Author Topic: The budget  (Read 3821 times)

marty998

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The budget
« on: December 07, 2017, 04:21:18 AM »
Starting a thread here because... I need one to penn some thoughts.

It's December. Which means it is MYEFO time. I will be amazed if the Government can actually deliver a budget update, considering how distracted they are with various other embarrassing things like not being validly elected.

Curious to know if the budget trajectory is improving or not. It's really getting to the point where serious tax reform needs to be implemented. Shockingly unfair that gainfully employed people pay 34.5% tax on every dollar above $37,000, and 39% tax on every dollar above $87,000. Bracket creep is starting to bite!

It's a lot of cash to be handing over to the government every pay cycle. Come on Malcolm, time to fix it... broaden the base and cut the rates for everyone.

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Re: The budget
« Reply #1 on: December 20, 2017, 04:00:03 AM »
Following the thread to keep up to date. I have a low information diet, so don't expect anything too startling from me.
Organisations starting with National are currently out of favour with me, NBN, NDIS...enormously inefficient.

marty998

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Re: The budget
« Reply #2 on: December 20, 2017, 04:13:04 AM »
I forgot I started this. Apparently there was a budget update a couple of days ago....

Deficit is predicted to be lower than forecast and and maybe there will be tax cuts on the way.

They say we'll start paying off the debt in 2020/21.... by about $10 billion? At that rate it'll take 60 years to pay off the national debt....


marty998

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Re: The budget
« Reply #3 on: January 05, 2018, 12:39:27 AM »
http://www.news.com.au/finance/money/costs/new-laws-and-changes-that-will-affect-australia-from-january-1-2018-and-beyond/news-story/85825f4092834190a292a828aacb7c3d

Government payments and other changes in effect from 1 January. Article might be behind a paywall - I googled my way to finding it.

Not a lot that would affect most people I'd imagine.

Eucalyptus

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Re: The budget
« Reply #4 on: January 06, 2018, 02:37:42 AM »
The freeze on University spending will probably bight into me unfortunately. Uni (all of them...) is already under severe budget strain, apparently... my contract is coming up in a few months for renewal. Hmm. :-(

"New homeowners will not be able to claim the cost of inspecting and maintaining rental properties as tax deductible. The change was designed to reduce the pressure of housing affordability in the 2017-18 budget"

This strikes me as a partial move towards the Labor policy of stopping negative gearing on new investment properties! Haha! Negative gearing still there for interest and depreciation, which are normally the major items for an investor each year.

"The $12,000 special duty on imported used vehicles will be axed"

Which politician(s) has a mate who is a dodgy used car importer??? Can't be many/hard to trace...

"From July 1 2018, the government has introduced an incentive for over-65s to downsize their homes, and make super contributions up to $300,000, outside the usual non-concessional (after-tax) contributions cap"

This is potentially a big one for some people on this forum and  their FIRE plans. Could be a big one for a lot of Australia retirees. Encouraging them to downsize will mean a massive reduction in burden on Pensions, and encourage more environmentally friendly living. I think its a good move in general. Of course many people already do downsize so in some ways its actually just reducing tax income for no extra benefit....

The new Child Care Package is a small benefit to me. Unfortunately its coming when my child is moving from really expensive childcare to school and OSHC. Oh well. Still a few more $ in my pocket each week. And its just plain tons simpler, the current system is an absolute mess (seriously who thought of that in the first place?!?!?!).

Thanks for sharing Marty :-)


marty998

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Re: The budget
« Reply #5 on: March 09, 2018, 05:28:34 PM »
It's a little more than 8 weeks to go and still no word on any goodies or nasties that might be in the budget this year.

I can't quite understand this. Gone are the years where masses of journalists and newspapers and TV networks would devote thousands and pages and minutes towards this.

For the bored people who still follow this, the Federal Government debt stands at $616 billion and still climbing.

It's going to take a very very long time to pay that off.

mustachepungoeshere

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Re: The budget
« Reply #6 on: March 09, 2018, 06:11:29 PM »
It's a little more than 8 weeks to go and still no word on any goodies or nasties that might be in the budget this year.

