Archive for March, 2013

Where are the leaders of Unions and the leaders of ACSPRO and its affiliated Associations?

March 29th, 2013 No comments

The AFR article “Call to scale back super tax breaks” 21’st March 2013 in which Mr.Ian Silk of Australian Super is reported as saying that the tax breaks for super are unsustainable, has really brought the super industry exponents out the woodwork.
In the AFR , Monday 1’st of April, Jennifer Hewett writes “Second grab for the piggy bank”, (whose piggy bank) the retirees with a million $ assets, or the managers of the retail super funds,
earning in excess of $500,000, managing workers super funds of less than $50,000.
The same day, on page 29, there is an article by John Kehoe, “The great super grab”
Another article in the same paper, Concerns grow over super tax rises” the disgruntled politicians have their gripes; I wonder how many of them sit on boards of industry super funds, earning a hefty remuneration on top of their parliamentary salaries.
The organizations which should be looking after the interests of workers with low super balances, like the Unions are surprisingly silent, because many of their leaders are sitting on boards of their members super funds.
The organizations representing retirees with modest defined super incomes, like ACPSRO (Australian Council of Public Sector Retiree Organisations) also do not seem to read the financial media, which will always go in to bat for super rich.
The Prime Minister Mr.Howard , in 2007 introduced the tax-free super for the over sixties and Gillard has backed off, of trying to reverse that decision, although as long as it stays in place, the cost to the government will rise exponentially and be unsustainable in the future. If the government abolishes the means test of the basic pension and all the tax concessions for super, what gripes should the owners of million dollar super assets have? The only gripe could be, that they could claim, that they benefit more from the tax concessions for super, than they would gain from receipt of the old-age pension, which after all would be taxable.

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Letter to the Treasurer P.Wong

March 11th, 2013 No comments

To the
Hon.P Wong MP
PO Box 6237
Halifax Street

12’th March 2013

Dear Ms.Wong.
In the AFR article “PM keeps superannuation tax-free for over -60s” 7.Feb 2013 you are quoted as saying: “the government would listen to all ideas”.
Here is what the government should look at very seriously.

This is how the retirees are treated in Australia.
Retiree: 1)
Worked for 45 years and paid taxes, but did not accumulate enough assets to be completely independent of the age-pension. For every dollar of extra income for him and his wife above $6,500, the couple loses $0.50 of age pension, and if their income exceeds $45,000 per annum, the couple will pay tax of $0.315 in the dollar including medicare levy, leaving them with an income of $0.185 from every dollar extra income. For the defined benefit income a 10% tax-offset applies if paid from an Australian super fund, but not if the income comes from an overseas fund.
Retiree 2)
Has accumulated assets of $1.5million,mostly with huge tax concessions, and the assets are in a so-called taxed Self Managed Super Fund. To be very conservative, the assets are in a term deposit earning 7.0% income of $122,500 per annum and even if the retiree is single, he/she will not pay a cent of tax.
Now if the assets are in fully franked shares, like banks, and return $100,000 worth of franked dividends, he/she will again pay no tax on the dividend, and the government will send him/her a cheque of $30,000 for the franking credits.
Should the assets of these retirees fall below a certain level, they will be entitled to the age pension as anyone else, therefore why does the government provides the rich retirees with such huge tax concessions, while punishing the retirees at the lower income scale with the punitive means-test of the age pension?
Retiree 3)
Is an ex-politician or highly paid public servant, in receipt of a defined benefit pension of $100,000, on which he/she will have to pay tax, but he/she gets a 10% tax offset, which equals $10,000 after reaching retirement age, but before retiring, the public servant can establish a SMSF and contribute into it extra with tax concessions if the $25,000 total for under fifty and $50,000, if over fifty is not exceeded and in addition he/she can contribute $150,000 from after tax income, and the earnings from the SMSF will only attract 15% tax, and when the person reaches the age of 60 even the income will be completely tax-free for the SMSF.
Retiree’s 2) are well represented by the media and the super industry, as well as the Unions, and retiree’s 3) are represented by the government, and ironically by the leadership of various retiree Associations, like ACPSRO and its affiliated Associations, but who represents retiree’s 1) the part- pensioners who are being robbed of a decent standard of living in retirement by the means-test of the age pension.
What is the fairest solution; scrap the mean test of the age pension and scrap all tax concessions for super.
Will Gillard have the courage and scrap the tax concessions for super and the means test for the age pension. After all Howard introduced the tax-free super in one fell swoop.
Is there any other country which treats its citizens in such a discriminatory manner?
I would like to refer you to two recent articles;
1st) AFR ,Dec 8-9. 2012 by Brian Toohey, “Compulsory super makes little sense.
2nd)AFR 13.Feb 2013 by Alison Kahler, “Don’t put super over the nationa l good.
Recently there was a lot written about changes in super, which now seems to have disappeared, because the super industry and the Unions seem to be secure that the government will not make any drastic changes to the tax concessions for super.
Last year, a record number of Australians travelled to other countries, a drain on the Australian economy, and many of the travellers were probably self-funded retirees, who benefit enormously from the tax concessions for super.
Yours truly

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