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Superannuation, the ultimate government cash cow?

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After ruining the economy, destroying the budget, and as long discussed, it is time to move to the egg baskets
www.afr.com

Chalmers urged to loosen performance test to get super behind net zero

A peak superannuation lobby group says performance benchmarks for funds make it less attractive to invest in renewables and promote productivity.
www.afr.com www.afr.com
If you ever have the slightest doubt about the scam nature of these net zero and co2 created climate change stories:
read "Unsettled"..as good now as when published.
Science without integrity is a terrible evil.
 
Ian Verrander has a red hot go at the super rich screaming at proposed Super fund tax reform.

How Australia's superannuation system subsidises the wealthy​

Everyone, it seems, claims to want tax reform. But you only need to scratch the surface to figure out that what they really want is to not pay any tax at all, and to let someone else pick up the tab.

Never has that been more evident than right now with the growing chorus of opposition to the federal government's plan to claw back some of the tax breaks available to the nation's richest households.

The backlash underscores the difficulty in implementing real reform. Only a tiny fraction of the population will be impacted by the proposed changes — which will claw back about $2 billion a year in revenue — and, on any reading, they hardly need to be on the receiving end of social welfare programs.

Worked hard, paid me taxes all me life​

Somewhere out there, there's a self-managed super fund with more than half a billion dollars.

If the person behind that fund is retired, in a half-decent year, the fund would be throwing off about $50 million or so in income, a little under $5 million a month.

Most of that income is taxed at a mere 15 per cent, a rate way below the level of most working Australians.

That's now about to change. The privileges aren't being entirely stripped away but it's generated an enormous backlash from the wealthy and powerful section of society.

The Australian Tax Office no longer reveals the size of the top individual funds. Perhaps it is too embarrassing.

The latest figures, obtained last October for the 2022/23 year by The Australian Financial Review, show that the 10 biggest self-managed funds had an average of $422 million each in assets and 42 funds had more than $100 million each.

Clearly, super funds of this magnitude aren't about a retirement income. They're tax shelters.

The earnings from super funds are mostly tax free on balances up to $2 million, a cap introduced by former prime minister Malcolm Turnbull. (ABC: Marco Catalano)

Once the beneficiary has retired, the earnings from a super fund are mostly tax free on balances up to $2 million. That limit, introduced by the Turnbull government, was an attempt to haul in the runaway expenses of the overly generous superannuation system.

When first initiated, the limit was $1.6 million but it has been frequently lifted to keep pace with inflation, including just a fortnight ago.

Beyond the new $2 million limit, retirees are obliged to pay just 15 per cent in tax on earnings and only on the portion above the limit.

That's below the tax rate for a worker pulling in a meagre $18,200 a year where the tax rate is 16 per cent.
Even apprentices and those just a little beyond the minimum wage have some of their earnings taxed at 30 per cent while tax rates for those higher up the scales hit 37 per cent and top out at 45 per cent.

Under Treasurer Jim Chalmers's proposed new system, another cap will be put in place.

Funds with balances between $2 million and $3 million will continue to pay 15 per cent tax on earnings between those bands. Those with more than $3 million will pay 30 per cent on earnings above that upper limit.

That's still below the top two tax rates for those who actually work for a living and represents a generous subsidy, a social welfare payment, for those sitting on massive retirement funds.
www.abc.net.au

Who's a dole bludger now? Why our wealthy are fighting to retain a super rort

Welfare for the wealthy. The battle over superannuation reform.
www.abc.net.au www.abc.net.au

 
basilio said:
But you only need to scratch the surface to figure out that what they really want is to not pay any tax at all, and to let someone else pick up the tab.
Click to expand...

That's part of the problem even outside of the superannuation structure. The are a number of services people want from the Government but we are reluctant to pay for. The obvious one is no gap when visiting a GP. I can faintly hear in the background the herd saying but if they didn't waste money on this project, blah, blah, blah - go and have a cup of tea, a Bex and a good lie down.

Anyways, the issues I have with the DIv296 isn't the tax as such but the methodology. Using unrealised capital gains in the formula just doesn't cut it with my way of thinking. Industry super funds, as they are pooled funds, haven't got the ability to attribute CG to individual members yet (or maybe never) but that can be done with SMSF's. And, yes, the big money is in SMSF's mainly due to superannuation being poorly designed from the start an open to being the politicians plaything to bribe to populace.

