Imaging if you rolled over your $300,000 super in 2005 into CSL shares or M2 shares. You would be looking at getting whacked with excess super tax.
Federal and state governments have hundreds of billions of dollars of unfunded liabilities for defined benefit pensions for public servants. Extremely generous” lifetime pensions worth more than $300 billion for retired public servants should be scrutinised in any review of the taxation of superannuation, critics say. Many politicians would be subject to the wealth tax on super if their super was measured the same way as the rest of Australia.The taxpayer-funded pensions are indexed to inflation, not exposed to sharemarket volatility and are lightly taxed.
Public servants have now become a big target, judge for yourself
The federal government’s superannuation liabilities for retired public servants are projected to be $298 billion by 2025-26 and $523 billion by 2060.
No tax is paid on contributions or earnings. Pensions in retirement for people aged over 60 are taxed at marginal rates and receive a 10 per cent tax offset for annual amounts of up to $100,000.
Surviving spouses are entitled to 67 per cent of the pension and surviving children aged up to 25 receive 11 per cent of the deceased public servant’s defined benefit pension.
Public servants who retire and return to work as contractors are still paid their pension. Retired Judges who have served more than 10 years are entitled to 60 per cent of their income as a pension in some cases nearly 360,000 income per year. Closing the generous pension scheme for federal judges that currently provides each retiree hundreds of thousands of dollars a year would leave the budget more than $400 million better off by the end of the decade, according to independent costing analysis. Treasurer Jim Chalmers has repeatedly stressed the importance of budget repair and finding savings.
Is the tax free family home next?
Australians amass most of their wealth in the capital gains tax free family home. The genie escaped from the bottle this week after reporters tackled the possibility of taxing the primary residence when it is sold. The cost of sheltering the family home from tax is calculated at 50 billion dollars a year.
Is the tax free family home next?
The dramatic increase in the cost of the tax concessions comes alongside the rapid rise in interest rates, which will increase the amount landlords can deduct for negatively geared properties.
In 2021-22 the amount of forgone revenue for negative gearing and capital gains tax concessions totalled just $8.5bn. Winding back these tax perks was Labor policy ahead of the 2019 election, but the proposal was dumped after Bill Shorten’s election loss was partly blamed on the party’s ambitious tax reform agenda. The parliamentary budget office reported the combined amount of forgone revenue of measures over the next decade will be $157bn, with the cost of negative gearing to reach $97bn as interest rates rise, and capital gains tax discounts to total $60bn.
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