Latest / The Money Puzzle / New government : Investment risks and opportunities

Transcript

New government : Investment risks and opportunities · The Money Puzzle

0:08
Speaker 1: Hello and welcome to The Australian's Money Puzzle podcast. I'm
0:11
Speaker 1: James Kirkby. Welcome aboard everybody. Well, what a difference a
0:15
Speaker 1: few days will make. We spoke, if you recall, in
0:19
Speaker 1: the show last to this day last week, to Jeff Wilson,
0:23
Speaker 1: and we talked about various things. Particularly we talked about
0:27
Speaker 1: the new super tax, and not so much about that
0:30
Speaker 1: tax being a new tax or that it affects people
0:34
Speaker 1: with more than three million super which is a small
0:36
Speaker 1: amount of people. I don't deny that for one moment,
0:38
Speaker 1: but the nature of the tax that is going to
0:40
Speaker 1: be based on paper gains, which is a big thing,
0:44
Speaker 1: and we don't have taxes like that. Similarly, it's going
0:48
Speaker 1: to be not be indexed, and that's really important and
0:51
Speaker 1: worth exploring. But Jeff Wilson on the show was of
0:54
Speaker 1: course assuming like we all were, that it was going
0:58
Speaker 1: to be a hung parliament and that it was going
1:00
Speaker 1: to be a reduced minority. The complete opposite has happened, right,
1:04
Speaker 1: So we have a second term Albanese Labor administration with
1:09
Speaker 1: an increased majority, and that means that a lot of
1:13
Speaker 1: the agenda which has been created and defined in the
1:19
Speaker 1: election campaign is going to come through. And what we're
1:22
Speaker 1: interested in as investors is what does that mean? What
1:25
Speaker 1: are the risks? What are the opportunities that we're going
1:29
Speaker 1: to get as investors in this new administration. I talked
1:33
Speaker 1: on Tuesday. I hope you didn't miss the show was
1:35
Speaker 1: very good with Stuart Wims and we just talked. We
1:38
Speaker 1: really just zoned in on two issues about the new government,
1:43
Speaker 1: which is houses, house prices, investment property, and to some extent,
1:48
Speaker 1: the changes with HEX and the outcome of that. By
1:51
Speaker 1: the way, whichever way you look at it is that
1:53
Speaker 1: house prices are going to go up, and are going
1:55
Speaker 1: to go up fastest and the most in areas ironic,
2:00
Speaker 1: clean enough where the first home bars Hunt, which is
2:03
Speaker 1: in the sub million category. If you're an investment property person,
2:08
Speaker 1: keep that in mind, that's going to be the heartly
2:09
Speaker 1: contested part of the market. And as Stuart said very smartly,
2:13
Speaker 1: if you're selling a property, well you might as well
2:15
Speaker 1: wait till January when they're suddenly going to be eighty
2:18
Speaker 1: thousand people with the five percent deposit wandering the streets
2:22
Speaker 1: and looking at auctions where you will have much more demand.
2:25
Speaker 1: Now today, I want to widen what we were talking
2:28
Speaker 1: about and talk about all investing opportunities and risks under
2:32
Speaker 1: the new Albanazy administration. My guest today is Will Hamilton
2:36
Speaker 1: of Hamilton Wealth Partners, regular on the show How are
2:39
Speaker 1: you well?
2:39
Speaker 2: Very well, James, thank you very much for having me.
2:42
Speaker 1: Very good to have you. One of the things before
2:44
Speaker 1: we just kind of get into some particular issues. This
2:47
Speaker 1: particular government is not particularly focused so far, at least
2:51
Speaker 1: on incentives. A lot of its focuses on help, and
2:57
Speaker 1: when I say incentives, I mean incentives in the way
2:59
Speaker 1: I want toneurial incentives or business incentives or share market incentives.
3:03
Speaker 1: A lot of the focuses on helping various quarters and
3:07
Speaker 1: that is useful in many ways. But in terms of
3:10
Speaker 1: the share market, do you think it will make much
3:13
Speaker 1: difference to the ASX two hundred this year the nature
3:17
Speaker 1: of the new government.
