Superannuation cuts to fuel the investments in NG property ?

It depends, if you are allowed to catchup the $25K limit on a rolling 5 year basis then that can be a very useful tool to keep pumping extra money inside without impacting your $500K limit.

Income earned on asset base of $3.2 million (Couple) being tax free and then only 15% tax is still a very attractive structure. Especially if you have shares with franking credits.

Cheers,
Oracle.

 

Very true. I suppose the vast majority of people won't have a half mill to put into their super in their working lifetimes. But I could see myself stashing a $100k gain on selling a rental property into super if I wanted too...

 

Looks like it's been written by the work experience kid. I'll wait for some proper analysis.

 

Yep...that is politics....but listening the the budget....unless labor can pick holes in it between now and the election...it is going to get interesting.

Things change very quickly before an election.....as a clue the holes are in things like what they are pulling back on doctors charging co-payments....increase in script costs..etc.

 

This is key. A couple of years back they were shouting from the roof tops that they would tax Super pension income over 100,000 p.a. at 15 % with any pension below that to be tax free. Many people complained and whinged. It was intended that all income upon retirement was to be tax free. I don't have a problem with them taxing SMSF income over (say) 100K.

This fixture on actual value of the funds assets is more concerning. I agree Oracle that this may only be the start and also you may find that as years progress and a retirees assets increase in value (STOCKS AND PROPERTY) there will be a bracket creep of sorts if the threshold is not adjusted upwards in particular if yields drop.

It is far cleaner for them to tax INCOME above a certain level than the asset value.

This is why I always keep banging on about not having too much in SMSF's. The laws change at whim. It is certainly a tax effective entity (to a degree), however the concurrent use of family trusts and/or personal assets with some debt attached for some asset protection of sorts is best. A little bit here and a little bit there. This assists with land tax issues also. I am so glad that I don't contribute anything into our SMSF beyond the organic growth it achieves. I am 5 years away from TTR however it looks like income will still be taxed at 15 %. Even though they didn't scrap prospective TTR, it isn't clear if it's going in 2017 or just going to be taxed at that time.

As an aside, the cash rate decision yesterday concerns me more. We will see easy money coming as there will need to be another two drops to make any dent to sentiment and spending. This looks like it fire up the ASX as people earning sub 2 % in the bank will be torn to seek some yield elsewhere. Property has just been given a sugar rush (when there is concern about the economy) and whilst we are investors here and we jump with glee at rate cuts, beware the swell it may cause to some sectors of property that in two or three or four years may see the correction that has been laughed at by many. I don't call a crash however when interest rates do rise (and one day they will) it will expose those over-leveraged and swimming naked when the tide goes out. The bargains will come along then. Same will occur with stocks IMO.

Merely my 0.02

Peace and out......................

 

Why only tax the SMSF of the income and not all super funds..?

I have a problem taxing a SMSF fund (which we have) but not taxing a non-SMSF.

I would also have a problem of taxing a non-SMSF and not taking the SMSF... Both supers should have the tax.

 

Yes agree BW. It should apply across the board. I was only quoting in terms of SMSF as that is my entity for Superannuation and many of the changes they propose affect the "wealthier cohort" of Superannuants who generally have SMSF's. I din't intend to confuse

 

This is a positive tax break to encourage startups

'We see it as a very lucrative investment area'

 

Can you please elaborate what tax is only on SMSF and not on non-SMSF? Example would be great.

Cheers,
Oracle.

 

I respond to the quote on my post, currently there is no difference in tax for a SMSF and non-SMSF.

 

Yep......people rush in at 4% rates...and they hike up to say. 6.75%....that is the equivalent of a 65% increase in repayment! Better start pumping insulin to soak up the sugar rush...otherwise the patient is about to go into a coma!

What the RBA did yesterday is the bait for the patient! The fishing in Sydney is going to be great by 2020! I feel that inner Melbourne will also have the same issue....

It reminds me of 1987....all over again.......

 

Look up Timbercorp...another disaster waiting to happen...in my eyes......lambs to the slaughter!

 

I'm not sure this should surprise anyone, Malcolm Turnbull has already come out and said that he will be doing everything in his power to continue the growth in property prices, removing one source of tax minimisation from the wealthy will simply steer more money towards other tax favoured investments, which in Australia is property first and foremost.

 

Yep...and then what....the RBA cools a red hot market with higher rates....that will not be good for the economy.

It is down right dangerous because people's wealth is tied to housing in OZ!

 

IMO this particular new rule is the biggest dud in the budget. Nasty, not necessary, and applying from budget night, so no chance for people to plan even a little bit ahead. I can see this receiving media criticism from finance professions and mum and dad self-funded retirees in the weeks ahead.

 

Agree...not a good look for liberals being criticized by their core constituents...IPA was mad at this. What happens to superannuants who have already exceeded this cap ?

 

Nothing happens if you are already over the cap. You just can't put further money in.

Also the $500k Limit is for Non Consessional Contribution, so after-tax contributions. Still very generous.

 

500K for a lifetime is generous ? Not when just a few days ago I could move 540K every 3 years - if I had the means .

That being said, it's a loophole they had to close. That is , until some future Govt lifts it to a $1 Million cap, and a later one drops it to $250K, and so the merry dance will go...

 

Some very good points player.

They keep tinkering with Super but to this date I think it's still the least taxed structure out there. Apart from fact that you cannot access it till your later years everything else is really good in term of building wealth. Even after the recent changes.

15% tax at most and no tax on earnings on assets worth $1.6mil. I think they will make all sorts of changes to super before they touch the 15% tax rate. That to me will be a no goer for any government for a very long time. So if you are content to pay 15% worst case super can be very handy to build wealth.

Being on high income and not too keen on negative gearing to minimise tax. I find the option of maximising concessional contributions to reduce tax quite attractive. Even though I can't access it but it's still my money and to see it grow along with my other investments is pleasing.

Cheers,
Oracle.

 

Hey mon , what's that dope yu smokin ?

Check in da Mirra .

yu da numba one on the most wanted list .

Cliff