Month: February 2016

The rise of the capital gains tax

AustralianActuary Life

It seems likely, judging by the continued Government hints, that the effective rate of tax applied to capital gains on assets held by superannuation funds is going to be increased. Probably this will be announced on Budget night in May and take effect from 7:30pm that night.

As usual, the language is distorted by the politicians to try to twist the truth. I wrote about that in an earlier post. This time around, they say that superannuation funds enjoy a capital gains tax discount. They say the discount results in a remarkably low rate of tax. Hence they are perfectly justified in reducing the discount and making the funds pay a fairer rate of tax. It’s all rubbish, of course. Lies and deception. Continue reading →

Shooting kites

AustralianActuary Business, Life

UPDATE (Feb 15): The kite referred to below has been shot down. The Government has announced it is not planning to freeze the SG at its current rate.

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The Government has done little to quell the press speculation this week that the Superannuation Guarantee rate of contribution, currently 9.5% of earnings but scheduled to increase to 12% over time, will be frozen at 9.5%. The lack of a smack-down suggests the Government truly is considering this option and allowing the media speculation to check for community reaction. It is called kite flying.

Goodness, the self-interested are quick off the mark – slings and arrows at the ready to shoot down that kite. Superannuation industry associations and rent-seekers have become too used to a guaranteed revenue stream coming in under the compulsion of law. It has become a sense of entitlement and they squeal when confronted with even the slightest perception of a threat to that money. They all lined up last week to squeal about how bad an idea that would be. It really is tiresome.

The cancellation of further increases in the compulsory rate of superannuation contribution is a good idea. I hope it is implemented. Then, I hope the Government realises the logic that if future increases in the SG should be dumped, the current rate is also too high. It should be reduced to zero. That’s right – the whole SG regime should be dumped. Continue reading →