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3 July 2025
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I forgot to mention in my comments, more PETER THORNHILL or similar articles please.
The method of calculating "income" for the proposed $3 million "cap" contains within it the indefensible idea of including unrealized paper gains in the market value of investments which would have the potential effect of penalizing investment in any speculative early stage exploration biotech or "tech" stocks. An example from my own experience is a biotech stock whose market price in the three years has gone from 2 cents to 60 cents and back to 12 cents. Anyone fortunately buying and selling at the the right time would have made real taxable capital gains, but anyone who simply held during this period may have huge paper gains which could now be called "income", at the same time as when the total value of the portfolio was temporarily inflated and exceeded the new "cap". This looks like another unintended consequence of poorly thought out proposal.
I appreciate the range of views expressed in Firstlinks publications.
Good source of information. Have tried to influence/introduce women to your newsletters but find that once brackets, percentages and calculations appear they turn off. Accountant type hyperbole of no interest. Look at the Dixon Fiasco. Perhaps more info to those on balances under $350,000. That is the real world of super, we can only dream of figures in the millionaire bracket.
"dream of figures in the millionaire bracket": Millionaire full Age Pension at deeming rate: = (26 * -1547.6) / 2.25% = -$1,788,337.78 (- = invested) Regrettable only while alive. Mortals: = PV(0%, (87 - 67), 26 * 1547.6, 0) = -$804,752.00 (- = invested)
Survey done! We all need steady regular cashflow. Besides Peter Thornhill, who else out there is doing good old fashioned dividend growth investing and can capably write about it? Let’s hear them please. As for Super dramas, there are other products and places to keep retirement money. Super is now in the cross hairs of legislation change, so just don’t have all your eggs in that basket.
Anne, how about $360k in super? ASFA, March 2022. Average super balance for a 60-64 year-old male is $359,870. At a return of 7% pa a 64 year-old male will hit the cap at the age of 104 years.
Sorry Anne, that should have been 94 years, not 104 years, but I could give you some scary numbers for a 64 year old female on a median (not average) super balance.
"64 year old female on a median (not average) super balance": = (137051 + 180718) / 2 = $158,884.50 https://www.afr.com/policy/tax-and-super/how-your-super-balance-compares-with-people-your-age-20220318-p5a5sn Age Pension Asset Test single: = $280,000 Age Pension single home owner full: = 26 f * 1026.50 / f = $26,689.00 / y Plenty live & entertain with spare to save.
Any one who shrugs their shoulders and says in relation to the proposed $3M cap 'well it doesn't apply to me' you are on notice. At a return of 7% pa your asset will double in value every 10 years. That means that if you have $1.5M in super now, in ten years time you will be hitting the un-indexed cap of $3M. If you have 750K in super now you will hit the cap in 20 years. Therefore the valuable commentary, largely by Graham, is very relevant to many people.
That would assume that you're in accumulation phase and not drawing down on your super at all. So if you're 50-55 (depending on whether you're planning to commence a pension at 60 or 65) then you need to have 1.5 mill now. If you're 40-45 then you need to have $750k now. Those certainly aren't impossible figures to have, but we're really talking about the top 10% or so of the population. I don't like the fact that this is in real terms a retrospective change to super, but I also think that someone with 3 mill in super of which 1.7 mill is in pension should be paying a higher tax rate on earnings than 0% on their pension and 15% or the other 1.3 mill, which is an overall tax rate of roughly 5%. If someone wants to argue that they're also missing out on the $21,000 or $26,000 of welfare in the form of age pension (depending on marital status) then sure that's fair, but assuming earnings of 5% on the total super amount of $3,000,000 so $150,000, and tax of $9,750 on the 5% in the $1,300,000 in accumulation phase, plus foregone welfare of $21,000, then you're looking at a total of $30,000 out of $150,000. Not peanuts, but surely a sum of money that someone with 3 mill in super might consider to be reasonable.
leaving aside any withdrawals Anne.
That is the point of the $3m cap. $3m will provide a comfortable retired living. Until you reach that $3m balance, enjoy the tax shelter while your balance grows. After reaching the balance, a discounted tax rate is not required to be paid to you by most other tax payers who have a snowflake in hell of achieving 10% of $3m - particularly women.
"snowflake in hell of achieving 10% of $3m": Minimum real after super tax rate of return, with maximum concessional contributions, required to achieve "10% of $3m": = RATE((67 - 27), (1 - 15%) * -27500, 0, 10% * 3000000) = -7.438% / y (- = loss) Real contributions, with o% real return, required to achieve "10% of $3m: = PMT(0%, (67 - 27), 0, 10% * 3000000) / (1 - 15%) = $-8,823.53 / y (- = contribution) Middle of the road proof: = RATE((67 - 27), (1 - 15%) * -8823.53, 0, 10% * 3000000) = 0.0%
well prepared content
Agree with Raymond. Would you please focus more on those of us living in the real world of super balances.
Calculate using your own inputs: = NPER(7%, ((1 - 15%) * 27500) + -110000, -750000, 3000000) = 11.2 y
I have enjoyed it for many years and is one of my prime sources of information
Always a good read for current issues. Perhaps a reduced emphasis on poor $3m+ individuals.
Always a good read for current issues. Perhaps a reduced emphasis on boomers and more on Gen-X.
Totally agree. Tax-free $6m a couple in superannuation, income of $30,000 each from other sources and pay no tax! I feel good luck to them, enjoy life, no one has yet taken a cent to the afterlife! If there is one!
The Government's proposed tax has copped a lot of flack though I think it's a reasonable approach to improve the long-term sustainability of superannuation and the retirement income system. Here’s why.
You've no doubt heard about Division 296. These case studies show what people at various levels above the $3 million threshold might need to pay the ATO, with examples ranging from under $500 to more than $35,000.
The $3m super tax could be put down to the Government needing money and the wealthy being easy targets. It’s deeper than that though and this looks at the factors behind the policy and why more taxes on the wealthy are coming.
The super tax has caused an almighty scuffle, but for SMSFs impacted by the proposed tax, a big question remains: what should they do now? Here are ideas for those wanting to withdraw money from their SMSF.
Australia's superannuation inequities date back to poor decisions made by Parliament two decades ago. If super for the wealthy needs resetting, so too does the defined benefits schemes for our public servants.
Business investment and per capita GDP have languished over the past decade and the Labor Government is conducting inquiries to find out why. Franking credits should be part of the debate about our stalling economy.
With Div. 296 looming, is there a smarter way to tax superannuation? This proposes a fairer, income-linked alternative that respects compounding, ensures predictability, and avoids taxing unrealised capital gains.
An ANU study has found that families with at least one super balance over $3 million have average wealth exceeding $19 million - suggesting most are well placed to absorb taxes on unrealised capital gains.
SMSFs have managed to match, or even outperform, larger super funds despite adopting more conservative investment strategies. This looks at how they've done it - and the potential policy implications.
Stockland’s development chief discusses supply constraints, government initiatives and the impact of Japanese-owned homebuilders on the industry. He also talks of green shoots in a troubled property market.
As the US debt ceiling looms, the usual warnings about a potential crash in bond and equity markets have started to appear. Investors can take confidence from history but should keep an eye on two main indicators.
US mega-cap tech stocks have dominated recent returns - but is familiarity distorting judgement? Like the Monty Hall problem, investing success often comes from switching when it feels hardest to do so.
How does a strategy built around systematically buying-and-holding a basket of the market's biggest losers perform? It turns out pretty well, so why don't more investors do it?