Chalmers eyes high super balances for tax increase amid revenue slump
Jim Chalmers is eyeing changes to concessions on high-value superannuation accounts, after it was revealed the tax break will cost the government $55bn this year.


News.com.au
December 18, 2024

Jim Chalmers is eyeing a crack down on super concessions after revealing they were tipped to cost Commonwealth coffers $55bn this financial year.

The federal Treasurer on Tuesday released the Tax Expenditures and Insights State­ment detailing 48 tax concessions it was reviewing.

Concessions on super was top of the pack.

Amid higher public spending, driven partly by increased demand for public services, and a revenue slump on the back of plummeting mineral earnings, the government has been scrambling to find ways to plug fiscal holes.

Speaking to press in Canberra after the statement was released, Mr Chalmers acknowledged growing demand for government services was weighing on federal budgets, but said Australians “are right to expect a decent level of services”.   :)

Aussies with high value superannuation accounts could be taxed more.
“Whether it’s aged care, Medicare, early childhood education, the care economy more broadly, this is going to become an increasingly important part of our economy as our population ages in particular,” he told reporters.

“We’ve tried to make room for that, tried to make sure we can pay people in these important parts of our economy appropriately so that we can recruit people into these areas.”

He said the Albanese government was pursuing a “combination of spending restraint elsewhere, finding all of those savings, some modest but meaningful tax reform means that we can pay for these priorities”.

“The focus for us is we have some unfinished business when it comes to some of the tax measures that we’ve already announced, multinationals, super tax concessions and the like and that’s our focus rather than new elements of an agenda on that front,” he said.

The Govt. even taxes superannuation.   ::)

Why don't they tax the air that we breathe?

Speaking to press in Canberra after the statement was released, Mr Chalmers acknowledged growing demand for government services was weighing on federal budgets, but said Australians “are right to expect a decent level of services”.   :)   

They charge people for using sunlight

https://www.ato.gov.au/businesses-and-organisations/gst-excise-and-indirect-taxes/gst/when-to-charge-gst-and-when-not-to/gst-free-sales

Main GST-free products and services


Most basic foods, some education courses and some medical, health and care products and services are GST-free, often referred to as exempt from GST.

Things that are GST-free include:

most basic food
some education courses, course materials and related excursions or field trips
some medical, health and care services
some menstrual products
some medical aids and appliances
some medicines
some childcare services
some religious services and charitable activities
supplies of accommodation and meals to residents of retirement villages by certain operators
cars for disabled people to use, when certain requirements are met
water, sewerage and drainage
international transport and related matters
precious metals
sales through duty-free shops
grants of land by government
farmland
international mail
exports
sales of businesses as going concerns
some telecommunications supplies
eligible emissions units.

whiteknight wrote on Dec 29^th, 2024 at 2:19pm:

Jim Chalmers is eyeing a crack down on super concessions after revealing they were tipped to cost Commonwealth coffers $55bn this financial year.

So what would the cost be if people didn't have super? He carefully doesn't say.

Do Australia's super tax concessions take from the poor and give to the rich?


Sun 22 Dec 2024
ABC News

In Australia's superannuation system, over two-thirds of the tax breaks flow to the top 20 per cent of income earners. 


Last week, the Albanese government's budget update had some surprises in it.

One of the biggest involved big upward revisions to the size of Australia's superannuation tax concessions.   :(

Let's take a look at them.

Earlier this year, the economist Chris Richardson said our super system was already acting like "a reverse Robin Hood" because it was taking money from poorer Australians and giving it to the rich.   :(

Will higher tax concessions make that problem worse?

How much do they cost?
You can find Treasury's latest estimates of Australia's super tax concessions here: 2024-25 Tax Expenditures and Insights Statement.

In the document, Treasury officials explain what's happening.

The Albanese government has handed down its mid-year budget update.

At the beginning of this year (January), Treasury officials were forecasting that Australia's super tax concessions were going to cost the government $50.1 billion in forgone revenue in 2025-26.

But in their new estimates, published last week, they say those super tax concessions will now cost the government $59.5 billion in 2025-26, which is $9.4 billion more than they were forecasting in January.

