This came in from the SMSF Owners Alliance at 5;36 pm tonight. The latest rumour we have picked up is that the Government may make the transition from the accummulation phase to the pension phase a capital gains tax event. We have no further insight at this point but this could have a significant negative impact on SMSFs and particularly where small business assets are held within an SMSF. If we hear more, we'll let you know, but it may be worthwhile seeking advice from your accountant before the Budget. Kind Regards nonrecourse
The worst thing is the speculation.The way the government conduct policy communication with the public is terrible. A SMSF CGT is definately part of the budget however I have heard it will apply when the members reach retirement age and it will depend on when the asset was aquired? What ever the fuck that means. Simon Crean came out 2 days ago and said that he truely hoped that any change was not retrospective. My call is that they will impose a indexed CGT on all assets aquired in SMSF after 1/7/13 and the tax will be paid when you retire ???
At a guess Cash would be out of consideration, surely. Or on the other hand, maybe not. Make everyone use a complex algorithm to determine CGT for every months' interest going back decades. No one in SMSF could afford the algorithm actuarial work and it would force everyone back to big funds. I saw the head of the SMSF Owners Alliance on TV a couple of times the other day, represented SMSF trustees and himself very well. I'm with Kawa, the current uncertainty is a killer.
How about skipping to another country 3 years before retirement. Then returning a few years later with cash (or leave it somewhere safe overseas)?
I have spoken with Duncan Fairweather the SMSF Owners Alliance a number of times this week. I sent an email to every member of the House of Representaives and Senate earlier this week and I did it as a private person rather than as a member of SMSFOA He asked me to go on channel 7 for an interview on how the proposed changes would effect my small businesses. She who must be obeyed said no so I sadly had to decline. I asked him what else could I do behind the scenes and his answer was recruit as many people as I can. The fight has only started. I am writting to every Labor back bencher today to ask them to cross the floor when the budget is read. If you have an SMSF please join. http://smsfoa.org.au/join-now.html Kind Regards non recourse
Every politician's super (Defined Benefits) will be targeted by this proposed reform... I wonder if you even need to ask them to 'x' the floor? The proposal was leaked into the media with no detail...and then when the inevitable $#!tstorm erupted they, refused to stomp on it by explaining what they were proposing. And they've given themselves no time to inact the changes before the election. They were more focused on apologies to... to.. I can't even recall now who they were, that's how important it was. Talk about fiddling while Rome burns. It's exactly what happened to Conroy's media reform bill... it's like they learned nothing. In both cases they've targeted (& alienated) those that have the most influence on their survival. In Conroy's case the 'Media Houses' and in Shorten/Swan's case, rich donors and his own backbencher supporters. the stupidity & incompetence is staggering
Here is the one page email I sent; Dear House of Representative/ Senate Member; As a director of a corporate trustee of our self managed superannuation fund that has been in existence since 1994 I am writing to every Member of Parliament in both the upper and lower houses. I am compelled to write because I believe the Self Managed Superannuation model (SMSF previously called an excluded fund) that has evolved in the last thirty years in Australia as well as the APRA regulated funds have been eviscerated and hung out to dry by poor policy choices over the last five years under the guise of fairness and sustainability. The current budget proposals to increase superannuation taxation suggest a serious disconnect between a significant number of parliamentarians and their constituents. As trustee of my SMSF the Australian Taxation Office is tireless in reminding me that the object of the sole purpose test is to ensure that regulated superannuation funds (SMSF's) are maintained for the sole purpose of providing benefits to members upon their retirement, or their dependants in the case of the member's death before retirement. How is it fair or equitable that tax payers are mandated to contribute to a superannuation system where the goal posts are constantly moved to suit short term government fiscal lapses? How does the proposed retrospective tax legislation pertaining to capital gains with commercial property that has been in place for 18 years fit in with my duty as a trustee to provide benefits to the members of my fund? I also draw your attention to the current scam to increase the annual compliance levy imposed by the ATO on SMSF's from $191 to $259. Up to 2007/2008 the levy was $45! A statistical summary of self managed superannuation funds carried out and published by the Cooper review revealed that in 2009 the following statistics in relation to SMSF taxpayer compliance in table 32 below. Why are SMSF's being targeted? The increase in compliance levy is yet another tax against the interests of your constituents. Table 32: ATO significant sanctions for compliance breaches Compliance outcomes in 2009 Funds made noncomplying 99 out of a total of 410,000 SMSF's = .00024% Trustees disqualified 29 Formal enforceable undertakings 131* Funds wound up 17 * The increase in the number of compliance outcomes in recent years is primarily due to an increase in the Number and intensity of compliance activities being undertaken by the ATO, rather than deterioration in compliance behavior. I'll end my discourse with a quote from Adam Smith the second president of the United States of America; it is the highest impertinence and presumption, therefore, in kings and ministers to pretend to watch over the economy of private people, and to restrain their expense. They are themselves, always, and without any exception, the greatest spendthrifts in the society. Kind Regards (Full name and address removed) non recourse
^ Aah, even though that is an Adam Smith quote, I think the 2nd US President was John Adams (and Adam Smith - the economist - was Scottish).