3:19
Speaker 2: I think very little.
3:21
Speaker 3: The major issue for the Australian equity market is productivity,
3:25
Speaker 3: and yes Charmers said on Sunday that that is going
3:30
Speaker 3: to be a focus. But unless we see signs of it,
3:33
Speaker 3: and see some clear signs that they're going to turn
3:36
Speaker 3: that around, I can't see much of a major effect
3:39
Speaker 3: for the share market. In fact, the union movement is
3:42
Speaker 3: sort of flexing their muscles a little bit and saying
3:45
Speaker 3: they'd like to see some increases with respect to pay.
3:51
Speaker 3: And I think that one of the areas we've looked
3:53
Speaker 3: at on productivity, one of the worst areas on productivity
3:55
Speaker 3: is actually in the mining sector, and that's been majorly
3:58
Speaker 3: affected by the increases that you've seen there in wages
4:01
Speaker 3: and conditions.
4:02
Speaker 1: That's interesting, And they're at the bottom of the cycle anyway,
4:06
Speaker 1: aren't they? Rio and BHP and Co. There Mind you, folks,
4:09
Speaker 1: As an investor, it's worth keeping in mind that you
4:11
Speaker 1: can get them at ten times earnings. They can get
4:13
Speaker 1: Rio at ten times earnings these days, and BHP more
4:16
Speaker 1: or less the same. The banks are on seventeen times earnings.
4:20
Speaker 1: CBA is on nineteen times earnings. So if you're a
4:24
Speaker 1: Warren Buffet style contrarian investor, that's your opportunity. Did you
4:30
Speaker 1: on Buffers? It was interesting? That's it, the last of
4:33
Speaker 1: the last. It's all over for Berkshire Hathaway. In terms
4:37
Speaker 1: of the great the Golden period, Charliemonger and Warren Buffett. Yeah,
4:41
Speaker 1: with that style of a bit, do you think we'll
4:43
Speaker 1: ever see anything like him.
4:44
Speaker 3: Again, it took him a long time to build a reputation.
4:47
Speaker 3: So whoever it is, if we are too so, I
4:50
Speaker 3: doubt it because it's going to take them a long
4:51
Speaker 3: time to build a reputation. But you know, wow, Yeah,
4:55
Speaker 3: both of them were phenomenal. It was It was incredible
4:57
Speaker 3: and they have cult followings.
5:00
Speaker 1: At the time of the GFC, which is when he
5:02
Speaker 1: became a household in because he did those fabulous deals
5:04
Speaker 1: any bank rode Gold mid Sex believe it or a
5:07
Speaker 1: lot and got a great deal with them, and then
5:10
Speaker 1: he became a worldwide figure. Yes, do you think we
5:14
Speaker 1: have anything proxy for Warren Buffett in our marketer emerging
5:19
Speaker 1: in overseas markets that you say there's someone that people
5:22
Speaker 1: could do well to look at and keep an eye on.
5:25
Speaker 3: Look, there's a lot of very good fund manager out there,
5:26
Speaker 3: but none of that lake to be honest.
5:29
Speaker 1: Okay, yes, And in terms of the ax we're just
5:32
Speaker 1: talking about with the new government and the nature of
5:34
Speaker 1: things you mentioned productivity, which is something it's not as
5:38
Speaker 1: you say, it would be very good for share market
5:41
Speaker 1: disc companies if there was improved productivity, but it's a
5:44
Speaker 1: long bow. Maybe more specifically, are there areas that you
5:49
Speaker 1: think you would go closer to or away from. With
5:52
Speaker 1: the nature of the government we have, I'm thinking of
5:55
Speaker 1: even spot checks, like I say, critical minerals. I saw
5:58
Speaker 1: the line as Chief saying on a second, you know,
6:01
Speaker 1: if you're getting in there, if the government is stuff
6:03
Speaker 1: piling critical miners, that's anti market. You saw something like
6:06
Speaker 1: them lenders mortgage insurance people saying, hang on a second,
6:09
Speaker 1: if you're going to provide free mortgage insurance cover for
6:13
Speaker 1: every single home buyer, where there it goes to the
6:15
Speaker 1: lender's insurance market. Do you think that the market interference
6:19
Speaker 1: that we will get for sure in a new administration,
6:24
Speaker 1: how might that affect things?