I am not necessarily pointing the finger at Governments with the initial concept of it but it didn't help when Governments (and I don't care which Government) could allow tax free pensions as a policy initiative. Naturally every person with half a brain would pile as much as they could into superannuation (as I did) where "free" money was to be had at some point in the future. Or allowing people to place $1m non-concessional at one point. These and other policy decisions were going to cruel tax revenue at some point. The laws passed by Parliament created this mess and now it is proposed Parliament, rightly or wrongly, screw over those who adhered to the law. That I find extremely irksome.

Having said that, I don't consider superannuation has fully matured yet. That will really only occur once those who enter the workforce and receive the 12% SG all of their working lives retire. So sit back and watch as further changes are likely to be made. Consider what is possible under the Superannuation (Objective) Act 2024.

Section 5(1) of that Act.

"The objective of superannuation is to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way."
 
The existing wealth tax for super contributions – known as Division 293 – has not been indexed since it was introduced by former treasurer (now Cbus chair) Wayne Swan back in 2012.

Under Division 293, contributions to super made by anyone earning over $250,000 face an extra 15 per cent tax – in reality, this measure creates an effective 30 per cent super contributions tax for higher earners.

... And, Division 296 is not indexed either. The new super tax is expected to bring in $2.3bn per annum when it is up running.

Of course, it will do no such thing, because older investors will move money out and younger investors will plan to divert savings elsewhere (especially higher income earners)

The super system as we knew it is over.


.
 
Not really, ..i assume you are working and young, now see 12% of your income automatically taken, while you are fighting to repay a HL or get a deposit.

The super funds are feeding like pigs on your dollars and are always ready to lower your return to please the government or target net zero

That money is not on gold, not on commodities or forex or crypto.

Mostly Australian invested so low tech, high concentration.

Good luck to achieve great outcomes like that in a collapsing economy.
 
You assumed wrong. Not working but not retired never had super paid to me from an employer went from tradie > business owner > trader. I have about the same amount of $ in my trading account as I do in my smsf with Stake.
"The super funds are feeding like pigs on your dollars and are always ready to lower your return to please the government or target net zero" Hmm I suppose if you are a lazy s**t and have no interest in your money that might be the case. There are plenty of industry funds out there that allow you to directly invest in shares,etf's and lic's. So you can get whatever exposure you want.
 
Geoff Wilson has made this interesting submission to the Economic Reform Roundtable concerning the proposed Div 296 tax.

He is actually proposing higher additional taxes on large super balances as seen below, but excluding unrealised gains.
1753594594349.png
A complementary tax offset is also proposed to cover the cost of systems upgrades to handle determining the capital gains. I assume this is for the industry funds that say they can't currently assign capital gains to individual members. I don't really understand the proposed tax offset.

He says the proposal will raise more revenue than the currently proposed Div 296.

It looks like a sensible proposal to me, however, I don't think Chalmers has much intention of making any changes to his original proposal.
 
The corporate regulator has raised the prospect of limiting what superannuation can be invested in and putting restrictions on retail investments in high-risk funds, as it warned a whole-of-ecosystem response is needed to counter industrial-scale misconduct in financial services.

Speaking at a Financial Services Council event in Sydney on Wednesday, ASIC chair Joe Longo took aim at super trustees and advice licensees for their part in the Shield Master Fund and First Guardian Master Fund collapses but also pointed to the extremely low bar for registering managed investment schemes.

“In our view, if you’re a superannuation trustee, you must undertake sufficient due diligence of new investment options before you make them available to investors…you are expected to check that the product is fit for purpose,” Mr Longo said.

“The same goes for advice licensees. There’s a reason why we are focusing on the role of licensees in our enforcement work – you are the first line of defence here. You must have strong quality controls for your approved product lists."
.
 
Dona Ferentes said:
The corporate regulator has raised the prospect of limiting what superannuation can be invested in and putting restrictions on retail investments in high-risk funds, as it warned a whole-of-ecosystem response is needed to counter industrial-scale misconduct in financial services.

Speaking at a Financial Services Council event in Sydney on Wednesday, ASIC chair Joe Longo took aim at super trustees and advice licensees for their part in the Shield Master Fund and First Guardian Master Fund collapses but also pointed to the extremely low bar for registering managed investment schemes.

