Superannuation Discussion + market volatility

[Kerrodt]

Except there is no limit to the total super balance

There kind-of will be a de-facto limit to a total super balance once the 296 tax comes into effect - and it will be $3m.

Why I say this is that anyone who is caught by 296 would have to ask themselves the question: "Do I need to keep more than $3m in my super fund or are there more tax effective, and overall better after tax investment returns available by having the excess above $3M in a structure outside the super fund?".

If the answer to that question is "Yes, I can get a better after tax investment return outside super" then the super fund has been effectively capped - not by the government, but by the individual super fund member. (Another clever design element of this new tax).

 

[Quickstatus]

There kind-of will be a de-facto limit to a total super balance once the 296 tax comes into effect - and it will be $3m.

Moving forward yes but up until this time no

 

[TheRealTMA]

Except there is no limit to the total super balance


I think you will find that judges will/may be exempt due to a constitutional provision for judges remuneration. And they are surprisingly quiet about federal pollies. State pollies are apparently exempt.

I thought I saw Chalmers specifically rule that out in an interview and say polies and judges will be subject to the same conditions as mortals.

 

[lakeman]

One thought that comforts me as a mere mortal superranuant (way below 3million) is that those mega funds will be subject to the 17% death tax !
I don’t understand why people put farms into their SMSF as being a lumpy investment it creates all sorts of problems in regard to the death tax and generating enough income to support a retirement income.
I can see how business premises and commercial buildings could have created a mega fund and I think that the 3 Million limit is unworkable in the medium term.

 

[Quickstatus]

"the Australian taxpayer is unwilling to heavily subsidise (CGT 0-10%) tax-free pensions of >$150k/pa (or $300k pa as a couple)" nor "provide a low-tax (0-<15%) inheritance strategy for wealthy people's children"

Sure but there are simple and existing measures that can be used rather than something novel as ur-CGT

but maybe it was indeed Judiciary.

It’s likely for this reason why they’ll be excluded

See Australian Constitution section 72 (iii):

Over time assets increase in value and compound

But if the general proposition is that $3M is more than enough, then it should be taxed.

 

[Pushka]

But if the general proposition is that $3M is more than enough, then it should be taxed.

Who gets to decide what is enough for someone to live on when they are not Centrelink clients? general consensus? I don't recall having a say. And for the record I won't be anywhere near the $3million mark but it's the principle. That unrealised gain, regardless of the what where and why, can't be taxed.

 

[Quickstatus]

Who gets to decide what is enough for someone to live on when they are not Centrelink clients

Yes, apparently it was something called the election. The comment was more a reply to a previous comment - that if its good for the goose (pre - retirement $3M) its also good for the gander (post retirement $3M). Whatever the tax treatment - iniquitous as it is, it is even more iniquitous when not equally applied.

 

[SYD]

But if the general proposition is that $3M is more than enough, then it should be taxed.

The $3m figure was a PFA number.

No real basis that it’s “more than enough” just a number that seems large to many (particularly those who never gave a second thought to super until closer to retirement).

If it was set, to say $10m (again, arbitrary) then they would still catch the mega balances immediately and kick the indexation issue down the road for a good few years.

Certainly, without indexation (like the TBC has), $3m won’t be adequate in a few years.

 

[tgh]

would still catch the mega balances immediately and kick the indexation issue down the road

Indeed.. but this is a political issue rather than an economic one.. designed to show the faithful that they can kick the wealthy where it hurts

 

[Quickstatus]

without indexation

the TBC could easily reach $3M but the pollies understand it. They just want the ability to increase the limit as an election bribe - as they do with bracket creep on income tax

 

[Pushka]

Yes, apparently it was something called the election. The comment was more a reply to a previous comment - that if its good for the goose (pre - retirement $3M) its also good for the gander (post retirement $3M). Whatever the tax treatment - iniquitous as it is, it is even more iniquitous when not equally applied.

I suspect most weren't even able or couldn't be bothered to understand the technical aspects of that part of future policy, as it didn't apply to them right now and that it took no part in any decision making. Not even considering that in future years, the non indexing aspect will come round to bite a much larger piece of the pie, and them! and potentially in such times they might even need that large chunk of super just to live comfortably. Let alone contribute to aged care costs.

 

[Quickstatus]

Let alone contribute to aged care costs.

And once you take out the RAD, there may not be much left. Though some would argue that if you need a RAD, then discretionary spends would drastically reduce. It is important to have the RAD because even though the Guvment guarantees Aged care placed to everyone who needs it, having the RAD means you have a much greater chance of getting the AC spot you want - especially location.