6:26
Speaker 3: I think, Look, the government has said on critical minerals
6:28
Speaker 3: they're going to look at stockpiling, but I think we
6:30
Speaker 3: need to look at the long term and where critical
6:33
Speaker 3: minerals have traditionally been supplied from, and China's been a
6:36
Speaker 3: large supplier of that to the United States. So Australia
6:39
Speaker 3: is going to benefit longer term in this, and hence
6:41
Speaker 3: why you know, I think Trump's been so keen to
6:45
Speaker 3: do a deal in Ukraine it is again to tie
6:48
Speaker 3: up critical minerals. But Australia's also got a lot of
6:50
Speaker 3: critical minerals, so longer term and as a supply to
6:54
Speaker 3: places like the United States, we're going to see benefit
6:57
Speaker 3: from that. But the second thing is, as you're right said,
7:00
Speaker 3: interference is generally a negative, but to what extent You've
7:03
Speaker 3: got to look just can't take a blanket picture and
7:06
Speaker 3: say well, this is going to have a negative effect.
7:09
Speaker 3: You've got to look at what percentage of earnings.
7:10
Speaker 2: This is as well?
7:12
Speaker 1: Okay, And in terms of energy transition again, Albanezi government
7:16
Speaker 1: is much more on the front foot about energy transition
7:19
Speaker 1: and that has two sides. It means moving away from coal,
7:22
Speaker 1: moving towards other new forms of energy.
7:25
Speaker 3: Well, yes, and you hope that gas comes into this
7:27
Speaker 3: because we need to have baseload and one of the
7:31
Speaker 3: reasons why people say the Abanese government has been so
7:34
Speaker 3: negative on gas is because of the Greens. Well, if
7:36
Speaker 3: the Greens have a reduced effect in this coming parliament,
7:41
Speaker 3: you hope that common sense prevails with respect to a
7:46
Speaker 3: cleaner base, low power future, and that being through gas.
7:51
Speaker 3: We've got a lot of it and we're exporting a
7:53
Speaker 3: lot of it. So is there some rethought towards that What.
7:57
Speaker 1: Did you think of Stuart's tension that the signature scheme
8:04
Speaker 1: of the Albanez government in the election campaign of universal
8:10
Speaker 1: first home buyer scheme or anyone buy your house for
8:12
Speaker 1: the first time can act a five percent deposit. It
8:15
Speaker 1: doesn't start till January. People will stay away from that
8:18
Speaker 1: market till January. They will pour into it in January.
8:21
Speaker 1: We will get a spike in house prices in January.
8:24
Speaker 1: What did you think of that theory?
8:26
Speaker 2: I agree on that.
8:27
Speaker 3: I think that everything's based on demand and supply, and
8:29
Speaker 3: therefore down at those lower areas you will see that
8:32
Speaker 3: spike and it's down to affordability, and I agree with
8:36
Speaker 3: his whole logic and how he's looked at that, and
8:38
Speaker 3: then therefore you could see a temporary sort of lull
8:41
Speaker 3: in demand. But hence after the first of January you
8:44
Speaker 3: could see that spik up.
8:46
Speaker 1: Okay, you get a spike in demand which would actually
8:48
Speaker 1: push our prices in that layer correct absolutely, being the
8:51
Speaker 1: first home buyer layer, which is under a million yep basically,
8:55
Speaker 1: and that would vary obviously around the country, but very generally.
8:58
Speaker 1: All right, now, folks, the things that we want to
9:01
Speaker 1: talk to will obviously particularly about is your tax outlook
9:05
Speaker 1: under the new administration, the changes they have already mentioned
9:09
Speaker 1: and the changes that may roll from the initial experiment
9:15
Speaker 1: on souper, which is so important. We're going to talk
9:17
Speaker 1: about that after the break. We'll be back in a moment.