And in 2026-27, they say Australia's super tax concessions will now cost the government $62.8 billion, which is $9.5 billion more than they were forecasting.   




Treasury officials say the upward revisions to the size of the government's super tax concessions are being driven by a few things.

They're forecasting higher-than-expected employee earnings over the next four years, which will flow into higher superannuation contributions, and they're forecasting a stronger capital gains outlook, which will support higher earnings within superannuation balances.

Since super contributions and earnings are both taxed at a concessional rate (15 per cent), that means the "cost" to the government from its super tax concessions (via forgone revenue) will be $18 billion more than expected over the next two years.

Who will benefit most?
It's worth thinking about who will benefit from those tax concessions.

In 2023, the Parliamentary Budget Office (PBO) published a great explainer: How is super taxed?

If you're after an introduction to how our super system works, and how it's taxed, it's a great place to start.

As it shows, super systems can be taxed at three points:

When contributions are made
When super assets earn investment returns (earnings)
When withdrawals are made
Australia's super system is taxed concessionally, which means it is generally taxed at a lower rate than other forms of taxable income (e.g. it's taxed at a lower rate than an individual's marginal tax rate).


Should super tax concessions be wound back?

Australia's government taxes most super contributions and earnings at a flat rate of 15 per cent, and it generally doesn't tax withdrawals from super in retirement.

If those three taxing points are denoted as either T for taxed or E for exempt, Australia is said to have a "TTE" super tax model.

That's because we tax contributions, we tax earnings, but withdrawals are mostly exempt from taxes.

Australia is unusual in this regard.

The most common retirement scheme for OECD countries is the EET taxing model, which means their contributions and earnings are exempt from taxes, but their withdrawals are taxed.



Super systems in the OECD
Australia's 'TTE' tax model for its super system is uncommon among OECD countries. (Source: Parliamentary Budget Office budget explainer, 27 April 2023, "How is super taxed?" page 18.)

Why does Australia have a TTE model?

As the PBO explains, when Australia's compulsory super guarantee was introduced in 1992, the decision to tax contributions and earnings meant revenue would be raised sooner from the system.

Under an EET model, the government wouldn't have raised any revenue from young individuals entering the workforce until they retired, potentially decades later.

But under a model that taxed contributions and earnings, even with relatively low tax rates, Australia's government would collect revenue from an individual's super income throughout their entire working life.

whiteknight wrote on Dec 29^th, 2024 at 4:10pm:

Earlier this year, the economist Chris Richardson said our super system was already acting like "a reverse Robin Hood" because it was taking money from poorer Australians and giving it to the rich.

It is their own money going into super. How is that taking it from the poor? Now there are more benefits flowing to the top end of town, but that also is not taking it from the poor. Because the poor do not pay that much. Very convoluted thinking. ::)

When Paul Keating brought in compulsory super it changed everything.

Many people started to invest in their future by paying extra super to boost their savings for retirement. Some people bought fishing boats, sportscars, holidays and high spending habits while some saved and were a bit more frugal. Now they want to tax the ones that did save their money. When are we ever going to learn. If you punish commonsense and promote poor discipline life won't get better.

Tax office reveals 11 more Australians reporting super balances of more than $100 million


3 Oct 2023
ABC News

More Australians have reported holding $50 million or more in their superannuation accounts.   :o


Eleven more Australians have joined the ranks of superannuation account holders with a balance of more than $100 million, according to the latest tax office figures.

Key points:
The number of Australians reporting $50 million or more in super has grown
The federal government is expected to today introduce draft legislation to tighten concessions for big super accounts
The government will need the support of the Greens, who are yet to sign on, in order to pass its reforms
The 2020-2021 data also reveals the number of Australians with super balances over $50 million has increased to 135 people.

The new figures have been released on the same day the federal government is expected to publish draft legislation on changes to superannuation tax concessions for wealthy Australians.

Under the proposal, the earnings on super balances of more than $3 million will be taxed at 30 per cent, rather than 15.

It will raise about $2 billion a year once it comes into effect after the next federal election, with a start date of July 2025.

When Treasurer Jim Chalmers made the announcement earlier this year he called it a "modest but important" change to superannuation tax concessions.