I can't quite understand this. Gone are the years where masses of journalists and newspapers and TV networks would devote thousands and pages and minutes towards this.

For the bored people who still follow this, the Federal Government debt stands at $616 billion and still climbing.

It's going to take a very very long time to pay that off.

Gone are the masses of journalists and the ad revenue that pays for it all.

deborah

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Re: The budget
« Reply #7 on: March 10, 2018, 02:32:39 AM »
The zombie measures appear to be back.

alsoknownasDean

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Re: The budget
« Reply #8 on: March 29, 2018, 08:56:04 PM »
For the bored people who still follow this, the Federal Government debt stands at $616 billion and still climbing.

No idea how their idea of slashing company taxes would change that. Especially as many Australian investors who receive dividends would still have to pay the same marginal rate whether they receive 70% of a total dividend as cash with a 30% franking credit, or 75% and 25%.

mjr

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Re: The budget
« Reply #9 on: March 29, 2018, 09:31:59 PM »
Lower company tax rates encourage foreign investment, foreigners don't get franking credits.

Also, lower company taxes allow the corporation to have increased cash on hand/lower expenses throughout the year.

alsoknownasDean

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Re: The budget
« Reply #10 on: March 29, 2018, 10:04:39 PM »
Lower company tax rates encourage foreign investment, foreigners don't get franking credits.

Also, lower company taxes allow the corporation to have increased cash on hand/lower expenses throughout the year.

That's all well and good, but I'm interested in the net impact of same.

If reducing company taxes reduces government revenue by $x per year, then surely any benefits of said tax reduction (such as potentially employing more staff and having them pay income tax (and/or reduced welfare expenditure), additional profits through incentives to reinvest, etc) would need to result in additional tax revenue of more than $x in order for it to have a beneficial effect on government coffers. Otherwise it'll just end up increasing deficits/debt.

I may be wrong, but I believe that it is highly likely that the amount of potential additional tax revenue is likely to be significantly less than the amount of tax revenue forgone.

marty998

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Re: The budget
« Reply #11 on: April 06, 2018, 08:19:52 PM »
Bah. We're only a month from the budget and still no word on anything. I guess everyone is more concerned about that bloody 30th Newspoll on Monday.

Supposably Morrison has a little bit more money to play with than expected. Income tax receipts are up and welfare payments are down, consistent with all the key economic indicators regarding employment.


alsoknownasDean

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Re: The budget
« Reply #12 on: April 13, 2018, 05:38:07 AM »
There was talk this week about the Feds offering $5B for a rail line to Melbourne Airport.

marty998

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Re: The budget
« Reply #13 on: April 13, 2018, 09:04:58 PM »
There was talk this week about the Feds offering $5B for a rail line to Melbourne Airport.

Something something vote buying something something :)

The NBN just got installed in my building... I wonder what the final tally on that little build is going to be...

Netflix must be laughing. Get the Australian Government to spend $50 billion so people can watch more TV fasterer.


marty998

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Re: The budget
« Reply #14 on: April 26, 2018, 07:01:41 AM »
Sco Mo has confirmed there is no rise in the Medicare levy this year (I'd forgotten that was even a proposal).

Ok so I'm not going to be down $500-$600 anymore. Still hanging out for my tax cut!

deborah

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Re: The budget
« Reply #15 on: April 26, 2018, 03:47:33 PM »
That was your tax cut - low and middle earners are getting them.

marty998

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Re: The budget
« Reply #16 on: April 27, 2018, 08:04:34 PM »
That was your tax cut - low and middle earners are getting them.

Orwell at his best :)

Agreeing not to raise taxes is considered a cut now!

Eucalyptus

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Re: The budget
« Reply #17 on: April 28, 2018, 03:10:31 AM »
That was your tax cut - low and middle earners are getting them.

Orwell at his best :)

Agreeing not to raise taxes is considered a cut now!


^This was my thought!


"We are the bestest nicest government ever because we decided not to cut all your benefits and raise your taxes to fund our richest mates". Told x10000 times until the votership believes it.

