Hi Scott,
With the newly re-elected government, there’s been lots of talk about the new tax on superannuation accounts over $3 million, specifically that it’s unindexed and that you pay it from unrealised capital gains. I think everyone would love your view as you speak from your heart and not your ego.
Barry
Hi Barry,
Jim Chalmers is a very smart politician.
I personally think his new tax should be hung up in the Lodge toilet so that future prime ministers can pay homage to it while they’re on the throne.
Here’s my take:
Both parties went to this election with a record amount of unfunded spending promises.
Now Jim Chalmers needs to find gushes of money.
So he’s chosen to tax super, for the same reason bank robbers hold up banks: because that’s where the money is. Trillions of dollars just sitting there, waiting to be taxed.
Yet his real genius is that he’s gone back in history and borrowed from the biggest bazooka of them all:
Bracket creep.
Now the fact that 50% of you reading this have no idea what these words even mean proves just how smart Jim is.
Bracket creep works like this: inflation pushes your income into a higher tax bracket, even if you’re not actually earning more in real terms. No new laws. No headlines. Just billions quietly hoovered up by the tax office.
And, by not indexing the $3 million cap, Jim’s effectively extended bracket creep into retirement. The upshot is that younger Aussies like me, who’ve been diligently adding to our super, may eventually get slugged.
Am I angry?
Not really. I’m a realist. The fact is that both parties have been hacking away at super for years. This is just the latest swing of the axe.
And what about his plan to tax unrealised capital gains?
(Unrealised capital gains tax means paying tax on something before you’ve sold it. It’s like the taxman sending you a bill just because your house went up in value, even though you haven’t sold it and haven’t made a dollar).
My view?
It’s an unflushable turd.
There is absolutely no way he’ll get away with it. After all, I’ve got family members who own their farms in SMSFs. If the value of their farm goes up one year, do they sell off a paddock to pay tax? And in a drought when the value of the farm falls, does the ATO send them a refund?!
Better get the plunger, Jim.
Scott