen anyone put forward examples of it occurring anywhere else in the world.

 

[Golden_6]

I think Kwality is talking about taxing unrealised capital gains. This is not 15% vs 30%, it is 1 calculation method with a 15% rate vs another completely different calculation method with a 30% rate.

An analogy for the second calculation method is if you decided to increase tax on people who owned more than a certain value of rental properties. You take the value of their properties at June 30th last and the value of their properties at June 30th this year. If that total value has increased then you apply a tax and they have to pay even though they have not sold those properties. If the total value has decreased they get a tax credit that can only be applied to increases that may occur in subsequent years.

Taxing unrealised capital gains does not occur in Australia until now and I have not seen anyone put forward examples of it occurring anywhere else in the world.

I expect there to be some serious pushback on this point over the upcoming years until the changes are law and I don't expect it to get up. Eventually they'll settle on just taxing the income at the increased 30% rate.

 

[Kwality]

The flip side is the inflation of prices if people can tap the super easily (ie using super to contribute to the principal)
Though I would be open to allowing it to be used for a primary residence home you have held a mortgage for already (?12-24 months) so it means you had to buy within means then use super to reduce the home mortgage (which is debt with no tax write off)

I agree where access to super is too easily given. So once only, penalty interest if rented out, i.e must be primary residence.
Not sure 12 - 24 month suggestion would achieve anything other than another hurdle for hurdles sake.

 

[Kwality]

I think Kwality is talking about taxing unrealised capital gains. This is not 15% vs 30%, it is 1 calculation method with a 15% rate vs another completely different calculation method with a 30% rate.

An analogy for the second calculation method is if you decided to increase tax on people who owned more than a certain value of rental properties. You take the value of their properties at June 30th last and the value of their properties at June 30th this year. If that total value has increased then you apply a tax and they have to pay even though they have not sold those properties. If the total value has decreased they get a tax credit that can only be applied to increases that may occur in subsequent years.

Taxing unrealised capital gains does not occur in Australia until now and I have not seen anyone put forward examples of it occurring anywhere else in the world.

Taxing unrealised profits is a recipe for confusion imho.
Often discussed on BF when it applies as a 'wealth tax'.

 

[Crankyhawk]

I agree where access to super is too easily given. So once only, penalty interest if rented out, i.e must be primary residence.
Not sure 12 - 24 month suggestion would achieve anything other than another hurdle for hurdles sake.

The hurdle is to take the steam out of the purchase price but still allow use of it to reduce mortgage burden. Ie trying to artificially reduce driver of higher house prices that serve no one

 

[peetoo]

The flip side is the inflation of prices if people can tap the super easily (ie using super to contribute to the principal)
Though I would be open to allowing it to be used for a primary residence home you have held a mortgage for already (?12-24 months) so it means you had to buy within means then use super to reduce the home mortgage (which is debt with no tax write off)

Which we do once we reach 60

 

[Home Alone]

Taxing unrealised profits is a recipe for confusion imho.
Often discussed on BF when it applies as a 'wealth tax'.

Every non SMSF super fund does it indirectly in calculating the rate of return or unit price.

Otherwise, you disadvantage members with that asset holding post sale.

On SM-A515F using BigFooty.com mobile app

 

[Crankyhawk]

Every non SMSF super fund does it indirectly in calculating the rate of return or unit price.

Otherwise, you disadvantage members with that asset holding post sale.

On SM-A515F using BigFooty.com mobile app

So solution to * over SMSF? Cool I can live with that

 

[Home Alone]

So solution to * over SMSF? Cool I can live with that

Not really. But tighter regulation is required. Those funds that we are mounting a case why this is bad legislation would also seem to have a very liberal view of the liquidity and sole purpose requirements of SMSFs.

I also expect that these funds wouldn't exist if the legislation was passed and in-specie transferred to a trust.

Perhaps I am arguing to * over SMSFs

On SM-A515F using BigFooty.com mobile app

 

[Kwality]

Every non SMSF super fund does it indirectly in calculating the rate of return or unit price.

Otherwise, you disadvantage members with that asset holding post sale.

On SM-A515F using BigFooty.com mobile app

That is an internal calculation as well you know. This is about the beneficiary paying the tax man, potentially having to sell assets to do so.
Lets see how the 'defined benefits' people are treated.

I'm not against the need to raise more tax revenue to pay down the debt future generations have been left. Just keep it equitable & that involves more thought than 'tax the rich'.

 

[Kwality]

The hurdle is to take the steam out of the purchase price but still allow use of it to reduce mortgage burden. Ie trying to artificially reduce driver of higher house prices that serve no one

It would only apply to a very limited number of people that have the funds in Super & are long term renters.
Whilst I agree the effect on housing prices is potentially THE biggest issue here, these people will permanently leave the rental market.
Given we are rushing back to the immigration 'ponzi scheme' that is a major driver of the inflation of real estate, my argument would be allowing this group of people to use their super with a high level of compliance is 'fair & equitable'.

 

[dockerfemme]

That is an internal calculation as well you know. This is about the beneficiary paying the tax man, potentially having to sell assets to do so.
Lets see how the 'defined benefits' people are treated.

I'm not against the need to raise more tax revenue to pay down the debt future generations have been left. Just keep it equitable & that involves more thought than 'tax the rich'.

I would be very interested to know whether the $2billion raised and the 80,000 people affected includes the defined benefits people. If not, then they clearly had no real plan. If so, then it is going to be a massive amount of work to figure out how to address all the different defined benefits schemes to possibly raise $2billion.

