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Letter to the Treasurer P.Wong

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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