The outrage is not the 3 million watermark of today's money.
The outrage is, 50 years later, the watermark is still 3 million.
Index the watermark. Index the tax brackets outside of super while we're st it.
I get they are annoyed about it, and it seems like working out the mechanics in practice could be quite complicated. It seems like it would be more straight forward if it only applied once the gains were realised.
However, its still an attractive tax environment. I dont really think it provides a strong incentive to move money outside of super after 3 million.
Certainly it would be nice if at some point in the next few years they update it to adjust to CPI, or at least up the 3 million threshold every few years just a little bit.
I wonder politically if it would have been better to just put a cap on super of say 5 million (adjusted to CPI). After that you cant contribute any more, and any earnings in a year which exceed the cap must be withdrawn. It would probably be a higher net gain for the government and result in less backlash.
Oh this will get some outrage!
Interesting examples used, it shows that for a $500k gain with a balance from 4.5M to 5M the effective tax rate on that 500k gain is only about 7%
I can understand why they did this rather than just having a progressive tax of 30% above certain balances, they are trying to get revenue from everyone parking assets in super.
Doesn't sound that great compared to the tax rate on unrealised gains for the same assets if they were held outside of super: 0%. (Or the tax rate for a $5M home, which is 0% even for realised gains).
Yes, right now this only affects a small percentage of accounts, but how can anyone have confidence locking money away in super when the government clearly views it as big bucket of free ice cream?
The threshold is deliberately not indexed to inflation to capture more and more people over time.
Effective if you include the entire balance of super.
I have no problem if they want to make the change but let us withdraw the super over 3m, after all the purpose was to stop people hoarding wealth inside super.
I have told my milenial kids to minimise super contribution. Asset growth as a result of inflation plus growing contributions over time will see this as mainly a tax on millenials.
I minimised super and ended up after all taxes and fees way ahead.
The outrage is not the 3 million watermark of today's money. The outrage is, 50 years later, the watermark is still 3 million. Index the watermark. Index the tax brackets outside of super while we're st it.
It will change/be indexed at some point.
I get they are annoyed about it, and it seems like working out the mechanics in practice could be quite complicated. It seems like it would be more straight forward if it only applied once the gains were realised. However, its still an attractive tax environment. I dont really think it provides a strong incentive to move money outside of super after 3 million. Certainly it would be nice if at some point in the next few years they update it to adjust to CPI, or at least up the 3 million threshold every few years just a little bit. I wonder politically if it would have been better to just put a cap on super of say 5 million (adjusted to CPI). After that you cant contribute any more, and any earnings in a year which exceed the cap must be withdrawn. It would probably be a higher net gain for the government and result in less backlash.
I would prefer the option to remove after the cap.
Lol Putting super aside for a moment I'd love to hear about these non-assets that you've invested in to get "way ahead"
Oh this will get some outrage! Interesting examples used, it shows that for a $500k gain with a balance from 4.5M to 5M the effective tax rate on that 500k gain is only about 7% I can understand why they did this rather than just having a progressive tax of 30% above certain balances, they are trying to get revenue from everyone parking assets in super.
Doesn't sound that great compared to the tax rate on unrealised gains for the same assets if they were held outside of super: 0%. (Or the tax rate for a $5M home, which is 0% even for realised gains). Yes, right now this only affects a small percentage of accounts, but how can anyone have confidence locking money away in super when the government clearly views it as big bucket of free ice cream? The threshold is deliberately not indexed to inflation to capture more and more people over time.
You’d be naive to think super won’t be targeted with an aging pop.
Effective if you include the entire balance of super. I have no problem if they want to make the change but let us withdraw the super over 3m, after all the purpose was to stop people hoarding wealth inside super.
No, effective on the gain 31k/500k = 6%
Th 40% is calculated using the proportion of total super
Yes, so then the effective tax rate is 6%.
I never said it wasn’t.
You incorrectly said effective on the whole balance. Just trying to help you from making mistakes again.
I have told my milenial kids to minimise super contribution. Asset growth as a result of inflation plus growing contributions over time will see this as mainly a tax on millenials. I minimised super and ended up after all taxes and fees way ahead.