 

[Kwality]

I would be very interested to know whether the $2billion raised and the 80,000 people affected includes the defined benefits people. If not, then they clearly had no real plan. If so, then it is going to be a massive amount of work to figure out how to address all the different defined benefits schemes to possibly raise $2billion.

The defined benefits group appears to be work in progress.

 

[Home Alone]

That is an internal calculation as well you know. This is about the beneficiary paying the tax man, potentially having to sell assets to do so.
Lets see how the 'defined benefits' people are treated.

I'm not against the need to raise more tax revenue to pay down the debt future generations have been left. Just keep it equitable & that involves more thought than 'tax the rich'.

Sorry, but I don't have a lot of sympathy for 'asset rich income poor' superannuants with $3 plus million balance.

While the Legislation is still being consulted, I will be very surprised if there isnt a mechanism for the fund to pay the incurred debt on behalf of the member. Much like the current Div 293 tax.

Defined Benefits will probably be an acturial determined factor applied to the notional interest required in the accrual of the benefit. In princiiple, like the notional contribution for defined benefits during the surcharge period of 1990 - early 2000s. Again, paid by the fund during the accumulation phase, and deducted from the members account on a release condition being met.

I am more interested if this will be administered by the ATO or the fund trustee. The trustee of X fund knows about the benefit member A has in X fund. And has no knowledge of member A's holding in fund Y and Z and if that combined holding is above the threshold.

You can frame it as tax the rich, but in my view this is initially caused by a cohort of people that have structured their assets around a flat 15% tax rate.

 

[kranky al]

 

[kranky al]

The flip side is the inflation of prices if people can tap the super easily (ie using super to contribute to the principal)
Though I would be open to allowing it to be used for a primary residence home you have held a mortgage for already (?12-24 months) so it means you had to buy within means then use super to reduce the home mortgage (which is debt with no tax write off)

Id rather we let people tax deduct their primary residence and stop negative gearing over a certain amount.

 

[peetoo]

Who is it then? Perhaps media owner of friend, or we might know already

An Australian has over $500 million in super. How is that even possible? — SBS News

Amid debate around the Albanese government’s changes to superannuation policy affecting wealthier individuals, it has been revealed one person has an eye-watering super balance.

apple.news

 

[peetoo]

So not indexed?

What happens when the transfer cap (currently 1.9mill and probably 2.1 mill when the legislation comes in) exceeds the non indexed threshold? 3 mill

At that time the price of a standard house and block in large parts of our cities will exceed 3 mill

Should have been ser at 2x the transfer cap. Earnings below that are tax free, 15% above

A couple of years ago they introduced incentives for retirees to downsize. That is now wiped out.

 

[Crankyhawk]

So not indexed?

What happens when the transfer cap (currently 1.9mill and probably 2.1 mill when the legislation comes in) exceeds the non indexed threshold? 3 mill

At that time the price of a standard house and block in large parts of our cities will exceed 3 mill

Should have been ser at 2x the transfer cap. Earnings below that are tax free, 15% above

A couple of years ago they introduced incentives for retirees to downsize. That is now wiped out.

Not really because the money from downsizing wouldn’t go into super as retirees are already in the pension stage (of super - by definition of being retired) so it would just be treated like it currently is (non super assets). Maybe a difference to those running smsf with investment properties inside but I already am suspicious of these deriving other benefits (breaching rules)

 

[peetoo]

Not really because the money from downsizing wouldn’t go into super as retirees are already in the pension stage (of super - by definition of being retired) so it would just be treated like it currently is (non super assets). Maybe a difference to those running smsf with investment properties inside but I already am suspicious of these deriving other benefits (breaching rules)

downsize and get taxed on the balance, or keep the property use reverse home loan to supplement income. No tax on capital gains on house. Just interest which will be fixed nowhere near 15%

Just need enough super to keep a cashflow you can control

 

[Crankyhawk]

downsize and get taxed on the balance, or keep the property use reverse home loan to supplement income. No tax on capital gains on house. Just interest which will be fixed nowhere near 15%

Just need enough super to keep a cashflow you can control

Not sure what tax there is on balance as (you also say) no cgt on family home. So just tax on interest which wouldn’t be much (mainly due to deposit interest still paying * all)

 

[Home Alone]

So not indexed?

What happens when the transfer cap (currently 1.9mill and probably 2.1 mill when the legislation comes in) exceeds the non indexed threshold? 3 mill

At that time the price of a standard house and block in large parts of our cities will exceed 3 mill

Should have been ser at 2x the transfer cap. Earnings below that are tax free, 15% above

A couple of years ago they introduced incentives for retirees to downsize. That is now wiped out.

In my opinion, the government has the view that $3mill is too high compared to the transfer cap. So presented with the option of a lower indexed threshold or a higher non-indexed cap that will 'organically ' come into line before it is indexed or increasing the threshold; chose the 2nd option

 

[Home Alone]

downsize and get taxed on the balance, or keep the property use reverse home loan to supplement income. No tax on capital gains on house. Just interest which will be fixed nowhere near 15%

Just need enough super to keep a cashflow you can control

Downsizer is intended to top up low balances on the sale of the primary residence. Not sure why we are concerned about people toppin up high balances.

 

[HirdyLannister]

This is good for a laugh.

Barefoot reveals median super balance of average Aussie

What’s the Labor Government doing attacking the little nest eggs of ordinary Australians?

www.perthnow.com.au