Who will be affected?
Analysis of new data from the Australian Tax Office shows 17 Australians had superannuation balances of more than $100 million in 2019-20.

That increased to 28 people in 2020-21.

The number of people with balances of more than $50 million in 2019-20 was 78 and that increased to 107 by 2020-21.

Figures on how many people had super balances of more than $3 million since 2019 — the threshold for who will be affected by the government's changes — have not been made public.

However, the treasurer has said the change is expected to apply to about 80,000 people when it comes into place in 2025.

Since July of 2020, the average super balance was $170,000.

Quote:

Australia's 'TTE' tax model for its super system is uncommon among OECD countries. (Source: Parliamentary Budget Office budget explainer, 27 April 2023, "How is super taxed?" page 18.) Why does Australia have a TTE model? As the PBO explains, when Australia's compulsory super guarantee was introduced in 1992, the decision to tax contributions and earnings meant revenue would be raised sooner from the system. Under an EET model, the government wouldn't have raised any revenue from young individuals entering the workforce until they retired, potentially decades later. But under a model that taxed contributions and earnings, even with relatively low tax rates, Australia's government would collect revenue from an individual's super income throughout their entire working life. Back to top

Keating! KEATING!!!

whiteknight wrote on Dec 29^th, 2024 at 6:06pm:

Tax office reveals 11 more Australians reporting super balances of more than $100 million 3 Oct 2023 ABC News More Australians have reported holding $50 million or more in their superannuation accounts.   :o Eleven more Australians have joined the ranks of superannuation account holders with a balance of more than $100 million, according to the latest tax office figures. Key points: The number of Australians reporting $50 million or more in super has grown The federal government is expected to today introduce draft legislation to tighten concessions for big super accounts The government will need the support of the Greens, who are yet to sign on, in order to pass its reforms The 2020-2021 data also reveals the number of Australians with super balances over $50 million has increased to 135 people. The new figures have been released on the same day the federal government is expected to publish draft legislation on changes to superannuation tax concessions for wealthy Australians. Under the proposal, the earnings on super balances of more than $3 million will be taxed at 30 per cent, rather than 15. It will raise about $2 billion a year once it comes into effect after the next federal election, with a start date of July 2025. When Treasurer Jim Chalmers made the announcement earlier this year he called it a "modest but important" change to superannuation tax concessions. Who will be affected? Analysis of new data from the Australian Tax Office shows 17 Australians had superannuation balances of more than $100 million in 2019-20. That increased to 28 people in 2020-21. The number of people with balances of more than $50 million in 2019-20 was 78 and that increased to 107 by 2020-21. Figures on how many people had super balances of more than $3 million since 2019 — the threshold for who will be affected by the government's changes — have not been made public. However, the treasurer has said the change is expected to apply to about 80,000 people when it comes into place in 2025. Since July of 2020, the average super balance was $170,000.

So??

Under the proposal, the earnings on super balances of more than $3 million will be taxed at 30 per cent, rather than 15.   :)

Frank wrote on Dec 29^th, 2024 at 6:10pm:

whiteknight wrote on Dec 29th, 2024 at 6:06pm: Tax office reveals 11 more Australians reporting super balances of more than $100 million 3 Oct 2023 ABC News More Australians have reported holding $50 million or more in their superannuation accounts.   :o Eleven more Australians have joined the ranks of superannuation account holders with a balance of more than $100 million, according to the latest tax office figures. Key points: The number of Australians reporting $50 million or more in super has grown The federal government is expected to today introduce draft legislation to tighten concessions for big super accounts The government will need the support of the Greens, who are yet to sign on, in order to pass its reforms The 2020-2021 data also reveals the number of Australians with super balances over $50 million has increased to 135 people. The new figures have been released on the same day the federal government is expected to publish draft legislation on changes to superannuation tax concessions for wealthy Australians. Under the proposal, the earnings on super balances of more than $3 million will be taxed at 30 per cent, rather than 15. It will raise about $2 billion a year once it comes into effect after the next federal election, with a start date of July 2025. When Treasurer Jim Chalmers made the announcement earlier this year he called it a "modest but important" change to superannuation tax concessions. Who will be affected? Analysis of new data from the Australian Tax Office shows 17 Australians had superannuation balances of more than $100 million in 2019-20. That increased to 28 people in 2020-21. The number of people with balances of more than $50 million in 2019-20 was 78 and that increased to 107 by 2020-21. Figures on how many people had super balances of more than $3 million since 2019 — the threshold for who will be affected by the government's changes — have not been made public. However, the treasurer has said the change is expected to apply to about 80,000 people when it comes into place in 2025. Since July of 2020, the average super balance was $170,000. So??