Eucalyptus

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Re: The budget
« Reply #18 on: May 08, 2018, 02:38:32 AM »
Hey@marty998


Getting excited?!!?!?!


In terms of things that affect post-FIRE, it sounds like we can expect some announcements around aged care including stay-at-home services. Which is something that affects pretty much everyone at some stage in retirement as they get close to the end. One of my grandmothers died at home in her early 70s from cancer, the other is still alive and at home. My grandfathers both passed away last year. One was overweight and had a variety of issues eg his back, arthritis, parkinsons, and had to spend his last couple of years in a private nursing home. The other lived with my grandfather and passed away at home with all of us around. The last few days often depends on how you go and if you need to be in hospital or not, however it seems like much of wind down often depends on logistical factors of independence, eg, can you cook and clean for yourself, wash yourself, will anyone know if you need help, etc? No doubt technological solutions could improve to help with all of these things over time. I'm interested to know if the government is going to invest in research and technology that could help improve this gap.

deborah

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Re: The budget
« Reply #19 on: May 08, 2018, 02:23:47 PM »
Interesting changes to Superannuation - it took a bit for me to find out what they were - this is from https://cuffelinks.com.au/budget-2018-highlights/

Quote
Retirement income framework

The retirement income framework is less developed than the accumulation phase. Products that address the risk of people outliving their savings are currently limited in take-up and there is no obligation for superannuation funds to address the retirement income needs of their members.

The Government is introducing a ‘retirement income covenant’, requiring super funds to help members achieve retirement income objectives. Trustees must offer a Comprehensive Income Product for Retirement (CIPR) that provides income for life, no matter how long they live. This will be a major boost to providers of products like lifetime annuities.

From 1 July 2019, new age pension mean testing rules will apply to pooled lifetime income streams. A fixed 60% of all pooled lifetime product payments will be assessed as income for age pension eligibility, and 60% of the purchase price of the product will be assessed as assets. These apply until the age of 84 (or a minimum of 5 years), and then 30% for the rest of the person’s life.

The Government expects this clarity will pave the way for the development of CIPRs, a product recommended by David Murray’s Financial System Inquiry. A more detailed position paper for public discussion will be released soon, expecting CIPRs to become a core part of the implementation by super funds of retirement strategies. Policies bought before 1 July 2019 will be grandfathered.

Superannuation

The Government announced a Protecting Your Super Package to commence on 1 July 2019 aimed at ‘reuniting’ Australians with their low balance, inactive superannuation accounts through the ATO. Inactive accounts below $6,000 will be transferred to the ATO to protect from further erosion, and data matching will be used to connect with the member’s active accounts. This technique is expected to push $6 billion in super back into 3 million active superannuation accounts.

The Government will also cap total fees on super accounts of less than $6,000 at 3%, and ban exit fees on all super accounts (exit fees cost members $37 million in 2015-2016). They will also make life insurance in superannuation an opt-in for people under the age of 25, plus those with low balance accounts or inactive accounts. An estimated $3 billion in insurance premiums may be saved by 5 million individuals.

Given the difficulty many superannuation funds have in identifying the exact fees on individual accounts, this measure might be difficult to implement. For example, funds might invest in a fund-of-funds with another level of fees. The wealth industry will need the time until the effective date of 1 July 2019 to sort it out.

Under ‘More Choices for a Longer Life’, the Government will introduce a one year exemption from the work test for voluntary contributions to super for people aged 65-74 and super balances below $300,000. This is intended to give retirees flexibility in the transition after work. The Budget Papers give an example of a person retiring on 1 June 2020 with only $150,000 in super who does not meet the work test. Under the new rules, he could put $45,000 at concessional rates (using the carry forward arrangements) and $100,000 in non-concessionals, almost doubling his super balance after leaving work.

The Budget confirms the maximum number of members allowed in an SMSF will rise from four to six to give more flexibility for larger families.

Additionally, some high income earners (above $263,157) with multiple employers will be able to nominate that their wages are not subject to Superannuation Guarantee from 1 July 2018. This will reduce the number of people who breach the $25,000 cap on concessional contributions, and allow some people to negotiate a higher income instead.

