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Labor Offers To End Super Concessions For The Rich (Read 3034 times)
imcrookonit
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Labor Offers To End Super Concessions For The Rich
Apr 2nd, 2015 at 6:08am
 
Labor offers to end super concessions for the rich

Date
    April 1, 2015 
    Canberra Times

    Hockey's budget faces new troubles

The prospect of a breakthrough on the contentious tax treatment of superannuation earnings has moved a step closer with Labor extending a rare offer of bipartisanship to a cash-strapped government.   Smiley   

With Treasurer Joe Hockey this week inviting a national conversation on tax reform, and struggling to craft a budget amid a declining revenue outlook, Labor's Chris Bowen has offered support for a crackdown on the super incomes of the super rich.   

It would likely apply to those with millions of dollars sitting in superannuation accounts from which they derive tax-free six-figure annual salaries.


"The Labor Party believes the taxation treatment of superannuation is unfair and needs to be fixed," Mr Bowen said in Melbourne.   Smiley

"I pointed out that this could be a matter of some bipartisanship if the government chose to agree as part of this so-called national conversation."

The Shadow Treasurer cited figures provided by the industry body, the Association of Superannuation Funds for Australia.

"ASFA shows, for example, that there are 475 people with more than $10 million in their superannuation accounts earning $1.5 million in income and there are 100,000 people in Australia with superannuation balances in excess of $2 million," he said.   Sad

"This is a real issue which needs to be addressed. The Labor Party is prepared to lead the way."

One possibility is that Labor could support new tax arrangements for high-end super fund accounts in exchange for a commitment from the government to recommence the staged progress toward a 12 per cent compulsory employer-funded superannuation goal, which has been paused by the government.   

Because of the favourable treatment of superannuation, revenue forgone in concessional tax rates - mostly 15 per cent on contributions rather than the relevant marginal income tax bracket - is extremely expensive, currently costing the budget more than $35 billion annually.

The government is wary of even discussing superannuation rules after promising in iron-clad terms before the election that there would be no negative modifications to the oft-tampered-with rules during its first term.

However, it is increasingly becoming accepted that the generous concessions for super at the top end have no utility in public policy, because they do nothing to keep people of such obvious wealth from claiming the age pension for which they are not eligible anyway - the original purpose for the concessional treatment.

Assistant Treasurer Josh Frydenberg has acknowledged that superannuation does need to be discussed as part of the broader tax mix, albeit with any changes to occur in subsequent terms of parliament.

"At the same time we need to be very conscious of the fact that we made that commitment at the last election that there'd be no adverse or unexpected changes to super and that we need to look right across the board and not just, as the Labor Party likes to do, at the higher income earners," he said.   Sad

His predecessor in the role, the respected NSW senator Arthur Sinodinos, has also acknowledged that some action needs to be taken on "equity grounds".
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Dnarever
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Re: Labor Offers To End Super Concessions For The Rich
Reply #1 - Apr 2nd, 2015 at 6:29am
 
Yep this should have been done a long time ago by either party.

10 Million in super is way too much to be allowed.

The 2 Million mark as used in the article is fair enough I would think.

Savings past about $2 Million should not get the tax benefits.
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Re: Labor Offers To End Super Concessions For The Rich
Reply #2 - Apr 2nd, 2015 at 10:11am
 
Quote:
At the same time we need to be very conscious of the fact that we made that commitment at the last election that there'd be no adverse or unexpected changes to super



they weren't conscious of keeping their commitments of no adverse or unexpected changes to policies when it came to the low income earners.  Cheesy Cheesy Cheesy
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Re: Labor Offers To End Super Concessions For The Rich
Reply #3 - Apr 2nd, 2015 at 10:28am
 
John Smith wrote on Apr 2nd, 2015 at 10:11am:
Quote:
At the same time we need to be very conscious of the fact that we made that commitment at the last election that there'd be no adverse or unexpected changes to super



they weren't conscious of keeping their commitments of no adverse or unexpected changes to policies when it came to the low income earners.  Cheesy Cheesy Cheesy


I would not feel inclined to honour that commitment in terms of those rorting superannuation, I feel that is a different matter.


Any money save in excess of that required to live in retirement is not really superannuation, it is just tax advantaged savings.
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Re: Labor Offers To End Super Concessions For The Rich
Reply #4 - Apr 2nd, 2015 at 10:36am
 
Quote:
One possibility is that Labor could support new tax arrangements for high-end super fund accounts in exchange for a commitment from the government to recommence the staged progress toward a 12 per cent compulsory employer-funded superannuation goal, which has been paused by the government.

