Here is a recent press release from MP Bill Shorten explaining how increasing taxes on super is a good thing for you [with additional commentary by Boston]:
“The Government will better target the tax exemption for earnings on superannuation assets supporting income streams by capping it to the first $100,000 [READ MONEY GRAB] of future earnings for each individual.
In just four years, 20 per cent of Australia’s population will be over 65 [INITIAL JUSTIFICATION FOR THE GRAB].
Australians are living longer and in this context the superannuation system needs to be fair [SOCIALISM] and it needs to be sustainable. This change will help restore a number of the original intentions of the superannuation system, to keep the system fair [SOCIALISM] and sustainable. [FURTHER JUSTIFICATION]
Under current arrangements, all earnings on assets supporting income streams (superannuation pensions and annuities) are tax-free, in contrast to earnings in the accumulation phase of superannuation, which are taxed at 15 per cent. [CURRENT SYSTEM – WORKS]
From 1 July 2014, future earnings (such as dividends and interest) on assets supporting income streams will be tax free up to $100,000 a year. Earnings above $100,000 will be taxed at the same concessional rate of 15 per cent that applies to earnings in the accumulation phase. [THE CHANGE]
The $100,000 threshold will be indexed to the Consumer Price Index (CPI), and will increase in $10,000 increments. Assuming a conservative estimated rate of return of 5 per cent, earnings of $100,000 would be derived from individuals with around $2 million in superannuation. [PARAGRAPH TO INVOKE CLASS HATREDS / FURTHER JUSTIFICATION]
Special arrangements will apply for capital gains on assets purchased before 1 July 2014:
- For assets that were purchased before 5 April 2013, the reform will only apply to capital gains that accrue after 1 July 2024; [GOOD IDEA]
- For assets that are purchased from 5 April 2013 to 30 June 2014, individuals will have the choice of applying the reform to the entire capital gain, or only that part that accrues after 1 July 2014; [COMPLEXITY FOR COMPLEXITY’S SAKE] and
- For assets that are purchased from 1 July 2014, the reform will apply to the entire capital gain. [THIS APPLIES TO MOST UNDER 50’S SO BE READY TO PAY HUGE TAXES WHEN YOUR SMSF SELLS THOSE PROPERTY HOLDINGS]
These generous transitional arrangements will ensure that people who have already purchased superannuation assets will have ten years to decide whether they want to restructure their superannuation holdings, before their capital gains start to be affected. [ I LOVE A GENEROUS GOVERNMENT]
This reform will not affect the tax treatment of withdrawals. Withdrawals will continue to remain tax-free for those aged 60 and over, and face the existing tax rates for those aged under 60.
Former Treasurer Paul Keating introduced taxation arrangements for superannuation in 1988 which taxed contributions and earnings in the accumulation phase at a rate of 15 per cent. The 15 per cent tax rate did not apply to earnings on assets supporting income streams, because the payments from income streams were taxed at personal marginal tax rates in the hands of the individual, less a 15 per cent tax rebate. [EXPLAINING WHY THE GRAB IS NECESSARY]
Former Treasurer Peter Costello made payments from income streams tax-free for those aged 60 and over, however he did not change the tax treatment of the earnings on these assets. This has allowed retirees with millions of dollars in superannuation to receive more government support through tax concessions than Australia’s poorest Age Pensioners. [MORE CLASS WARFARE – BLAME THE OPPOSITION]
For example, the maximum rate of the single Age Pension is currently $21,076 per year. In comparison, tax-exempt earnings of $100,000 receive a minimum tax concession of $26,447 each year. That means that an individual with around $2 million in superannuation (assuming a 5 per cent rate of return) currently receives more government assistance than someone on the maximum rate of the single Age Pension. [JUSTIFICATION 5]
A retiree with $20 million in superannuation with typical returns would receive more than 20 times the government support provided to someone on the full Age Pension (over $438,000 compared to $21,076 a year). [JUSTIFICATION 6]
This arrangement isn’t fair and it isn’t sustainable. This was never the intention of the superannuation system left in place by the Labor Government in 1996. That system included ‘Reasonable Benefit Limits’ that were specifically designed to place a limit on the amount of tax concessions that an individual could receive, by taxing withdrawals above that threshold at full marginal tax rates. [ETC ETC]
These Reasonable Benefit Limits were abolished by the previous Liberal Government. Had they not been abolished, the Reasonable Benefit Limit applying to a person who takes more than half of their superannuation as an income stream would today be set at around $1.8 million in superannuation assets.
For superannuation assets earning a rate of return of 5 per cent, this reform will only affect individuals with more than $2 million in superannuation assets supporting income streams.
Treasury estimates that around 16,000 individuals will be affected by this measure in 2014-15, which represents around 0.4 per cent of Australia’s projected 4.1 million retirees in that year.
This reform will save around $350 million over the forward estimates period.”
Now why would any smart business entrepreneur put money into Super?