Also, the extension of the government reverse mortgage scheme will reverse the last budget incentives for elderly people to free up their homes.

Llewellyn2006

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Re: The budget
« Reply #20 on: May 08, 2018, 03:53:53 PM »
This seems like a blatant "we're off to the polls" budget. Funny how all of a sudden the "debt emergency" of a few years ago has disappeared. I can't believe that they are contemplating going to the polls in August/September - potentially just two years after the last fabricated election. Actually I can believe it and it's just bullshit - time for fixed terms I think.

marty998

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Re: The budget
« Reply #21 on: May 09, 2018, 05:23:47 AM »
@Eucalyptus sigh... Budget Paper #2 (which details the changes in spending since MYEFO) was the most boring paper I have ever read in a long time.

About the only interesting thing in there was the government exempting the ICC from income tax, as an incentive to hold the Twenty20 cricket world cup in Australia in 2020.

No longer do governments present a budget for the coming year, instead, they present a budget for SEVEN YEARS TIME. How fucking ridiculous.

The much championed $10.50 a week tax cut won't even be received until at least August 2019 (i.e. in 2019/20 fiscal year) because the LTIO is delivered when you lodge your tax return. So it won't even impact the budget (or the household budget) this year.

The biggest revenue measure is apparently raising $3.5 billion by chasing missing tobacco excise. I remember Tony Abbott excoriating Wayne Swan for doing this, and the Libs have gone and done exactly the same thing.

They're all a bunch of muppets. The debt continues to grow, it'll never be paid down.
« Last Edit: May 09, 2018, 05:26:14 AM by marty998 »

alsoknownasDean

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Re: The budget
« Reply #22 on: May 09, 2018, 10:35:06 PM »
Obviously our economic situation even in a year depends quite heavily on the health of the Chinese economy. If China is doing well and commodity prices are high, then we're in good shape, but if China suffers a recession...

I found it interesting about the idea of prohibiting cash transactions of more than $10,000. I wonder if that'll mean that there'll be no $100 notes in the current series?

There's obviously a few paranoid types flipping out about it, but they'll probably just start buying gold to stash under the mattress instead of $100 notes. :)

@marty998 I wonder if there'll be a sudden boost in overall spending around July-September 2019 as people get their offset in their tax returns?

marty998

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Re: The budget
« Reply #23 on: May 10, 2018, 03:27:02 PM »

@marty998 I wonder if there'll be a sudden boost in overall spending around July-September 2019 as people get their offset in their tax returns?

Doubtful - I reckon most people will use it to pay down debt. The sort who need the sugar hit from a $500 cash splash are the sort who would have racked up credit card debt throughout the year beforehand.

I do recall Harvey Norman and JB HiFi shares getting a boost with Rudd's $900 cheques, but I'm not sure you can equate this the same way.

marty998

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Re: The budget
« Reply #24 on: May 12, 2018, 10:24:55 PM »
I am so conflicted now. I do not like my local Liberal MP but... voting for Labor will cost me literally thousands, if not 10's of thousands into the future. While watching Sco Mo on Insiders this morning I was looking for any reason to say "this is shit", but I couldn't find one.

Do I just simply grin and bear it by voting Lib, putting aside how objectionable I find that (as a I consider myself a progressive type?)

God dammit. I never voted green. But I did not think the natural transition from left to right that most people go through as they age would hit me so soon.


Fresh Bread

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Re: The budget
« Reply #25 on: May 12, 2018, 11:48:08 PM »
I am so conflicted now. I do not like my local Liberal MP but... voting for Labor will cost me literally thousands, if not 10's of thousands into the future. While watching Sco Mo on Insiders this morning I was looking for any reason to say "this is shit", but I couldn't find one.

Do I just simply grin and bear it by voting Lib, putting aside how objectionable I find that (as a I consider myself a progressive type?)

God dammit. I never voted green. But I did not think the natural transition from left to right that most people go through as they age would hit me so soon.

