Australian Politics Forum - Multimillionaires Exploiting Superannuation.

imcrookonit

Ex Member

Multimillionaires Exploiting Superannuation.
May 22^nd, 2014 at 4:54pm

'Tax leakage': Multimillionaires exploiting superannuation

Date
May 22, 2014

Relaxing retirement

A common strategy is to put money into super to get a tax deduction, then pull the money straight back out tax free.

Accountants and tax advisers have blown the whistle on multimillionaire clients exploiting tax concessions in self-managed superannuation funds, urging the federal government to act against "tax leakage".

Analysis by Fairfax Media of Australian Taxation Office statistics shows almost 9200 self-managed super funds have a balance of more than $5 million, a rise of 76 per cent in the past three years, and the number of funds with over $10 million has doubled. Shocked

Treasury Secretary Martin Parkinson said on Tuesday that there should be a debate about whether the super system was creating incentives for people to manage their retirement incomes or whether it was being used as a wealth creation tool.

"The issue is whether the existing super system actually is a retirement incomes system . . . or is it a wealth creation tool? If it's a wealth creation tool, who is ultimately benefiting from this?" Dr Parkinson said.

Tax advisers have raised the alarm on the number of super-wealthy clients able to have incomes taxed at zero to 15 per cent, instead of the current top rate of 46.5 per cent, by using generous concessions and "cracks" in the superannuation system.

"These are people with $10 million to $20 million in self-managed super. They've funded their retirement several times over. They don't need concessions," said a tax lawyer who asked not to be named for fear of a backlash from his wealthy clients. The number, which ignores money parked in industry funds, is rising.

Advisers are wary of discussing the concessions enjoyed by some of their wealthiest clients. "I don't want to poo in my own nest," said one adviser.

But the fierce backlash against the Abbott government's first budget, handed down last week, is leading to increasingly vocal criticisms of the taxation of superannuation.

"There are probably 30 different strategies motivated by tax minimisation rather than a desire to self-fund one's retirement," one superannuation specialist told Fairfax Media.

A lot of these strategies involve "shuffling money" in and out of super funds to trigger a lower tax rate or glean personal tax deductions.

The most popular is 55-year-old executives who start drawing a tax-free pension from their fund, while tipping their salary into it and effectively reducing their taxable income from 46.5 per cent.

Another common strategy is to put money into super to get a tax deduction, then pull the money straight back out tax free.

'Material leakage to Commonwealth revenue'

Advisers say the sheer volume of this behaviour is causing "material leakage" to the nation's revenue position. Sad

Others say these are "marginal" tactics and that the main game is in making voluntary contributions of up to $430,000 a year as a couple or paying inter-family loans through the super fund. These strategies can up to halve the amount of tax high-income earners would otherwise pay.

"It does need to be looked at," said one big four accounting firm's superannuation partner.

But advisers caution against turning the debate over superannuation concessions into a witch hunt against the wealthy, who they say continue to pay "plenty of tax". Some advisers also suggest their clients believe the concessions available to them are excessive.

"Some of my clients think the profits they earn in these entities that aren't taxed are too generous," said one Melbourne adviser.

In his speech on Tuesday, Treasury's Dr Parkinson said the distribution of the tax benefits of superannuation should be sensibly debated.

"I think the sorts of discussion that was in the Henry tax review will inevitably come back on to the table, and that will go to the distribution of the benefits of the tax incentives, and the issue of the preservation age will I think eventually have to come into play," Dr Parkinson said.

The 2011 Henry review found that while superannuation should continue to receive tax assistance, "there is a case for distributing assistance more equitably between high and low income individuals, including by limiting generous salary-sacrifice concessions".

The Abbott government made an explicit promise it would make no "adverse" changes to super in this term of government.

The tax review white paper process will start soon and is expected to include views on superannuation

Read more: http://www.smh.com.au/business/banking-and-finance/tax-leakage-multimillionaires-exploiting-superannuation-20140522-38po9.html#ixzz32QMdyvc0

Back to top

IP Logged

imcrookonit

Ex Member

Re: Multimillionaires Exploiting Superannuation.
Reply #1 - May 22^nd, 2014 at 4:57pm

'Material leakage to Commonwealth revenue'

Advisers say the sheer volume of this behaviour is causing "material leakage" to the nation's revenue position. Sad

Others say these are "marginal" tactics and that the main game is in making voluntary contributions of up to $430,000 a year as a couple or paying inter-family loans through the super fund. These strategies can up to halve the amount of tax high-income earners would otherwise pay.