Quote:
The government is wary of even discussing superannuation rules after promising in iron-clad terms before the election that there would be no negative modifications to the oft-tampered-with rules during its first term.

They've already broken this election promise. What's the harm in breaking it again?
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Re: Labor Offers To End Super Concessions For The Rich
Reply #5 - Apr 2nd, 2015 at 10:37am
 
Dnarever wrote on Apr 2nd, 2015 at 6:29am:
Yep this should have been done a long time ago by either party.

10 Million in super is way too much to be allowed.

The 2 Million mark as used in the article is fair enough I would think.

Savings past about $2 Million should not get the tax benefits.


agreed
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Re: Labor Offers To End Super Concessions For The Rich
Reply #6 - Apr 2nd, 2015 at 10:44am
 
Dnarever wrote on Apr 2nd, 2015 at 6:29am:
Yep this should have been done a long time ago by either party.

10 Million in super is way too much to be allowed.

The 2 Million mark as used in the article is fair enough I would think.

Savings past about $2 Million should not get the tax benefits.

People should be allowed as much super as they want. What should not be allowed is support from the taxpayer for such huge balances.

A cap on the tax benefits of contributions of about $2000 per year should be considered. It's simple and it's fair because it applies to everyone.
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Re: Labor Offers To End Super Concessions For The Rich
Reply #7 - Apr 2nd, 2015 at 10:47am
 
Sprintcyclist wrote on Apr 2nd, 2015 at 10:37am:
Dnarever wrote on Apr 2nd, 2015 at 6:29am:
Yep this should have been done a long time ago by either party.

10 Million in super is way too much to be allowed.

The 2 Million mark as used in the article is fair enough I would think.

Savings past about $2 Million should not get the tax benefits.


agreed


Even 2 Million seems a bit high to me 1.5M would suffice
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Re: Labor Offers To End Super Concessions For The Rich
Reply #8 - Apr 2nd, 2015 at 5:00pm
 
I repeat my view - anything put aside beyond what is required to provide an adequate income to live on - which I stipulate as being the Aged Pensions level - should be considered savings and be treated the same for tax at both ends.

At 5% return, to get the pension you need around $400k set aside - after that amount you are saving for a rainy day, same as everyone else, and your money saved is already income taxed at full rate, and then your earnings on it are taxed.

Goose and gander.

ADDS:-  On the news right now - a couple with $1 million assets excluding family home can get a part pension.  Now the issue is if you have $1m invested and it returns 5%, you get $50k a year from it.

For a couple that $50k is around the cutoff point for getting any pension after extra earnings.  The idea is being mooted that $750k should be the cutoff point... $750k invested at a 5% return will give you $37.5k - which is less than the couple pension (I think - lemme look it up).

Acdually not - couple is about $34k...... single $22k.....

Close enough if you get some rental assistance....

Sooo.. you decide what you think, should the cutoff point be at equivalent pension rate or at the current cutoff point for pension.... there is a difference.

I think the mill should stay, but income deemed should be closely looked at and treated the same as those who work (myself included).

OH - the idea of getting a part pension is that some get to keep a health care card, get assistance with power, rego for car etc..... even if not receiving any monetary pension.
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« Last Edit: Apr 2nd, 2015 at 5:14pm by Grappler Truth Teller Feller »  

“Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passion, they cannot alter the state of facts and evidence.”
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Re: Labor Offers To End Super Concessions For The Rich
Reply #9 - Apr 2nd, 2015 at 5:10pm
 
Redmond Neck wrote on Apr 2nd, 2015 at 10:47am:
Even 2 Million seems a bit high to me 1.5M would suffice


Please don't base policy on arbitrary figures like this especially with justification that it "feels high". 9/10 clients I've produced needs analysis' for have needed around 2 million+ in super to fund their retirement goals.

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I thought the whole point of super was for people to fund their retirement instead of the government, so if people are still paying taxes (say 15%) and this allows them to not need a state pension, isn't that a worthy trade off for you guys? Isn't the reduced revenue offset by a reduced welfare cost?  Huh This seems inconsistent as usual......

Anything people can do themselves (or together in the market) to reduce their dependancy on tax payer funded services or get a better deal than paying a wasteful immoral inefficient state then I'm all for it.

I'd rather see people pay less taxes and maintain/increase their quality of life while reducing intergenerational debt....it's frustrating to see such an obsession with central planning and controlling people's lives.  Undecided
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Re: Labor Offers To End Super Concessions For The Rich
Reply #10 - Apr 2nd, 2015 at 5:17pm
 
Bam wrote on Apr 2nd, 2015 at 10:44am:
People should be allowed as much super as they want. What should not be allowed is support from the taxpayer for such huge balances.


How is it tax payer support?