“In our view, if you’re a superannuation trustee, you must undertake sufficient due diligence of new investment options before you make them available to investors…you are expected to check that the product is fit for purpose,” Mr Longo said.

“The same goes for advice licensees. There’s a reason why we are focusing on the role of licensees in our enforcement work – you are the first line of defence here. You must have strong quality controls for your approved product lists."
.
Click to expand...
LOL bit late to the party boys.
 
here's another party:

Leading funds, including the nation’s two biggest – AustralianSuper and Australian Retirement Trust – are distributing tens of millions of dollars to investors as a reward for not leaving their ranks.

Retirement bonus payments can run up to $10,000 per investor.

So how does it work?

If you are in a big super fund and you get to the point of retirement, then you are about to move into a tax-free phase. In that phase, most people don’t have to pay tax.

If you stay put and retire with the same fund, that accumulated amount saved up for you need not be paid over to the tax office, so instead you get “rewarded” with what the funds like to call a “bonus” payment.

In recent months, some enterprising super savers have become aware of bonus payments. They have gamed the process by staying with the fund and then quitting shortly after retirement, that is, after they have received their bonus.

This lucrative strategy has sparked a decision by some funds to instigate a clawback on the payments if investors take the money upfront and later leave the fund.
 
Dona Ferentes said:
The corporate regulator has raised the prospect of limiting what superannuation can be invested in and putting restrictions on retail investments in high-risk funds, as it warned a whole-of-ecosystem response is needed to counter industrial-scale misconduct in financial services.

Speaking at a Financial Services Council event in Sydney on Wednesday, ASIC chair Joe Longo took aim at super trustees and advice licensees for their part in the Shield Master Fund and First Guardian Master Fund collapses but also pointed to the extremely low bar for registering managed investment schemes.

“In our view, if you’re a superannuation trustee, you must undertake sufficient due diligence of new investment options before you make them available to investors…you are expected to check that the product is fit for purpose,” Mr Longo said.

“The same goes for advice licensees. There’s a reason why we are focusing on the role of licensees in our enforcement work – you are the first line of defence here. You must have strong quality controls for your approved product lists."
.
Click to expand...
what 'high risk ' ... like Green energy infrastructure ( as if normal infrastructure investment isn't risky enough )
 
Ferret said:
Geoff Wilson has made this interesting submission to the Economic Reform Roundtable concerning the proposed Div 296 tax.

He is actually proposing higher additional taxes on large super balances as seen below, but excluding unrealised gains.
View attachment 204733
A complementary tax offset is also proposed to cover the cost of systems upgrades to handle determining the capital gains. I assume this is for the industry funds that say they can't currently assign capital gains to individual members. I don't really understand the proposed tax offset.

He says the proposal will raise more revenue than the currently proposed Div 296.

It looks like a sensible proposal to me, however, I don't think Chalmers has much intention of making any changes to his original proposal.
Click to expand...
The above tax rates wouldn’t be to bad, provided the super funds still had the CGT discount.
 
Not only the Government trying to get their teeth into superannuation money.

"Australians who were left with missing teeth and drained superannuation accounts for unfinished work at a dental chain are unlikely to see their money again, according to the company's liquidator."

www.abc.net.au

Australians left with 'ugly' teeth and no super are unlikely to see their money again

A creditor’s report into Supercare Dental and Cosmetics Tuggerah reveals almost $3 million in unsecured creditor claims with little chance patients will be able to recoup their money.
www.abc.net.au www.abc.net.au

Nothing is new about people withdrawing funds for cosmetic dental treatment - or other treatment. It's been an issue for a few years.

"They should stop it" goes the cry. Well, the trustees of superannuation funds are not health practitioners and should a practitioner pen a good enough report.........

Hopefully, the legislation regarding the objective of superannuation will give the trustees pause for thought or cause them to seek advice.
 
Bellcose said:
Nothing is new about people withdrawing funds for cosmetic dental treatment - or other treatment. It's been an issue for a few years.

"They should stop it" goes the cry. Well, the trustees of superannuation funds are not health practitioners and should a practitioner pen a good enough report.........

Hopefully, the legislation regarding the objective of superannuation will give the trustees pause for thought or cause them to seek advice.
Click to expand...
a problem that appears to be getting worse

Screenshot_20250905_092412_Chrome~2.jpg
 

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