People put their money where its most effective, now instead of putting money into super they will invest in Property, shares or other investments. So the extra $2bil the government are expecting will not materialize. So they will adjust the threshholds to gain the extra money. Those threshholds will eventually include the average working Joe.

Quote:

Those threshholds will eventually include the average working Joe.

Of course they will.

The Govt shouldn't even know how much super each person has -
it's none of their business.

whiteknight wrote on Dec 29^th, 2024 at 6:15pm:

Under the proposal, the earnings on super balances of more than $3 million will be taxed at 30 per cent, rather than 15.   :)

Why?

Why more than $3 mill? Why not $1 mill? Why not all?


Envy is not a sound economic or taxation policy.

Those super balances accrued legally, under existing rules. Why change now, other than because of envy?

If they want to change it should not be retrospective.

Australia’s superannuation system is no longer about ensuring a dignified retirement for workers. Successive parliaments have contorted its purpose so that it is now Australia’s premiere tax haven for wealth accumulation and estate planning. This legislation will not change this trajectory in any meaningful way.

As the co-architects of compulsory superannuation system, the ACTU submitted to the inquiry:

Superannuation was not designed as, and should not be, a tax haven for the wealthy nor a way for the wealthy to receive tax handouts. Instead, superannuation tax concessions should provide assistance to those who need it, to save sufficient income for their retirement.

Current superannuation tax concessions are unfairly targeted, regressive and unsustainable.   :(

whiteknight wrote on Dec 30^th, 2024 at 4:50am:

Australia’s superannuation system is no longer about ensuring a dignified retirement for workers. Successive parliaments have contorted its purpose so that it is now Australia’s premiere tax haven for wealth accumulation and estate planning. This legislation will not change this trajectory in any meaningful way. As the co-architects of compulsory superannuation system, the ACTU submitted to the inquiry: Superannuation was not designed as, and should not be, a tax haven for the wealthy nor a way for the wealthy to receive tax handouts. Instead, superannuation tax concessions should provide assistance to those who need it, to save sufficient income for their retirement. Current superannuation tax concessions are unfairly targeted, regressive and unsustainable.   :(

Got it in one!!  Apart from fees and charges impacting more on those with the lowest balances - who in retirement - are likely to have nothing anyway.... then there is the demographic of the growing unemployed and part-employed - HTF do you accumulate super Super when you have Pharkall income?

I offered you the Grappler scheme - a set limit amount indexed to which a super fund can provide an adequate income - after that your extra is called 'savings' and the income on it taxed- no fees and charges under a specified lower limit.   And everyone on the same scheme as the politicians etc... and the mass of money lying around to be loaned out to governments etc for valid infrastructure mass movements such as rail and road links and the GAIAs for the truly forward-looking.

This Island Banana Republic has to change in a fundamental way to get ahead - or it will be nothing more than a supplier of raw materials/importer of all finished goods - with a 'general' living standard/prosperity propped up by a near zero living standard for a growing number at the 'bottom'... the Tent City Slickers who do it far worse than any remote community member given all the good things to make a good life - the boats, the fishing gear, the cargo cult subsidised fuel and food.... sandy beaches, drinking rum every night, free RFDS weekly visits and free flights for medicals, money on da table ever' fortnight without fail, bit o' royalty cash .... no interference from Da Man an' right to 'disappear' any bloke or sheila who don't listen .... man - dat da life...  wasting away down in Timtamaville..... while, with 'government' connivance, chopping Australia up into private hunting reserves and spiritual retreats to suit only you... Man - DAT IS da life!