The govt fiddles with super again - suggests halving CGT discount

SpacePete

SpacePete

Well-Known Member
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And the Financial Review got to add "diddly-squat" to their headline :)

Halving capital gains tax discount for super funds would raise 'diddly-squat'

Halving the capital gains tax discount for superannuation funds would raise "two-thirds of diddly-squat" and do very little to tackle the inequities in the system, Grattan Institute chief executive John Daley says.

The ABC is reporting that the government is considering cutting the CGT discount from 33 per cent to 15 per cent. The government has not commented on the report.

Income and capital gains for assets outside super can be taxed at rates as high as 47 per cent. Inside super, capital gains are taxed at 15 per cent.

If the asset sold by the super fund has been held for more than 12 months there is a 33 per cent discount, which means an effective tax rate of 10 per cent.

But if the change were adopted, it would represent a small increase in taxes on the accumulation phase.

That is, the phase during which workers are contributing to their super before it becomes tax free in retirement.

"If you are proposing to increase taxes on earnings before retirement, why wouldn't you do so for earnings in retirement, which is where the big hole is, where the system is grossly unfair and a mistake of history," Mr Daley said.

In question time Monday, Prime Minister Malcolm Turnbull appeared to rule out increasing capital gains tax. "Increasing capital gains tax is no part of our thinking whatsoever," he said.

The PM's office later said he was still open to tightening the tax deduction for losses on negatively geared investment, and reducing the capital gains tax discount for investors, but not by as much as Labor.

http://www.afr.com/news/politics/na...funds-would-raise-diddlysquat-20160222-gn0tcs
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Arguments about the level of capital gains 'discount' are nonsensical when no consideration is made of the time value of money. Trading assets over a longer term (eg 1yr +) involves gambling on the value of future dollars much more so than day trading on shares. Any arbitary change in the CGT 'discount' smacks of cynical scalping without regard for the supposed purpose of the CGT 'discount'.
 
Just in case your thought that the government would be encouraging you toward being self-sufficient in your retirement, and just in case you thought that your super earnings would be for you to use in your retirement, in comes the government to take your money that you risked, and give it to someone else for doing absolutely nothing:

Budget 2016: High-end superannuation tax concessions to be cut, Scott Morrison confirms

Treasurer Scott Morrison has confirmed wealthy Australians will pay more tax on their superannuation, as he frames his first budget in the shadow of an election.

"We'll be ensuring that we better target the concessions that are there in superannuation, we've said that for some time," Mr Morrison said.

"I don't think there's any great secret about that, the details of those things we'll deal with on Tuesday night.

"But it's important that we get these incentives right because superannuation is so important for Australians and for their future and we need to make sure that those concessions are well targeted."
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http://www.abc.net.au/news/2016-05-...uation-top-ups-taxed-on-budget-agenda/7373712

It'll have the support of the usual suspects, The Australia Insitute, ACOSS, the Unions etc - all of whom flourish in perpetuating the myth of inequality. :/
 
And the definition of "wealthy Australians" will broaden thanks to bracket creep and rhetoric.

Even if this specific measure doesn't go ahead, governments will try and try again. It is doubtful people under 40 today will be able to access their contributions at retirement beyond a small stipend from a goverment controlled fund. If there is a major economic crisis in the meantime then super funds could lose significant value or be used for bailouts and there's nothing you can do about it.

People are increasingly losing confidence in the system of mandatory super.
 
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