You don't have to vote for the party that leaves you the best off financially. But if you find you agree with their policies for society as a whole then you go for it, no regrets. I find myself veering more to the right in terms of the economy as I get older but I remain v left-wing on social issues.

mjr

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Re: The budget
« Reply #26 on: May 13, 2018, 07:31:19 AM »
As people age, those who work hard, with skills and values and aspirations tend to break out of the pack.   These people become targets for the so-called progressives for having the hide to be successful.  Ooh, you have money - we'll have that, thanks.

Personally, I prefer a political and economic system that doesn't punish people for being successful - it furthers society as a whole.

It's the old grow-the-pie versus redistribution argument.


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Re: The budget
« Reply #27 on: May 13, 2018, 09:58:41 PM »
I am so conflicted now. I do not like my local Liberal MP but... voting for Labor will cost me literally thousands, if not 10's of thousands into the future. While watching Sco Mo on Insiders this morning I was looking for any reason to say "this is shit", but I couldn't find one.

Do I just simply grin and bear it by voting Lib, putting aside how objectionable I find that (as a I consider myself a progressive type?)

God dammit. I never voted green. But I did not think the natural transition from left to right that most people go through as they age would hit me so soon.

I face the same conundrum - I'm quite progressive on social issues.  However, I have some very strong negative views about trade unions, and have conservative economic views.  I used to vote green, until I felt their policies were more socialist than environmentally focused, and these days vote lib, with the occasional letter to members about social issues.

Rowellen

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Re: The budget
« Reply #28 on: May 14, 2018, 05:59:37 AM »
I find that neither major party aligns to the beliefs that I was led to believe they held. It seems to me that whatever one party says, the other will say the opposite. All for the votes of course.  Then they will pick and choose what they like from the other party's policies despite their their initial objections and spruik it as their own. So it doesn't really matter who you vote for these days.  So many people blindly vote for the party they've always voted for.   The individual candidate is mostly irrelevant unless they fuck up majorly and get caught out by the media.   JMO.

For what it's worth, I think Labor's policy on franking credits is the incredibly unfair (it's not a tax increase; it's just not getting a refund).  There's a strong chance I won't be voting Labor purely on that basis. I'm not personally affected at this point in time but many of my clients are. 

happy

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Re: The budget
« Reply #29 on: May 17, 2018, 06:45:48 AM »
I'm another political ambivalent! I'm left when it comes to social issues and green re the environment, but I've more right wing views about the size of government, and the economy. I always figured this meant I want to have my cake and eat it too.
The labour stance on franking credits is reactionary and not well thought out. The implication is that only rich people benefit from franking credits, so its a labour mans/woman's policy.

marty998

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Re: The budget
« Reply #30 on: May 23, 2018, 06:16:33 AM »
I'm another political ambivalent! I'm left when it comes to social issues and green re the environment, but I've more right wing views about the size of government, and the economy. I always figured this meant I want to have my cake and eat it too.
The labour stance on franking credits is reactionary and not well thought out. The implication is that only rich people benefit from franking credits, so its a labour mans/woman's policy.

I have a sudden urge to eat cake now.

Pauline is killing off the company tax cuts. I can't believe she is still standing to be honest. She and Abbott make a great couple.

Eucalyptus

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Re: The budget
« Reply #31 on: May 25, 2018, 11:13:22 PM »
Incredibly the SA Liberals are going from hopeless, to somehow winning the election (I think most people just figured its time to change), to deciding to implement both the Labor AND Liberal Party election policies for Home batteries in SA; so we are going to have 90,000 full or partially funded batteries in our state. Like wow, actual progress, intelligent decision making.


Its like Steven Marshall figures he'll just be able tag team out the Federal Government soon.

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Re: The budget
« Reply #32 on: June 09, 2018, 07:13:20 AM »
Despite being extremely disappointed in the direction of social policy I prefer the liberals at the moment.  Pretty much because Turnbull is gung ho on public infrastructure and the longer he is in government the better for our country,  since public infrastructure is nation building and far overdue.

