ATO finalises Super CGT guidance

Discussion in 'Superannuation, SMSF & Personal Insurance' started by Nodrog, 9th Mar, 2017.

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  1. Nodrog

    Nodrog Well-Known Member

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  2. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    I would argue very few taxpayers should attempt to consider the complexities without financial and tax advice prior to 30 June.

    The issue is only relevant where
    1. A taxpayer has total super account balances of $1.6m plus at 30 June 2017 OR
    2. Is a member of a SMSF where one or more of the members is affected. OR
    3. A person who receives a non-account balance defined benefit pension (usually military or Government) AND has account balances in other super funds
    4. Persons whose spouse dies between now and 30 June 2017 who should seek personal financial advice on the impact on reversionary pensions.
     
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  3. Nodrog

    Nodrog Well-Known Member

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    Since 1, 2 & 3 (hopefully not 4:() apply to me I will for the first time in many years be getting my intended actions vetted by a dedicated SMSF professional.

    The complexities the Gov't has created with these changes is crazy. Best gift for fee income the Gov't has given to the Financial Planning Community in a very long time.
     
  4. Mike A

    Mike A Well-Known Member

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    Government had to do something to replace income lost from the robots :p
     
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  5. Nodrog

    Nodrog Well-Known Member

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    IMG_0113.JPG
    :D:D
     
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  6. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    In many cases the planning issues are very simple esp when a defined pension occurs. The bigger the balances the greater the issue. But the outcome will be a lot more taxes being paid by fund members. I just did a calc for one person who will be $9k pa worse off. Thats still just a tax rate of under half a percent so it seems larger than it truly is. The SMSF goes from tax free to fully taxed with no alternatives. The assets in the SMSF cant be given a CGT concession (share losses offset gains almost equally).

    The defined pension issues come with some (very unfair) rules which are mandatory and assist simplicity but I think they are unfair and undo what was promised all their working life. To tell a 75 year old that their life expectancy is 16 years is silly. To tell a 90 year old the same thing even worse.
     
    Last edited: 9th Mar, 2017
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  7. Nodrog

    Nodrog Well-Known Member

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    Yes, by the time my SMSF account based pension is adjusted for DB pension (x 16) and excess transferred to Accumulation there's no doubt I will be paying more tax. But overall a couple utilising the tax free threshold outside Super and maximum benefits of tax free pension and accumulation inside Super one can't complain. Still a nice tax result for many retirees.

    The sting that many are still not aware of is what happens when the spouse passes away and the remaining member has already maxed out their Super pension:eek:.

    As for DB pension rule (x 16) at 57 it's not quite so bad for me but yes certainly very unfair for the poor sods you mentioned who are 75 plus. A tiered multiple based on age would have been fairer. Fortunately my and the wife's DB pensions are only a small part of our overall Super balance.

    Oh well all these Super changes make for delightful lite bedtime reading:). Don't you agree:cool:?
     
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  8. Ross Forrester

    Ross Forrester Well-Known Member

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    The primary effect of these guidance notes is to show you how hard it is to plan for clients. When you are looking at massive changes on 1 July and you are only being told of how they work on 4 months in advance....

    How do people properly plan???? 9 months ago I was looking at a $500k lifetime limit.
     
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  9. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Yes Ross. And thats just in six months. The worst affected are those who stared working for the Commonwealth aged 17 or even younger. Tax free pensions they were told. The generous pension is why they got paid less they were told. Job for life they said. They were also told they still needed to contribute to super although they had that pension right after 1995. So they did. Tax free after 60 they were told. So they contributed. The complies with tax law and recommended strategies that employers encouraged !!

    Now they are being told:
    - Their govt pension counts to the $1.6m cap
    - The Govt unfairly chose a factor of 16 x the annual pension to determine what their "pension balance" is. Regardless of their age. So a 90 year old on $100,000 has a pension worth $1.6m as does a 60 year old. But the 90 year old has FA chance of living that long and their pension STOPS on death. Statistically they should be dead tomorrow.
    - The tax free on the pension is being pruned back to $10K of offset total AND any of their money other super money loses the tax free concessions on earnings.

    Non working former government employees cant strike can they and are hostage to this rip off. They should all let their Federal member of Parliament personally know why their vote may change. If enough personally speak to their member and seek review of the ludicrous 16x factor perhaps someone may actually listen.
     
  10. Nodrog

    Nodrog Well-Known Member

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    From memory generally 2/3 of the pension continues to be paid to a surviving spouse in the case of Federal Gov't employees. After that though in most cases no one gets anything. I assume that's implied in your comment but just mentioning it incase others are unaware.

    I might be wrong but I vaguely recall Labor wanting to dip into the Future Fund to spend, spend, spend if returned. Too much of that and no body might be getting their DB Pension:rolleyes:.

    Given the massive liability to the Gov't associated with these defined benefit pensions I'm guessing the Gov't is hoping the recipients all kick the bucket sooner rather than later.
     
  11. Mike A

    Mike A Well-Known Member

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    i think many of those former federal employees are enjoying a nice defined benefit pension. something most of the community doesnt get to enjoy. pension for life has always been a giant ponzi scheme.
     
  12. Nodrog

    Nodrog Well-Known Member

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    He he, I didn't say anything earlier but my sentiments also. I'm glad the wife and I are recipients of a small DB pension each. Got mine when I took a redundancy package 16 years ago at 41. Gov't guaranteed Super pension indexed for life from 41. Wife gets 2 / 3 of it when I kick the bucket. Don't you feel sorry for us poor former Government employees:p. Violins please:D.

    Any wonder the Government and most (all?) employers closed these schemes to new members many years ago.

    That said, I do agree with Paul in regard to the 16 times factor not being adjusted for age.
     
  13. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Yes but many paid a price for it in lower pay and that was one of the working conditions seen as favourable. They also had long term vesting clauses for years and years and unlike SGC when it came in many had only partial rights if they left.

    Easy to knock it now but they "paid" their dues and now the rules have been changed. Unfairly v's account based employees.
     
  14. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    If you both die at the same time then the pension ends. Nothing for the kids however.
    Its OK for them to end it on death but tax it as if its 16 years.
     
  15. Nodrog

    Nodrog Well-Known Member

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    No kids to worry about but would be concerned for our three pet chickens. Haven't been able to bring myself to tell them they won't be receiving our DB Pensions when we're gone. They'll just have to make do with the other 90% of our assets in the Disc Trust and SMSF:(. Hope they can get by on that, they're greedy little buggers and spoilt rotten:D.
     
  16. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Solution : A box of stuffing and a BBQ galore rotisseree. Bequeth them to me I will throw a wake.
     
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  17. Nodrog

    Nodrog Well-Known Member

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    You're a very cruel man.

    Be warned though our chickens have been trained to defend themselves, very aggressively indeed. Make ninjas look like wimps. Here's what happened to the last accountant who had the same idea as you:
    IMG_0119.JPG
     
  18. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Funny. But hot and spicy is better. Ask them which "clothes" they prefer to wear to the wake.
     
  19. Nodrog

    Nodrog Well-Known Member

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    Well it seems the threat of decapitation by our girls isn't going to deter you from your evil deed so they have decided to use sex appeal to charm you into submission:
    IMG_0121.JPG
    :D