9:30
Speaker 1: Hello and welcome back to The Australian's Money Puzzle podcast.
9:34
Speaker 1: James Kirby talking to Will Hamilton of Hamilton Wealth Partner's
9:37
Speaker 1: regular contributor to the Australian Wealth Section and of course
9:41
Speaker 1: regular on the show. Now Will so when Jeff Wilson
9:45
Speaker 1: was on last week, and we've got some interesting questions
9:47
Speaker 1: about his arrival on the show in the next segment.
9:50
Speaker 1: But he assumed it was going to be a hung parliament,
9:53
Speaker 1: and he assumed that he would have to chase around
9:56
Speaker 1: and pressure as a lobbyist, or at least as an
10:00
Speaker 1: to this. He was assuming that you'd have to deal
10:02
Speaker 1: with all these crossbenchers. But the way it's shaping up
10:06
Speaker 1: as we speak this morning is really quite different than
10:08
Speaker 1: it was even a week ago. Number One, the government
10:10
Speaker 1: they will have to reintroduce this bill, and just to
10:14
Speaker 1: clarify for all listeners, because I was amazed how some
10:17
Speaker 1: people were really only starting to figure this out last week.
10:19
Speaker 1: Judging by our correspondence, it's a new tax fifteen percent
10:23
Speaker 1: on earnings above three million in super be that as
10:26
Speaker 1: at me. What is driving people up the wall, including Jeff,
10:30
Speaker 1: was that it's based on paper gains, paper gains, unrealized profits.
10:35
Speaker 1: We haven't had that before. It's really going to change
10:38
Speaker 1: the nature of things if we bring it in in
10:40
Speaker 1: the way they have it planned and it's not to
10:42
Speaker 1: be indexed. If it's not indexed, it means that tens
10:45
Speaker 1: of thousands of vestors will be brought in each year
10:48
Speaker 1: to the net. But here's the thing what we know
10:50
Speaker 1: so far is it now looks like that if they
10:52
Speaker 1: do reintroduce it, and they will, we know that that.
10:55
Speaker 1: We've got confirmation this week that they will reintroduce it,
10:58
Speaker 1: it will sail through the Lowerhouse because they have huge
11:00
Speaker 1: majority there now. So it's all about the Senate and
11:03
Speaker 1: dealing with the Greens. The Greens say if they want
11:07
Speaker 1: to get this through, they want to bring it down,
11:09
Speaker 1: they want to bring the threashold down from three million
11:12
Speaker 1: to two million. What are we looking at here.
11:14
Speaker 3: Well, that's the level of the transfer balance cap. So
11:17
Speaker 3: at the moment that transfer balance cap from the first
11:20
Speaker 3: July twenty twenty five is going to kick in at
11:22
Speaker 3: two million dollars, So we're seeing on hundred thousand dollars increase.
11:26
Speaker 3: It will capture a lot more. I would hope that
11:29
Speaker 3: this is not the case, because I think it's going
11:32
Speaker 3: to create mayhem amongst our investors. You know, we're already
11:36
Speaker 3: looking ourselves at the minute we get some degree of
11:39
Speaker 3: clarity on the legislation, make sure there's no changes. We're
11:42
Speaker 3: going to be holding some things for clients because it's
11:45
Speaker 3: going to be a major issue for us.
11:47
Speaker 1: At three million, what's mayhem? What do you mean by mayhem?
11:50
Speaker 3: Well, you're bringing it down to just a lower level,
11:52
Speaker 3: and it's going to capture. If you brought it down
11:54
Speaker 3: to two million, like the Greens want, the capture is
11:57
Speaker 3: going to be that much more substantial with respect to
11:59
Speaker 3: those that are affected and the unrealized gains I think
12:03
Speaker 3: is a major.
12:04
Speaker 2: Issue at the moment.
12:06
Speaker 3: Of the way I've been looking at it is that
12:08
Speaker 3: they're saying it's not index, that's three and therefore the
12:11
Speaker 3: transfer balance cap level is the index. So we just said,
12:15
Speaker 3: what you're seeing an increase of one hundred thousand dollars.