Reality is that I vote for whoever is not in power in my local electorate, since swinging seats are always flush with amenities.

deborah

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Re: The budget
« Reply #33 on: June 25, 2018, 10:21:40 PM »
After investigating some of the recent changes in the budget, there is a lot there for early retirees.

Firstly, people can add concessional contributions to super when they're not working.

Secondly, if you have less than $500k in super, and haven't deposited all your allowed concessional contributions in the past 5 years, you can add whatever you haven't at once.

Together, this means early retirees can wait until they reach their preservation age (or until they are sure they'll make it to preservation age with their non-super stash) to deposit up to $125k of concessional contributions. Since concessional contributions reduce your income, it means that CGT for moving a stash from outside super to inside super is significantly reduced, and you can possibly deposit non-concessional contributions at the same time (up to $300k with the bring forward rule) and still have minimal CGT. I haven't done the calculations, but it could be quite significant for early retirees, and a way to transfer up to $425k at once from outside super to within it.

 

Phryne

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Re: The budget
« Reply #34 on: June 26, 2018, 04:02:04 AM »
After investigating some of the recent changes in the budget, there is a lot there for early retirees.

Firstly, people can add concessional contributions to super when they're not working.

Secondly, if you have less than $500k in super, and haven't deposited all your allowed concessional contributions in the past 5 years, you can add whatever you haven't at once.

Together, this means early retirees can wait until they reach their preservation age (or until they are sure they'll make it to preservation age with their non-super stash) to deposit up to $125k of concessional contributions. Since concessional contributions reduce your income, it means that CGT for moving a stash from outside super to inside super is significantly reduced, and you can possibly deposit non-concessional contributions at the same time (up to $300k with the bring forward rule) and still have minimal CGT. I haven't done the calculations, but it could be quite significant for early retirees, and a way to transfer up to $425k at once from outside super to within it.

Thanks deborah, you are a wealth of information!

Can I just check my understanding? I have an apartment which will attract ~$100k capital gain (after discounts) so a decent amount of tax even once I RE. But if I dump (some of) that money into super I can decrease my taxable income by the amount left in my cap if my balance stays below $500k? I don’t have much room in the cap now due to my salary,  but once I stop working will be $25k a year...

I think you’ve just saved me a bunch!!

Fresh Bread

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Re: The budget
« Reply #35 on: June 26, 2018, 04:49:59 AM »
After investigating some of the recent changes in the budget, there is a lot there for early retirees.

Firstly, people can add concessional contributions to super when they're not working.

Secondly, if you have less than $500k in super, and haven't deposited all your allowed concessional contributions in the past 5 years, you can add whatever you haven't at once.

Together, this means early retirees can wait until they reach their preservation age (or until they are sure they'll make it to preservation age with their non-super stash) to deposit up to $125k of concessional contributions. Since concessional contributions reduce your income, it means that CGT for moving a stash from outside super to inside super is significantly reduced, and you can possibly deposit non-concessional contributions at the same time (up to $300k with the bring forward rule) and still have minimal CGT. I haven't done the calculations, but it could be quite significant for early retirees, and a way to transfer up to $425k at once from outside super to within it.

Is this for next tax year? Due to a stuff up in timings, hubby has accidentally put $35k into super this year. But $15k last year.

ETA: I've since read it's from 1 July. Bugger. I've since done the sums myself and it's $29k not $35k so not quite as bad.
« Last Edit: June 26, 2018, 05:23:18 AM by Fresh Bread »

marty998

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Re: The budget
« Reply #36 on: June 27, 2018, 06:39:01 AM »
Might want to write a letter to your super fund and ask to treat the excess as a non-concessional contribution Fresh Bread.

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I'm really cranky at Bill Shorten, for a number of reasons but mostly because I think he just lost the next election with his rollback promise.

marty998

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Re: The budget
« Reply #37 on: July 06, 2018, 04:12:00 AM »
https://www.financeminister.gov.au/media-release/2018/06/27/australian-government-general-government-sector-monthly-financial

This is interesting. There are more than a few mentions of the word surplus throughout the media release.

About time. Almost makes me want to hold my nose while I vote liberal.