Superannuation Discussion + market volatility

[cove]

Some might say that they are happy with 3 years in the election cycle rather than 4 years.

 

[andye]

What has gone by unnoticed, or perhaps I missed it, is that everyone in a pooled super fund (whether Industry or for profit) is taxed by the fund on unrealised profits every time the unit price is calculated. Even if your super balance is just a couple of thousand.
True the tax on unrealised profits is not sent to the tax man - I strongly suspect that less scrupulous funds pocket the interest earned on this amount.
It is done this way so people who are redeeming/moving to a different provider pay the tax due as if those assets were sold and the unrealised gains realised for tax purposes. Again interesting whether the fund or the entity earns the interest on these amounts.

It's something I've wondered as presumably in a big fund, when someone leaves the fund doesn't need to sell most of those assets as chances are someone else will be buying.
I understand that, when converting from accumulation to retirement, some funds give a modest uplift to recognise taxes on capital gains not needing to be paid

 

[andye]

On a related note, I presume it would be a sensible strategy in an SMSF to periodically sell and rebuy shares in retirement phase while under $3M to reset the CGT clock in case you tip over in the future

 

[Quickstatus]

reset the CGT clock

I think for that one we need to see the legislation

 

[Kerrodt]

On a related note, I presume it would be a sensible strategy in an SMSF to periodically sell and rebuy shares in retirement phase while under $3M to reset the CGT clock in case you tip over in the future

In its current legislative form, the $3m threshold and the tax that will apply beyond that has little to do with CGT. It is based on outright balance change from point to point (subject to adjustments for contributions and/or payments/withdrawals). I don't see how your proposal of selling and purchasing shares will avert this and reset any "clock" related to the excess balance taxes - unless I am missing something and you can enlighten me further.

 

[andye]

In its current legislative form, the $3m threshold and the tax that will apply beyond that has little to do with CGT. It is based on outright balance change from point to point (subject to adjustments for contributions and/or payments/withdrawals). I don't see how your proposal of selling and purchasing shares will avert this and reset any "clock" related to the excess balance taxes - unless I am missing something and you can enlighten me further.

Thanks. I hadn't understood how it was planned to work. It does seem simpler than tracking individual investments/assets

I had assumed that currently (in an SMSF) CGT was payable annually on a per asset basis if realised (but I could be wrong). So, how is the portion of capital growth prior to hitting the $3M mark going to be calculated and taxed after the 296 comes in? If CGT was payable on top of 296 then could effectively end up with 30-40% taxation on capital gains

Also, is it intended for there be a tax deduction if TSB fell over a year (once contributions/withdrawals are accounted for)?

 

[Kerrodt]

Thanks. I hadn't understood how it was planned to work. It does seem simpler than tracking individual investments/assets

I had assumed that currently (in an SMSF) CGT was payable annually on a per asset basis if realised (but I could be wrong). So, how is the portion of capital growth prior to hitting the $3M mark going to be calculated and taxed after the 296 comes in? If CGT was payable on top of 296 then could effectively end up with 30-40% taxation on capital gains

Also, is it intended for there be a tax deduction if TSB fell over a year (once contributions/withdrawals are accounted for)?

There was a pretty good article in today's AFR that gave a relatively straightforward and easy to understand explanation on how this tax is likely to work for a relatively simple structured fund (as many will be that are around the $3M in value mark).

The link is here is you have access: Why you should think twice about trying to avoid the $3m super tax

In relation to some of your comments above:

• This new 296 tax will be separate to, and in addition to, any CGT liabilities.
• There are no deductions or clawbacks if balances reduce below the threshold.

 

[andye]

There was a pretty good article in today's AFR that gave a relatively straightforward and easy to understand explanation on how this tax is likely to work for a relatively simple structured fund (as many will be that are around the $3M in value mark).

The link is here is you have access: Why you should think twice about trying to avoid the $3m super tax

In relation to some of your comments above:

• This new 296 tax will be separate to, and in addition to, any CGT liabilities.
• There are no deductions or clawbacks if balances reduce below the threshold.

Thanks
That's pretty punitive so I'm sure it will lead to some decent fees for the tax advisors

 

[SydneySwan]

The link is here is you have access: Why you should think twice about trying to avoid the $3m super tax

Any other options if you don't have access? I am not an AFR subscriber.

 

[CaptJCool]

Here’s a parliamentary document canvassing all sides of this debate

Chapter 2 - Views on the bill

Chapter 2Views on the billIntroduction2.1This chapter outlines the views of submitters and other stakeholders on the provisions of the Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023 (the bill) and the Superannuation (Better Targe

www.aph.gov.au

 

[Brissy1]

Any other options if you don't have access? I am not an AFR subscriber.

Lot of words but simply mentions if you withdraw...
- compare the tax rate you'll be paying outside super (d'oh)
- be aware that you might trigger otherwise unrealised CGT (how ironic) (my opinion... careful about selling $25cba shares you might still have, be selective, be aware selling selling shares in pension account are cgt free)
- if it's based on fund value at 30june2026, then you have until 30june2026 to reallocate assets to get below $3m