"It does need to be looked at," said one big four accounting firm's superannuation partner.

But advisers caution against turning the debate over superannuation concessions into a witch hunt against the wealthy, who they say continue to pay "plenty of tax". Some advisers also suggest their clients believe the concessions available to them are excessive.

"Some of my clients think the profits they earn in these entities that aren't taxed are too generous," said one Melbourne adviser.

In his speech on Tuesday, Treasury's Dr Parkinson said the distribution of the tax benefits of superannuation should be sensibly debated.

"I think the sorts of discussion that was in the Henry tax review will inevitably come back on to the table, and that will go to the distribution of the benefits of the tax incentives, and the issue of the preservation age will I think eventually have to come into play," Dr Parkinson said.

The 2011 Henry review found that while superannuation should continue to receive tax assistance, "there is a case for distributing assistance more equitably between high and low income individuals, including by limiting generous salary-sacrifice concessions".

The Abbott government made an explicit promise it would make no "adverse" changes to super in this term of government.

The tax review white paper process will start soon and is expected to include views on superannuation

Maintaining confidence in super

Others say an attack on a few high net individuals "at the fringes" could undermine confidence in the entire superannuation system.

"There's no doubt there are some very high net-worth individuals who are using super concessions to pay less," said ICAA superannuation expert Liz Westover.

"But introducing thresholds can make it so complex and expensive to administer. It defeats the overall purpose. You don't want to make it more difficult for those that could self-fund retirement to do so," she added. "Sometimes simplicity is the answer. And, yes, a few people will get through the cracks."

Others are worried the government will go too far with any tweaks to the system.

Nexia's Ian Stone said most of the self-managed super funds he sees have between $500,000 and $2 million in them and are being used by aspirational middle-class workers who are still in wealth creation mode.

With a government asking people to self-fund more aspects of their lives, Mr Stone said people are already nervous about putting too much of their savings into super out of fear governments will fiddle with policy settings.

Read more: http://www.smh.com.au/business/banking-and-finance/tax-leakage-multimillionaires-exploiting-superannuation-20140522-38po9.html#ixzz32QPlVxkU

Back to top

IP Logged

Grappler Deep State Feller Gold Member Offline Australian Politics Posts: 85369 Always was always will be HOME Gender:	Re: Multimillionaires Exploiting Superannuation. Reply #2 - May 22^nd, 2014 at 5:06pm The old, old story - anywhere there's a gap the rats will get through it....
Back to top	“Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passion, they cannot alter the state of facts and evidence.” ― John Adams IP Logged

John Smith Gold Member Offline Australian Politics Posts: 75183 Gender:	Re: Multimillionaires Exploiting Superannuation. Reply #3 - May 22^nd, 2014 at 5:09pm they're sharing the load, crook ... the load of bollocks put out by Abbott.
Back to top	Our esteemed leader: I hope that bitch who was running their brothels for them gets raped with a cactus. IP Logged

hawil

Gold Member

Offline

Australian Politics

Posts: 1345

Re: Multimillionaires Exploiting Superannuation.
Reply #4 - May 22^nd, 2014 at 5:39pm

Quote:

'Tax leakage': Multimillionaires exploiting superannuation

Date
May 22, 2014

Relaxing retirement

A common strategy is to put money into super to get a tax deduction, then pull the money straight back out tax free.

Accountants and tax advisers have blown the whistle on multimillionaire clients exploiting tax concessions in self-managed superannuation funds, urging the federal government to act against "tax leakage".

Analysis by Fairfax Media of Australian Taxation Office statistics shows almost 9200 self-managed super funds have a balance of more than $5 million, a rise of 76 per cent in the past three years, and the number of funds with over $10 million has doubled. Shocked

Treasury Secretary Martin Parkinson said on Tuesday that there should be a debate about whether the super system was creating incentives for people to manage their retirement incomes or whether it was being used as a wealth creation tool.

"The issue is whether the existing super system actually is a retirement incomes system . . . or is it a wealth creation tool? If it's a wealth creation tool, who is ultimately benefiting from this?" Dr Parkinson said.

Tax advisers have raised the alarm on the number of super-wealthy clients able to have incomes taxed at zero to 15 per cent, instead of the current top rate of 46.5 per cent, by using generous concessions and "cracks" in the superannuation system.

