Superannuation, the ultimate government cash cow?

[divs4ever]

The super tax and the defined benefits scandal​

The super tax and the defined benefits scandal

Australia's superannuation inequities date back to poor decisions made by Parliament two decades ago. If super for the wealthy needs resetting, so too does the defined benefits schemes for our public servants.

www.firstlinks.com.au

The case for the $3 million super tax​

The case for the $3 million super tax

The Government's proposed tax has copped a lot of flack though I think it's a reasonable approach to improve the long-term sustainability of superannuation and the retirement income system. Here’s why.

www.firstlinks.com.au

some of the comments under each article provoke some thought as well

apart from the concept of a tax on unrealized capital gains ( will this be applied once only , yearly maybe every three years ? ) it leaves gaping flaws that only ensure this legislation will require more changes or adjustments , and ATO inflicting more retrospective penalties

HOW THE HECK ARE YOU SUPPOSED TO PLAN SENSIBLY when the target area is being waved around by a consortium of kleptocratic clowns

using super cash to invest in the nation's infrastructure ?

you can forget all about that , any serious wealth will be flowing overseas to say airBNBs in Dubai ( or Monaco )

 

[Knobby22]

Doesn't affect me but thought i would share............

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Good afternoon,​ We invite you to stand with us and sign the petition to stop the Australian Government’s proposal to tax unrealised gains. Under the proposed changes, superannuants with balances over $3 million would be required to pay tax on the increase in the value of their assets, even if the assets are not sold and no cash has been generated to fund the tax. A lack of indexation on the $3 million means that 8.1 million Australians, or half of all current superannuants, will be captured by 2053 due to the impact from ‘bracket creep’. Sign the petition today and share with friends and family.

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Why we are taking a stand

It undermines the Australian superannuation system: The proposed changes penalise a lifetime of saving and erodes trust in the $4.2 trillion superannuation system. It is illogical and bad policy: Paying tax before you sell an asset is a breach of the social contract - the unwritten agreement between the government and its citizens to encourage self-funded retirement. This is especially problematic for illiquid assets such as start-up businesses, energy infrastructure and farms, which cannot easily be sold to cover the tax bill. It will damage the economy: Superannuation will become the only part of the tax system where individuals are taxed on unrealised gains, distorting capital allocation. Our modelling indicates $94.5 billion would be removed from the Australian economy and $155 billion of superannuation savings would be redirected into tax-free structures such as principal places of residence, exacerbating the housing affordability crisis that already weighs on younger Australians. The “$3 million” cap is not indexed: More than 8.1 million Australians are on track to be captured by 2053. Every signature sends a clear message to all Parliamentarians, who are yet to vote on the proposed legislation: rethink the taxing of unrealised gains and protect Australians’ retirement.

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Thank you for standing with us and adding your voice.

Kind regards, Geoff Wilson AO Chairman and Chief Investment Officer Wilson Asset Management​

Isn't he the bloke who has over $500 million in Siper?

 

[Dona Ferentes]

Isn't he the bloke who has over $500 million in Super?

It's understood two WTC early bird investors and directors have $1billion in their SMSFs, between them

 

[Dona Ferentes]

James Gerrard writes:

People commonly think the new Division 296 tax levies a flat 15 per cent on earnings, both realised and unrealised, from superannuation account balances above $3m. The logic being the government is effectively doubling the tax currently paid. This explanation is simplistic.

It is more detailed than that and to the surprise of many, it may not be as bad as initially thought. Although Division 296 is a new 15 per cent tax in addition to the existing 15 per cent tax on super balances above $1.9m, it only applies on the proportion of earnings attributable to the part of an individual’s total super balance that exceeds $3m.

Best explained by an example, say a super fund member has a $3m balance as at 1 July 2025 and by 30 June 2026 the balance increases to $3.2m.

Division 296 taxes the proportion of earnings above $3m, so in this example, $200,000 represents 6.25 per cent of the $3.2m super balance. As such, only 6.25 per cent of the increase in value above $3m is taxable at the additional 15 per cent.

The tax paid is not what some people assume, that is, 15 per cent on $200,000 being $30,000.

Instead, it is 6.25 per cent of $200,000 taxed at 15 per cent, which equals $1875. As a percentage, the Division 296 tax payable represents just 0.94 per cent. That’s a far cry from 15 per cent tax.