12:17
Speaker 3: So I've been looking at there being this indexing until
12:20
Speaker 3: you get that transfer balance cap at three million dollars.
12:23
Speaker 3: Then you hope common sense prevails and you see the
12:27
Speaker 3: three million dollar level as the starting to go up
12:30
Speaker 3: because it effectively is the TBC.
12:32
Speaker 1: So just to clarify to the average list here and
12:35
Speaker 1: tell me if I'm wrong, Will, But what you're saying
12:37
Speaker 1: is you don't pay tax in super anyway up to
12:39
Speaker 1: two million, yep, But that's indexed, and the new tax
12:44
Speaker 1: is you actually paid double tax. Yes, you pay thirty
12:47
Speaker 1: roll than fifteen after three ye but if it's not
12:49
Speaker 1: index more and more people go in there anyway, So
12:52
Speaker 1: one way or another, before you know where you are,
12:54
Speaker 1: it becomes effectively a thirty percent tax on two million
12:57
Speaker 1: over the passage of time, even if the Greens nothing.
13:00
Speaker 3: Correct, right, because it's effectively well, it's like bracket creep
13:04
Speaker 3: at the personal levels. That's what it is, and that's
13:08
Speaker 3: why people are very concerned on that level because the
13:11
Speaker 3: fact is these are investment assets. You take lare of
13:16
Speaker 3: investment seven eight percent, you're looking at doubling every ten years,
13:20
Speaker 3: et cetera. So you know this is a major issue
13:22
Speaker 3: and then you've got unrealized gains on that as well,
13:24
Speaker 3: which is just grossly unfair because it has a major
13:28
Speaker 3: effect on cash flow. Yes, the fact is people made
13:31
Speaker 3: decisions based on.
13:32
Speaker 2: The law at the time.
13:33
Speaker 1: That's right for their life.
13:35
Speaker 2: Correct.
13:35
Speaker 3: Yeah, and then though suddenly everything's changed and that has
13:39
Speaker 3: a major effect on them.
13:41
Speaker 2: People.
13:42
Speaker 3: I've seen this some questions with respect to farmers. Farmers
13:45
Speaker 3: have an asset in there with probably very little else
13:48
Speaker 3: in a lot of cases being the farmland, and therefore
13:52
Speaker 3: if that value goes up, they need to meet that liability.
13:55
Speaker 3: But where is the cash flow to do that?
13:57
Speaker 1: Explain when you get your bill on your page or gain.
14:01
Speaker 1: Apart from the obvious frustrations of that. Yep, you must
14:05
Speaker 1: pay it there and then to the tax office, and
14:10
Speaker 1: that has all sorts of ramifications. You must pay it
14:13
Speaker 1: either as a person, that is you will Hamilton have
14:16
Speaker 1: to write a check for the ATO, or you have
14:18
Speaker 1: to take it out of your superfund.
14:20
Speaker 3: Where you're actually assessed individually on that unlike below three million.
14:25
Speaker 3: And yes, you are given leave to source that liability
14:31
Speaker 3: from your super fund.
14:33
Speaker 1: You can take the money out and pay the bill
14:34
Speaker 1: from your superfund.
14:35
Speaker 2: Correct. Yeah.
14:36
Speaker 1: So you're taking money out of your super fund to
14:38
Speaker 1: pay a bill on gains that were possibly imaginary because
14:44
Speaker 1: their paper gains correct. Yeah, so this is really the problem.
14:48
Speaker 1: This is what people don't like. But what's the chances
14:51
Speaker 1: that this will broaden this technique of taxing paper gains.
14:54
Speaker 3: Well, to go back a step first before we get
14:56
Speaker 3: onto that. The thing is, you know, we've just been
14:59
Speaker 3: through MAC corrections and therefore the people are going to
15:03
Speaker 3: have paper losses. Yes, but you don't get a refund.
15:07
Speaker 3: All you get is an offset of future tax liabilities
15:11
Speaker 3: like CGT.