"These are people with $10 million to $20 million in self-managed super. They've funded their retirement several times over. They don't need concessions," said a tax lawyer who asked not to be named for fear of a backlash from his wealthy clients. The number, which ignores money parked in industry funds, is rising.

Advisers are wary of discussing the concessions enjoyed by some of their wealthiest clients. "I don't want to poo in my own nest," said one adviser.

But the fierce backlash against the Abbott government's first budget, handed down last week, is leading to increasingly vocal criticisms of the taxation of superannuation.

"There are probably 30 different strategies motivated by tax minimisation rather than a desire to self-fund one's retirement," one superannuation specialist told Fairfax Media.

A lot of these strategies involve "shuffling money" in and out of super funds to trigger a lower tax rate or glean personal tax deductions.

The most popular is 55-year-old executives who start drawing a tax-free pension from their fund, while tipping their salary into it and effectively reducing their taxable income from 46.5 per cent.

Another common strategy is to put money into super to get a tax deduction, then pull the money straight back out tax free.

'Material leakage to Commonwealth revenue'

Advisers say the sheer volume of this behaviour is causing "material leakage" to the nation's revenue position. Sad

Others say these are "marginal" tactics and that the main game is in making voluntary contributions of up to $430,000 a year as a couple or paying inter-family loans through the super fund. These strategies can up to halve the amount of tax high-income earners would otherwise pay.

"It does need to be looked at," said one big four accounting firm's superannuation partner.

But advisers caution against turning the debate over superannuation concessions into a witch hunt against the wealthy, who they say continue to pay "plenty of tax". Some advisers also suggest their clients believe the concessions available to them are excessive.

"Some of my clients think the profits they earn in these entities that aren't taxed are too generous," said one Melbourne adviser.

In his speech on Tuesday, Treasury's Dr Parkinson said the distribution of the tax benefits of superannuation should be sensibly debated.

"I think the sorts of discussion that was in the Henry tax review will inevitably come back on to the table, and that will go to the distribution of the benefits of the tax incentives, and the issue of the preservation age will I think eventually have to come into play," Dr Parkinson said.

The 2011 Henry review found that while superannuation should continue to receive tax assistance, "there is a case for distributing assistance more equitably between high and low income individuals, including by limiting generous salary-sacrifice concessions".

The Abbott government made an explicit promise it would make no "adverse" changes to super in this term of government.

The tax review white paper process will start soon and is expected to include views on superannuation

Read more: http://www.smh.com.au/business/banking-and-finance/tax-leakage-multimillionaires-exploiting-superannuation-20140522-38po9.html#ixzz32QMdyvc0

You read about this in the AFR; but how many people read the AFR?
I have been trying for years to get the ABC to bring this "Great Australian Super Fraud" to bring it to the attention of more people through programs like "Four Corners" but without success.
I don't think that Associations mentioned below are interested to change anything about super, yet the super rorts are probably the cause of the budget problems, so much talked about by Abbott and Hockey.
The Australian government provides a safety net of the age pension to everybody of pension age and residential qualification, therefore if a “Self funded retirees” assets or income falls below the cut-off level of the age pension, he/she is entitled to a part-pensio

Back to top

IP Logged

hawil

Gold Member

Offline

Australian Politics

Posts: 1345

Re: Multimillionaires Exploiting Superannuation.
Reply #5 - May 22^nd, 2014 at 5:41pm

Grappler Deep State Feller wrote on May 22^nd, 2014 at 5:06pm:

The old, old story - anywhere there's a gap the rats will get through it....

You read about this in the AFR; but how many people read the AFR?
I have been trying for years to get the ABC to bring this "Great Australian Super Fraud" to bring it to the attention of more people through programs like "Four Corners" but without success.
I don't think that Associations mentioned below are interested to change anything about super, yet the super rorts are probably the cause of the budget problems, so much talked about by Abbott and Hockey.