 

[qldfrog]

James Gerrard writes:

People commonly think the new Division 296 tax levies a flat 15 per cent on earnings, both realised and unrealised, from superannuation account balances above $3m. The logic being the government is effectively doubling the tax currently paid. This explanation is simplistic.

It is more detailed than that and to the surprise of many, it may not be as bad as initially thought. Although Division 296 is a new 15 per cent tax in addition to the existing 15 per cent tax on super balances above $1.9m, it only applies on the proportion of earnings attributable to the part of an individual’s total super balance that exceeds $3m.

Best explained by an example, say a super fund member has a $3m balance as at 1 July 2025 and by 30 June 2026 the balance increases to $3.2m.

Division 296 taxes the proportion of earnings above $3m, so in this example, $200,000 represents 6.25 per cent of the $3.2m super balance. As such, only 6.25 per cent of the increase in value above $3m is taxable at the additional 15 per cent.

The tax paid is not what some people assume, that is, 15 per cent on $200,000 being $30,000.

Instead, it is 6.25 per cent of $200,000 taxed at 15 per cent, which equals $1875. As a percentage, the Division 296 tax payable represents just 0.94 per cent. That’s a far cry from 15 per cent tax.

What is artfully trying to be hidden is the unrealised capital gain part.
You get ABC and AFR articles egc, explaining moving super tax from 15 to 30 %. Is bla bla bla..and yes it is..as long as it is just a matter of tax rate
But it is not, it is a taxation on wealth, worse wealth creation.
And only the most cretin among us would not believe it will not be extended to all assets and taxpayers within a few years.

Who is going to be crazy enough to start and create a business, develop a farm, improve an existing enterprise ?
This is a complete takeover of Australian enterprises from the smallest to the smaller corporate to finance an economic incompetence which is rarely matched in the western world, not that we do not have our share of incredible losers.
Run, move your assets overseas and consider that 12% super you pay on your wages just another 12% tax.
Which then lead to: why do you bother working at all, let alone build a career.
And all that while we dace a superpower switch, incredible energy challenge and a tech revolution which can or will replace the jobs of mist employees within a decade
The blind leading the deafs

 

[rolly1]

Who is going to be crazy enough to start and create a business, develop a farm, improve an existing enterprise ?

Hmm have to disagree with you there. Having built up and sold 2 businesses while making money was a goal it wasn’t the major one. It was the challenge and experience that I looked at more. If you are close or just over 3mil you have a lot of options.
If you are well over 3 mil then you have most likely got huge tax benefits along the way to get there so maybe just giving some of that back.
Look I didn’t vote for these turds and I never will as I hate the unions. We just need a party/group to have the balls and increase the gst and get rid of all the other taxes. It is the most fairest tax as it’s a user pays one. It’s a simple fix but they are too scared to do it. Just mho.

 

[qldfrog]

Hmm have to disagree with you there. Having built up and sold 2 businesses while making money was a goal it wasn’t the major one. It was the challenge and experience that I looked at more. If you are close or just over 3mil you have a lot of options.
If you are well over 3 mil then you have most likely got huge tax benefits along the way to get there so maybe just giving some of that back.
Look I didn’t vote for these turds and I never will as I hate the unions. We just need a party/group to have the balls and increase the gst and get rid of all the other taxes. It is the most fairest tax as it’s a user pays one. It’s a simple fix but they are too scared to do it. Just mho.

You do not understand what i try to convey:
I am not affected at all, i never trusted government and my super is minimal.
The issue with that law is not the taxation rate or effects on super above 3m but the creation of a monster
Unrealised capital gain.
And seriously who could think it will stop there
So @rolly1 , how would you have built your business if every year, the ato had checked your business, see you had made great progress reinvesting, extending market share not even for any increased income or cash in the bank, and decided to revalue it and send you a bill for a third of the rise.
but giving you an iou if a recession collapse your business or you struggle during a few years
Set a farm
Spend the year and $1m putting irrigation or dams in place
Asset increase by $1m+ , get an extra $300k tax bill on top of your $1m loan..
You see where it leads.
Plus succession headache for farmers
So family farms gone in 20y as in the EU
Or you can think it will never happen because we have bright politicians always ready to reduce costs and increase productivity?
It is currently affecting super, the real issue is what and when next.
Super is the Trojan horse purposely chosen as most Aussies do not care,
The currently affected are a small minority you can target via envy, we learnt from Hitler or Mao, and the bloody worst is that these rotten politicians exempt themselves from the real issue.
I have long lost any hope in this country.
A great holiday spot or destination like Vanuatu, Bali or Egypt