Thanks for the correction I wrote the email late at night (3 a.m.) and I looked at a lot of quotes. Coming from an economist who wrote the wealth of Nations I think carries even more weight. Kind Regards
Mate its not us that is getting f@#$%ed. Its your generation. We set up a structure that would have insured that our childrens children would have a secure future in super in one of the three pillars of financial security that we have built. The current proposals mean we don't get slugged with capital gains tax for 10 years ....and having attained 60 they have not yet closed off lump sums. They won't be getting any tax from us in pension mode either, we have been preparing for this for 10 years. The seizure of the private pensions in Hungry three years ago and now the Malta theft of depositors funds is just the beginning Rather than getting mad as a friend who knows more about trust law than anyone I have ever known said to me last night get even.. .....screw the bastards legally. For every action there is an equal and opposite reaction. Nothing in life stays still. If you are stupid enough to throw your hands in the air, sell up your properties and put the money in the bank or paper equities an electronic transaction with the click of a mouse will see your ASSets disappear into the ether. We have our castles, our moats keep getting deeper.To be forearmed is to be forewarned. Kind Regards non recourse
So given that perspective, NR what would you suggest for current 'almost' retirees who are hooked into the system with expected govt pensions or superannuation pensions, who own their houses and have very little working life left?
Side Note. I first read the Wealth of Nations in first year B.Econ.I found it boring AT 17 YO. I have re read it three times since and it is a truely an amazing book once you have had life experiences and been through a few economic cycles. Adam Smith was a smart dude.
I'm afraid julie that in the next 10 years those "average" people are f_#ked. Inflation is going to hollow out their pitance that will be so means tested there is going to be a huge number of impoverished baby boomers with nothing. Frankly I am sorry for them but not surprised. We went away for the holiday Easter into Northern Victoria as my wife wanted to catch up with some old friends. Nice people but clueless about what is coming. I lost count how many came up to me and questioned why I was still working. They all hate their jobs. 80% of the population in this rich great country we live in will retire on the pension. I think that is a disgrace. Wayne Swan and the rest of those labor criminals don't give a rats ass about working families. I put a 45 page submission into the Cooper review back in 2009 arguing that if SMSF's were allowed to retain deceased members remaining super balances rather than being forced to pay it out to the remaining adult beneficiaries where it is taxed in two generations 75% of all working Australians would be independent of Centre Link. What the labor thugs have confirmed is they don't want you to be financially independent. There are a lot of clueless liberals too I know but nothing like the other mob. Keep stacking my prediction is after the election we will have three years of improved conditions in Australia before the financial tidal wave engulfs the world. Like dominos Europe Japan, the US and China are all going to suffer and the lucky country will not be able to side step the next collapse. Kind Regards non recourse
Thanks NR. I'm not so confident about 3 years but I agree most people are totally unprepared. I've tried to point a few of my friends in the position I described towards safeguarding their futures but it's still lattes on the weekend, fine dining and 'it's so cheap in Europe' holidays. I've even handed a few people your post on saving money that you did a while back. I thought it was my delivery then realised it was the attention spans and the dreaded 'normalcy bias'.
I have to agree with you julie . When you actually start to talk sense to people their eyes just glaze over in a few minutes like the cant process the info ....peoples attentions spans are atrocious along with their memories ive found ....in one ear out the other
Seems the fear was unjustified. Only if you are pulling $100k out of your super in its pension phase will there be a 15% tax increase, affecting about 16,000 of the wealthiest. Wealth is concentrated too much in the hands of too few but this I dont agree with. Their super nest egg, be it $2 mil or $200 mil was all accumulated according to the laws of the time. Now they will be in effect retrospectively taxed. I would rather see changes to contributions where the uber wealth avoid paying their share of income tax by dumping money into their Super fund. The net effect is, the middle income earners pay disproportionately more income tax to make up for the shortfall.
I think the opposition to the change is still justified. Now the law is proposed, when it passes, as I said in another thread, wait 5 years and the threshold is $90K or $80K. It will come down every time a government can get away with it and by the time we retire that tax will be on every level of fund income.