Putting it that way makes it sound like they're taking money from tax payers when in reality they're merely paying less to the state anf if your income taxes (some of the highest in the world) can't fund a few "essential services" while allowing people to save for retirement at a lower rate them you have a wasteful inefficient government that doesn't deserve anymore of people's hard earned money.

Aren't concessional contribution caps enough at this stage?
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Re: Labor Offers To End Super Concessions For The Rich
Reply #11 - Apr 2nd, 2015 at 5:19pm
 
Vuk11 wrote on Apr 2nd, 2015 at 5:10pm:
Redmond Neck wrote on Apr 2nd, 2015 at 10:47am:
Even 2 Million seems a bit high to me 1.5M would suffice


Please don't base policy on arbitrary figures like this especially with justification that it "feels high". 9/10 clients I've produced needs analysis' for have needed around 2 million+ in super to fund their retirement goals.

What are those retirement goals? $100,000 per year with no depletion of the lump sum?

If a couple can't manage to live comfortably on $50,000 a year indexed for life with all debts paid, own their own home (very low housing costs) and almost no tax, they're being greedy.
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Re: Labor Offers To End Super Concessions For The Rich
Reply #12 - Apr 2nd, 2015 at 5:28pm
 
Vuk11 wrote on Apr 2nd, 2015 at 5:17pm:
Bam wrote on Apr 2nd, 2015 at 10:44am:
People should be allowed as much super as they want. What should not be allowed is support from the taxpayer for such huge balances.


How is it tax payer support?

Putting it that way makes it sound like they're taking money from tax payers when in reality they're merely paying less to the state anf if your income taxes (some of the highest in the world) can't fund a few "essential services" while allowing people to save for retirement at a lower rate them you have a wasteful inefficient government that doesn't deserve anymore of people's hard earned money.

Aren't concessional contribution caps enough at this stage?

Massive tax concessions, very favourable tax treatment in general. With a long-projected increase in the retiree to worker ratio over the next 30 years, it's clearly not sustainable, yet it's taking Hockey a very long time to figure it out!

A better plan ... pay everyone the aged pension, tax free with no means tests, scrap all other tax concessions for retirees, and tax superannuation contributions normally. Superannuation tax concessions cost the budget as much as the aged pension.

Advantages of this plan:
* Simpler and less frequent paperwork (annual ATO instead of fortnightly Centrelink)
* Income tapering is reduced to the applicable top marginal tax rate
* No more wealthy retirees doing all manner of tax dodges to hide money from the government
* More consistent taxation overall
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Re: Labor Offers To End Super Concessions For The Rich
Reply #13 - Apr 2nd, 2015 at 5:34pm
 
Bam wrote on Apr 2nd, 2015 at 5:19pm:
Vuk11 wrote on Apr 2nd, 2015 at 5:10pm:
Redmond Neck wrote on Apr 2nd, 2015 at 10:47am:
Even 2 Million seems a bit high to me 1.5M would suffice


Please don't base policy on arbitrary figures like this especially with justification that it "feels high". 9/10 clients I've produced needs analysis' for have needed around 2 million+ in super to fund their retirement goals.

What are those retirement goals? $100,000 per year with no depletion of the lump sum?

If a couple can't manage to live comfortably on $50,000 a year indexed for life with all debts paid, own their own home (very low housing costs) and almost no tax, they're being greedy.


Quite subjective of you but no that's not their goals or an accurate representation.

The general situation I've found is:
- $2 million in todays dollars indexed for inflation so it will end up in 30 years a lot higher than that due to inflation.
- This is to maintain their current standard of living (ie take their current budgets and pan it out over retirement)

From there it's hard to generalise as goals become quite diverse, whether it be; provide for dependants, leave a little bit to their kids after death (not finishing off completely), maybe retiring at 55/60 instead of 65/70, taking into account liabilities and other goals. Most of them are just modest requests, maybe a $10k holiday and to have their estate looked after.

All of these people have taken on extra risk to grow their super in time for retirement and made concessional contributions which must be commended.

So instead of spending more now they're deferring gratification and showing with their actions that they care about their families future.......we should make this harder? Make people more dependant on tax payers? Make it harder to join the few % that can self fund their retirement comfortably?

No I disagree and we should stop calling these people "super rich/wealthy" it's not true.
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Re: Labor Offers To End Super Concessions For The Rich
Reply #14 - Apr 2nd, 2015 at 5:42pm
 
Bam wrote on Apr 2nd, 2015 at 5:28pm:
Superannuation tax concessions cost the budget as much as the aged pension



not quite  .... numbers i saw had pensions at $26B whereas super contribution were expected to reach $50B by the end of this year

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