In a word, yes. And as much as we can argue how that shouldn't be the case, the unfortunate reality is that its true and there is a wealth of empirical evidence to back up that assertion. Er, no. Refer to the discussion about private fund managers and Self Managed Super Funds above. The government does not want to look after your money. That's why they invented superannuation to begin with.
As for the governments wanting people to look after their own retirement, I'm afraid we are dealing with a kleptomaniac schizophrenic. As someone who has run our own SMSF for 17 years all governments, hard labour, nutty nationals, liberals who are anything but and the faries at the bottom of the green cespool ... there are rules for them and then there is this big fat pool of money called superannuation that every month the ATO and the kleptomaniacs move the gold posts. In 2010 I supplied a 28 page submission to the Cooper Review on SMSF that the hard labour mob solicited. What the review clearly demonstrated was that SMSF's run rings around the retail and industry funds in both a superior return on funds invested and on governance; (see my preamble to the submission below) non recourse Addressed to; Mr Jeremy Cooper Chairman Super System Review Phase Three Structure Issues Paper GPO Box 9827 Melbourne Victoria 3000 By email [email protected] Preamble Thank you for the opportunity to provide input into the issues relating to SMSFs. Our self managed superannuation fund was established in the early 90's with a corporate trustee and a separate unit trust that the super fund controls all the units in. This was done after seeking advice from our family solicitor. In this submission in addition to responding to issues relating to SMSFs (Sections 17-22 respectively) we also touch on the pre 11th of August Unit Trusts particularly relating to small businesses that purchased the commercial properties where their businesses operated from via this SMSF/ unit trust arrangement. This submission discusses the ongoing benefit of property under the grandfathering clause for these pre 11/08/1999 trusts and the 2007 budget reforms that again allowed for SMSFs to borrow through a property warrant arrangement. Acting as directors through our corporate trusteeship of our SMSF we have over the course of the last fifteen years witnessed an unrelenting campaign by some sections of the financial press aided and abetted by the retail and industry funds to portray self managed superannuates as untrustworthy and tax cheats. Shortly after establishing our SMSF we became disenchanted with the prevailing accounting and investment advisors whom advocated investing predominantly in paper equities under the guise of diversification. As small shareholders we had no control over the boards of these large publicly listed companies that often act to the detriment of small shareholders such as ourselves. The folly of diversification by holding an array of shares and bonds was exposed during the global financial crisis in 2008. The federal court of Australia decision (Treviso vs. the commissioner of taxation) on 29/04/1991 by judge J Burchette1 opened the door for small businesses such as ours to escape the investment advisory trailing fee merry go round that the Cooper review has touched on. The Trevisan Trust investment approach was and still is viewed as a threat to the investment advisory industry. By innuendo and concerted lobbying these self interest groups swayed government to close off unit trust investing by SMSFs after the 11th of August 1999. Referrence1 Case 91 ATC 4423 (Australian Taxation Commissioner V Trevisan) In 2004 further lobbying saw SMSFs barred from providing a defined benefit pension under the false pretence that compression of reasonable benefit limits via reserving was occurring. These same retail advisors had been for years advising their wealthier clients to use warrants to purchase shares to get around the borrowing restriction until the tax office in late 2005 outlawed it. When lobbying by these self interest groups resulted in warrants being allowed they were hoisted on their own petards by the broader than expected result that again allowed SMSFs to borrow to purchase property. True to form, we now have these same so called " investment experts" baying about how risky it is to purchase property in an SMSF using a similar warrant arrangement they put their clients in to purchase shares. The reality is once your SMSF has a bare trust in place with a limited recourse property loan/ warrant; there is little need for ongoing advice to manage the property investment. This is the reason for the continued opposition by the retail and industry funds to the 2007 reforms that restored some of the options that allowed SMSFs to invest in freehold real estate via the use of property warrants. The Peruvian economist Hernando de Soto's2 views on the power of property ownership in poor and developing countries to unshackle the yolk of poverty can equally be applied to any Australian of limited means who aspires to be financially independent in retirement. Our fund in the early 1990's borrowed funds through our SMSF controlled unit trust and purchased two commercial properties which represented 100% of our SMSFs assets. The return on our investment by concentrating rather than diversifying has been exponential. The risk a SMSF faces when purchasing freehold real estate is extremely low. The reforms that now allow the purchase through a bare trust using a property warrant with a limited recourse loan is safer that the original pre August 1999 unit trust method that we used so successfully. The statistical summary of self managed superannuation funds provided by the Cooper review does not support the contention that SMSFs are unsophisticated investors that need to protected from themselves. The overall investment performance of SMSFs demonstrates that those fiscally literate individuals who have abandoned the retail and industry funds are quite capable of controlling their own financial destiny. The problem does not lie with the trustees of SMSFs undermining their retirement, but rather the so called investment advisors that are increasingly tied to the four major banks and large insurance companies who push tied financial products. Referrence 2 The Mystery of Capital 2000 Hernando De Soto All rights reserved. ISBN: 0-465-01614-6 Successive governments have continued to profess they want individuals to be self funding to ease the tax burden on future generations but are still influenced by powerful vested lobbying. The government's argument that super needs to be yet again altered to be "fair and equitable" does not stand up to closer scrutiny. The lowest quartile of society that will require assistance can only be provided in retirement if the majority of retirees are encouraged to be totally self funded. Forward projections point to only 20% of retirees being totally self funded out to 2030 and beyond. The major reason for the reforms of the last Costello Budget was