 

[divs4ever]

The issue with that law is not the taxation rate or effects on super above 3m but the creation of a monster
Unrealised capital gain.
And seriously who could think it will stop there

no i don't ,

in fact as i read it , there are several areas of it that need clarification , BUT what you will get are more amendments , adjustments and clauses , ensuring your accountant will charge you more to fill out your tax obligations , .. and more people will be affected

don't expect much from any government , they are too busy planning how to spend next year's revenue ( and as much as they can borrow )

 

[rolly1]

You do not understand what i try to convey:
I am not affected at all, i never trusted government and my super is minimal.
The issue with that law is not the taxation rate or effects on super above 3m but the creation of a monster
Unrealised capital gain.
And seriously who could think it will stop there
So @rolly1 , how would you have built your business if every year, the ato had checked your business, see you had made great progress reinvesting, extending market share not even for any increased income or cash in the bank, and decided to revalue it and send you a bill for a third of the rise.
but giving you an iou if a recession collapse your business or you struggle during a few years
Set a farm
Spend the year and $1m putting irrigation or dams in place
Asset increase by $1m+ , get an extra $300k tax bill on top of your $1m loan..
You see where it leads.
Plus succession headache for farmers
So family farms gone in 20y as in the EU
Or you can think it will never happen because we have bright politicians always ready to reduce costs and increase productivity?
It is currently affecting super, the real issue is what and when next.
Super is the Trojan horse purposely chosen as most Aussies do not care,
The currently affected are a small minority you can target via envy, we learnt from Hitler or Mao, and the bloody worst is that these rotten politicians exempt themselves from the real issue.
I have long lost any hope in this country.
A great holiday spot or destination like Vanuatu, Bali or Egypt

It won't happen to business there is far too much subjectivity in the valuing process. Super was always going to be a target for them not to get their grubby hands on at some stage.
I 100% agree with you on them exempting themselves but I would expect nothing less than that from the union lead Labor. The elction was on on the same basis as the US the winner was lesser of 2 evils.
As in business you need to do the same in personal life and plan ahead. Super and I also think investment properties might be on the radar as two areas they will target to make up their shortfall in revenue. Just mho of course.

 

[divs4ever]

It won't happen to business there is far too much subjectivity in the valuing process. Super was always going to be a target for them not to get their grubby hands on at some stage.
I 100% agree with you on them exempting themselves but I would expect nothing less than that from the union lead Labor. The elction was on on the same basis as the US the winner was lesser of 2 evils.
As in business you need to do the same in personal life and plan ahead. Super and I also think investment properties might be on the radar as two areas they will target to make up their shortfall in revenue. Just mho of course.

unrealized capital gains tax , is not just an Australian trend several other nations are trying to get a variation in ,

think on how widespread VAT ( GST hese ) has become ,

another issue ( again not just in Australia ) is the voters get a choice of evil 'with sprinkles ' or evil with cinnamon ( but you end up with the same counter-productive policy )

 

[qldfrog]

It won't happen to business there is far too much subjectivity in the valuing process. Super was always going to be a target for them not to get their grubby hands on at some stage.
I 100% agree with you on them exempting themselves but I would expect nothing less than that from the union lead Labor. The elction was on on the same basis as the US the winner was lesser of 2 evils.
As in business you need to do the same in personal life and plan ahead. Super and I also think investment properties might be on the radar as two areas they will target to make up their shortfall in revenue. Just mho of course.