By James Glenday
Audio: Think tank wants big change to retirees' benefits (AM)
"Superannuation concessions are unfair ... the top 5 per cent of income earners get a third of the benefit, and the bottom 20 per cent get literally nothing."
The report suggests scrapping concessions entirely, introducing a universal or non-means-tested age pension and upping the current rate by about 7.5 per cent to $26,273 a year for singles and nearly $39,611 for couples.
The Australia Institute says that plan would cost about $52 billion annually, leaving the budget between $13 billion and $22 billion better off. It says more money would flow to women and poor people.
"You often hear people say the more people spend on superannuation tax concessions, the more we save on the age pension," Dr Denniss said.
"In theory that's possible, but in practice it's just not the case. If it were the case, the combined cost of these two schemes would be flat-lining."
Furthermore, as the super assets are growing, and more and more frauds are reported, it will reach a point of “Too big too fail”, the government will pick up the tab, while most of the funds managers will walk away as multimillionaires.
The Australian government provides a safety net of the age pension to everybody of pension age and residential qualification, therefore if a “Self funded retirees” assets or income falls below the cut-off level of the age pension, he/she is entitled to a part-pension yet at the lower end of the pension scheme, a part-pensioner starts losing $0.50 of every dollar of the age pension, once a single pensioner earns $4,000 or a couple $7,000, keeping the retirees on very modest extra income virtually on the poverty line.
How can the Australian government get away with this blatant discrimination of the age pensioners; because Associations like COTA, ACOSS, SCOA, SA Superannuants, all other Associations affiliated with ACPSRO and the Unions fail to represent the interest of their lower income or wages members, because the leaders of this Associations benefit more from the governments generosity towards the high-income and assets benefits them in the same way as the politicians.

Back to top

IP Logged

John Smith

Gold Member

Offline

Australian Politics

Posts: 75183
Gender: male

Re: Multimillionaires Exploiting Superannuation.
Reply #6 - May 22^nd, 2014 at 5:47pm

hawil wrote on May 22^nd, 2014 at 5:41pm:

Grappler Deep State Feller wrote on May 22^nd, 2014 at 5:06pm:

The old, old story - anywhere there's a gap the rats will get through it....

You read about this in the AFR; but how many people read the AFR?
I have been trying for years to get the ABC to bring this "Great Australian Super Fraud" to bring it to the attention of more people through programs like "Four Corners" but without success.
I don't think that Associations mentioned below are interested to change anything about super, yet the super rorts are probably the cause of the budget problems, so much talked about by Abbott and Hockey.

By James Glenday
Audio: Think tank wants big change to retirees' benefits (AM)
"Superannuation concessions are unfair ... the top 5 per cent of income earners get a third of the benefit, and the bottom 20 per cent get literally nothing."
The report suggests scrapping concessions entirely, introducing a universal or non-means-tested age pension and upping the current rate by about 7.5 per cent to $26,273 a year for singles and nearly $39,611 for couples.
The Australia Institute says that plan would cost about $52 billion annually, leaving the budget between $13 billion and $22 billion better off. It says more money would flow to women and poor people.
"You often hear people say the more people spend on superannuation tax concessions, the more we save on the age pension," Dr Denniss said.
"In theory that's possible, but in practice it's just not the case. If it were the case, the combined cost of these two schemes would be flat-lining."
Furthermore, as the super assets are growing, and more and more frauds are reported, it will reach a point of “Too big too fail”, the government will pick up the tab, while most of the funds managers will walk away as multimillionaires.
The Australian government provides a safety net of the age pension to everybody of pension age and residential qualification, therefore if a “Self funded retirees” assets or income falls below the cut-off level of the age pension, he/she is entitled to a part-pension yet at the lower end of the pension scheme, a part-pensioner starts losing $0.50 of every dollar of the age pension, once a single pensioner earns $4,000 or a couple $7,000, keeping the retirees on very modest extra income virtually on the poverty line.
How can the Australian government get away with this blatant discrimination of the age pensioners; because Associations like COTA, ACOSS, SCOA, SA Superannuants, all other Associations affiliated with ACPSRO and the Unions fail to represent the interest of their lower income or wages members, because the leaders of this Associations benefit more from the governments generosity towards the high-income and assets benefits them in the same way as the politicians.

it's a rort, everyone who knows about SMSF's knows it, but no one wants to do anything about it.

Back to top

Our esteemed leader:
I hope that bitch who was running their brothels for them gets raped with a cactus.

IP Logged

Bam

Gold Member

Offline

Australian Politics

Posts: 21905
Gender: male

Re: Multimillionaires Exploiting Superannuation.
Reply #7 - May 22^nd, 2014 at 11:41pm

Quote:

'Tax leakage': Multimillionaires exploiting superannuation

Date
May 22, 2014

Relaxing retirement

A common strategy is to put money into super to get a tax deduction, then pull the money straight back out tax free.

Is anyone surprised?

It's why we should abolish these tax concessions on contributions, they are costing the country billions.

By way of compensation, make the earnings tax free.

Back to top

You are not entitled to your opinion. You are only entitled to hold opinions that you can defend through sound, reasoned argument.

IP Logged