to encourage particularly those in their 40's and 50's to transfer assets into super and the tax free status after age 60 to retain super in retirement rather than looking for a government pension. Under the Canadian RRSP system (Registered Retirement Savings Plan) the Canadian government forgoes taxing super contributions, earnings and capital gains during the accumulation phase so the compound growth is greater. They then tax the super at the member's marginal tax rate in Pension mode. Contrast this with the Australian approach of taxing at 15% on contribution, another 15% on earnings year in year out during accumulation phase and 10% capital gains meaning a much smaller compounding outcome. The fair and equitable media beat up and some sections of treasury would have all but the most dependant paying their personal marginal tax rate in the super phase as well as further limiting what can be contributed during the accumulation phase? It makes no sense to penalize those who aspire to be completely self funded. This approach will result in a poor outcome for future generations at a time when our tax base will ill afford this policy defect. The current system has another glaring fault. Because of the Treasuries short term focus, superannuates are required to draw down 4% of their total fund per annum. (2% during the current GFC) The rational behind this policy is that Treasury does not like intergenerational transfer of wealth in a tax sheltered environment. What is wrong with encouraging SMSFs or for that matter industry funds to retain deceased members residual funds in an accumulation reserve for allocation to related members so that the number of totally self funded retirees as a proportion of the overall population continues to grow to 40 to 60 percent? Contrast this with the current lobbying by insurance, bank and retail superannuation self interest groups to compel all retires to purchase an annuity with 20-30% of your final super nest egg. The message is clear the so called wealth management lobby is whispering in government's ear that Australians can not be trusted to manage their money in retirement. My question to the Cooper review is; considering the unfunded federal and state civil service superannuation funds that the tax payers are going to have to fund. Where is the money going to come from in the future if 40-60% of retirees are not encouraged to be totally self funded? Rather than focusing on the short term, the review needs to ensure that we are not pushing the problem onto the next generation because of poor policy.
That my friend is why your poor and I'm rich; attitude that means you never gain altitude but bump along with the bottom feeders:lol:
You may be rich in terms of fiat, but you are poor in terms of manners However, I'll agree with your point about my attitude holding me back. I could easily offshore 90% of my business and more than double my profits, but I have pride in what I do and I am against offshoring.
I have printed out your quote and put it up on the wall in my office. If one day I should be tempted to act like a superior, childish objectionable wanker that is insecure enough to use my good fortune to put other people down in order to prop up my own fragile ego I hope that it catches my eye and reminds me that if I go ahead and do so I am acting like the kind of person that good parents train their children never to become.
From one wanker to another. When I post information about a submission and the response is another Ponzi Scheme regardless if it is in jest or serious in posting here or in real life I don't walk away, I'll kick the put down talking head every time. As for my ego I have lived long enough to trust my own judgement and the fact that my work ethic you put down to good fortune doesn't faze me. Kind Regards non recourse
Your submission to the Cooper Review was great, and I can appreciate that you took the time to express yourself regarding the big players trying to play down SMSFs. If I had to make a choice, I would much prefer a SMSF to a retail fund.
You do have a choice jnkmbx you can establish an SMSF for under a $1000. Unfortunately your not in Melbourne because there is a great group of individuals who started an SMSF Trustees interest group that I would invite you to, they have nothing to sell you just a group of older men and women who learn from each other. The cost is $3 per meeting for hire of the hall and the coffee. If you'd like some basic information on how to go about learning about your responsibilities with an SMSF, just pm me. Kind Regards non recourse
To those who think taxes are too high and they need to be cut - > that's all well and good BUT tell me, if there is say $100 billion in tax cuts, what $100 billion in government programs/spending would you like to see cut? Defense? Hospitals? Roads? Schools? Social Security? Its all very well to say "cut taxes" but like I say, "which services are to be cut?". Now I'm no leftoid fairy greeny, but I like the discussion to progress past a 2 word argument of "cut taxes" because things arent as simple as that - are they?
The states will be the ones getting the tax cuts as GST revenue falls due to falling retail and wholesale activity, and the Federal government will be getting a tax cut too, the unemployed don't pay taxes.
But the unemployed only buy necessities, and only with money taken from the tax pool in the first place. The states need a lot more GST than that.
Pollies salaries wouldnt even give you $1 a week. Democracy isnt perfect, but it beats communism (Mr Stalin), fascism (Mr Hitler), military juntas (Burma), socialists (Nth Korea), dictatorships (Mr Mussolini) and anarchy states (Somalia, Sierra Leone).
The only solution I have seen for little people is to be outside the system financially. Working for mostly cash, being your own bank and your own central bank. If your in the system your screwed to the wall. Even those who think they are safe with plenty of assets and no debt will find that they are the piggy bank of last resort for a government that finds itself struggling to pay social security checks. If the choice comes down to looting super funds and bank accounts or riots in the streets the super will be looted and the bank accounts stolen. There are almost one million Australians on disability support now, god knows how many sole parents on pensions, old age pensioners, unemployed and special cases like the 100 000 odd refugees that land here each year. They all have to eat.
Notanother..They have got to hide the unemployed somewhere! Don't forget The mature age allowance for those over 60 who can't get a job. I think that this payment might have been discarded in the last year or two, but at one stage there was over 200,000 on this as well. We all have our noses in the trough one way or another as far as government payouts go. Regards Errol 43
The number of people who still work but have had their hours reduced due to Gillard's retarded "fair Work" mess is the hidden unemployment problem right now.