"It won't happen in business"
Well it is happening for farms, service stations, hotels, etc next year owned by SMSF all over Australia ..
Unless that law is changed, and i doubt it will

 

[Dona Ferentes]

there are a good diversity of replies in the comments to this ( contrarian) view on the Div 296 proposal - not yet law

The case for the $3 million super tax

The Government's proposed tax has copped a lot of flack though I think it's a reasonable approach to improve the long-term sustainability of superannuation and the retirement income system. Here’s why.

www.firstlinks.com.au

 

[qldfrog]

there are a good diversity of replies in the comments to this ( contrarian) view on the Div 296 proposal - not yet law

The case for the $3 million super tax

The Government's proposed tax has copped a lot of flack though I think it's a reasonable approach to improve the long-term sustainability of superannuation and the retirement income system. Here’s why.

www.firstlinks.com.au

But in a nutshell

https://www.skynews.com.au/business/finance/labors-unrealised-gains-tax-sparking-real-panic-for-small-businesses-chartered-accountants-anzs-tony-negline-warns/news-story/9d3211464d41748f08e23d2060f85dd1

 

[rolly1]

They took the risk to put their business in a smsf which is a highly regulated government toy. The main reason was to save on tax plain and simple. The article by Dona clearly shows the majority of tax benefits are going to the very wealthy.
I stand by my statement earlier about scraping all taxes and increase the GST as it is the most fairest tax of them all.

 

[sptrawler]

I stand by my statement earlier about scraping all taxes and increase the GST as it is the most fairest tax of them all.

I agree, also with supper, put a cap on how much can be held in super, it would be easier, fairer and less open to abuse.

If its purpose is to enhance or replace the pension, then cap it at $3m/person and review it periodically.

The reality is, as you say @rolly1 it is a Government toy/ slush fund.

$3 trillion is in quasi Govt controlled funds and $1trillion in SMSF, the underlying issue isn't how much is in super, but the $1 trillion that they can't dictate where it is invested IMO.

Super funds ramp up renewable energy investments

Super funds now finance 10 per cent of Australia’s renewable energy capacity, as debate rages over the use of retirement savings to fund ‘nation building’ investments.

www.afr.com

Time for super to invest in the renewable energy future | Future Group

Future Group CEO Simon Sheikh has written to super funds calling on leaders to adjust their investments to look to a more sustainable future.

www.futuregroup.com.au

 

[divs4ever]

They took the risk to put their business in a smsf which is a highly regulated government toy. The main reason was to save on tax plain and simple. The article by Dona clearly shows the majority of tax benefits are going to the very wealthy.
I stand by my statement earlier about scraping all taxes and increase the GST as it is the most fairest tax of them all.

you will be absolutely astounded how quickly you and your friends will ascend into the 'very wealthy ' bracket ( while a select few will appear to be untouchable by the current and any new measures )

 

[Sean K]

If the LNP can't bank some political capital out of this then they are truly a sorry bunch.

And, they need to isolate Rishworth and ask her some questions she doesn't have a script for. As soon as she's on her own she's abysmal.



Labor’s admission that politicians including Prime Minister Anthony Albanese will be treated differently to others who have to pay the proposed new tax on superannuation balances above $3m has sparked outrage as critics round on the government for not being honest with the public over the contentious revenue-raising move.

Workplace Relations Minister Amanda Rishworth on Sunday admitted on Sky TV that defined benefit super schemes would be “treated differently” to the defined contribution funds most Australians pay into.

But Ms Rishworth failed to clarify exactly when politicians on defined benefit schemes, such as Mr Albanese, would pay the new tax due to kick in for everyone else next financial year.

It is widely assumed those on legacy defined benefit schemes will not have to pay the tax until they retire.

 

[sptrawler]

If the Government want to make super fair and sustainable, just make the 15% contribution tax an offset, so that those at the top 45% tax rate get a 15% reducction to 30%.
At the moment the low income earners only save 3% as they only pay 18% tax, whereas the wealthy get 30% reduction, on their 45% tax rate.
That would make a lot more money.

 

[rolly1]

If the Government want to make super fair and sustainable, just make the 15% contribution tax an offset, so that those at the top 45% tax rate get a 15% reducction to 30%.
At the moment the low income earners only save 3% as they only pay 18% tax, whereas the wealthy get 30% reduction, on their 45% tax rate.
That would make a lot more money.

Another great idea, why can't those elected officials come up with pearlers like this? Oh that's right cause they are in the 45% tax bracket LOL.

 

[basilio]

Bad news! The communist Albanese government is introducing a new superannuation tax on the rich! | First Dog on the Moon

Can we still take five overseas holidays a year? Whither the lucky country!?!

www.theguardian.com