Superannuation cuts to fuel the investments in NG property ?

Interesting take in the age on super and interest rate cuts and their impact on NG property. Extra money sloshing in the economy has to find a tax shelter.

Why the super crackdown could add fuel to the housing affordability fire

 

Can someone help explain the changes? My brain is not working very well
What's the changes from x to y?
Why y (and whatever tax) could potentially increase negative gearing investment?

 

The basics from my understanding for a couple;

Before budget - If you had 4M and it grew by 5% in super before you would pay $0 in tax ($200,000 income).

Now - 4M - 3.2M (1.6x2) = 800k you and your super grew by 5% = $40,000 so you would need to pay tax of $6,000 ($194,000 income)

So in theory lowering your tax taking on another NG property would be beneficial as you could offset the loss against your income.

It is ever more beneficial if one person had the 4M as you would be paying $18,000 in additional tax under the new budget as your threshold would only be 1.6M.

 

@Big Will so NG loss offset against 15% tax rate?
It sounds like a moot point to lose $1 and receive 15 cents back?

 

If the above is true. I don't think it is too bad and certainly not unfair. If you making $200K income paying $6000 tax is 3%.

My only concern is this might be just the start. Future governments might be tempted to keep fiddling with the $1.6m threshold to balance the budget.

Cheers,
oracle.

 

I would say this is to be expected. It's an easy target (ie super as a whole, not just the $1.6m threshold).

 

I agree you don't spend $6,000 to get back $900 isn't a good scenario, however you must consider the full picture.

If you get $50,000 in CG you increased your net worth and that is an extra $900 so you only lost $5,100 so you are roughly ahead 45k.

Compared to just receiving $40,000 income and paying $6,000 you are only ahead $34,000.

It is the same principals as the NG except you are playing with a lower tax return...

This moot would rather $900 back than nothing..

FYI I am not saying it is the best scenario I was responding to why people would consider NG a property in super.

 

Summary from Australian Super on the super changes in the federal budget
AustralianSuper - Federal_Budget_2016

 

You phrase it like ng is a problem?

 

If people (in general not meaning specifically PC) just take all the time, questions, energy, focus etc they have for NG...and just spend 1/10th of that on learning how to move towards financial freedom, they would be weeeeel on their way.

Its soooo ironic its actually quite sad.

My opinion.

 

Thanks...Quoting from the above link for someone who is Working and saving for future

This is my understanding about the catchup payments. Say during the last 4 years I have only contributed $15K into my super. Does that mean this year I can pay $40K ($10k shorfall x 4) + $25K this years limit so total of $65K as concessional contribution? This does not impact the $500K after tax lifetime limit?

Bit confused about this one. Does this relate to after tax contributions linked to the $500K limit or concessional catchup payments? If the former, I could effectively contribute $50K ($25k concessional and $25K after tax with $25k tax deduction provided I am still under the $500K limit) into super. Does that sound right?

I know this rule existed and just the limit is reduced from $300K to $250K. I still don't understand it fully. Are they saying if you earn $250K then your concessional super contributions is taxed at 30% instead of 15%? How do they determine the $250K income. Is it taxable income they look at or something else?

I have a smsf and I never supply any group certicates or personal tax returns to my smsf auditor for them to know my income FY. So how can they calculate whether I fall under 15% or 30% tax bracket?

Cheers,
Oracle.

 

Agree with this 100%...the money will head to Brissue, Outer Melbourne, Adelaide and even Perth....Sydney will get some...

The elephant in the room is that what will happen in 3-5 years as boomers retire??

 

Unless we have PM Shorten, who will rip the NG and CGT off

 

Yep....but after last nights budget unless the Libs do something stupid they are a shoo in.

 

Uncertain times...Happy to sit on the sidelines at least till the elections are over.

 

I love times like this...this is when you make the most amount of cash...

As wazza said be greedy when others are fearful and fearful when others are greedy!

 

Just a couple of days ago you said they had lost the election.

 

also , capping the life time extra contributions to 500 K means people are more likely to keep extra money outside super and invest in property .

 

This is a problem that would only affect less than 5 or 10% of people? And I think i'm being very generous here on the 5 or 10%. I don't have the stats but I don't think it would affect a huge number...

 

This is SSOOOOOO true Leo - media harnessing envy and running with it. I don't care that much whether NG is in or out but the obsession with it is just bizarre.

During the speech I think he said 3%