15:12
Speaker 1: You can't get a comp You say, listen, I paid
15:16
Speaker 1: twenty grand in tax last year for something I never
15:19
Speaker 1: got to play with or cash in, and now it's
15:22
Speaker 1: plunged and I've got a loss. Can I have compensation?
15:25
Speaker 1: And they say, no compensation. You can only carry this
15:28
Speaker 1: forward against future gains.
15:30
Speaker 2: Yeah. Correct, And then it's referred to as division too NAN.
15:33
Speaker 3: Six and under that, if you've got a loss three
15:36
Speaker 3: super fund but you've got a tax liability from other assets,
15:40
Speaker 3: you can't offset that loss, even though you're assessed personally,
15:44
Speaker 3: you can't offset that loss against liabilities that you've got
15:48
Speaker 3: from other areas.
15:50
Speaker 1: And that you see as tax inequitable to put it,
15:53
Speaker 1: my lig it is yeah yeah, yeah yeah, or on
15:56
Speaker 1: as you were saying, grossly unfair at the start. And
15:59
Speaker 1: I think this is the point I'm trying to make
16:01
Speaker 1: to listeners and to readers in the Australian. It's not
16:04
Speaker 1: the dollar figure here, it's the method of taxation. Okay. Now,
16:10
Speaker 1: one thing that's yet to be drawn out, and I
16:12
Speaker 1: think it's very interesting if for anyone who has a
16:14
Speaker 1: self managed super fund. The Greens who have now got
16:18
Speaker 1: though you might think because Adam Bant, I think he's gone,
16:21
Speaker 1: and because they're not in the lower house of any
16:24
Speaker 1: they are not a power in the lower house, but
16:26
Speaker 1: they're a power in the upper house. The other part
16:28
Speaker 1: thing they wanted in their agenda was to scrap the
16:33
Speaker 1: ability to borrow money in super what's it called LBR.
16:38
Speaker 1: So most people who have a super fund get it
16:41
Speaker 1: to borrow an SMSF and they borrow often to buy
16:45
Speaker 1: property and that's been allowed for years and years and
16:48
Speaker 1: years and every government has sort of toied along, but
16:50
Speaker 1: they've signed it off. The Greens want that scrapped. Do
16:53
Speaker 1: you think albinezy government will scrap it?
16:57
Speaker 3: So First of all, in a super fund, you cannot
17:00
Speaker 3: negatively gear, and our said it has to be positively geared.
17:03
Speaker 2: So just we need to remember that.
17:05
Speaker 3: So yes, you can borrow up to a certain level,
17:07
Speaker 3: but you also have to have a positive cash flow.
17:10
Speaker 3: One of the things the government has said is that
17:12
Speaker 3: they won't introduce any new taxes, but they haven't said
17:16
Speaker 3: that they wouldn't remove tax breaks.
17:18
Speaker 1: That's a very good point. Well, that is a gem, yes.
17:22
Speaker 3: So what I'm worried about is, yes, what you've just said,
17:28
Speaker 3: and then there's the double breaks that you have in
17:32
Speaker 3: investment property taxes. I doubt they'll play with negative gearing.
17:35
Speaker 3: I think that was done by bull keating and reversed.
17:39
Speaker 3: But I'm wondering about this CGT relief and removing that.
17:43
Speaker 3: So I'm looking at things saying, well, they haven't said
17:46
Speaker 3: they wouldn't remove tax breaks, yes, and I'm wondering which
17:49
Speaker 3: how they will play with this. And I think removing
17:53
Speaker 3: CGT relief is a lot neater because you know, what's
17:57
Speaker 3: been previously proposed by the Greens on negative gearing was
17:59
Speaker 3: you're allowed or two properties or something like that to
18:01
Speaker 3: negative gear, and whereas with this is you just draw
18:04
Speaker 3: a line, pray this period you're allowed at post this period.
18:07
Speaker 1: Sorry, it's gone, and you can stand in front of
18:09
Speaker 1: the cameras and say we said no new taxes. This
18:11
Speaker 1: is not a new tax. This is a restriction of
18:14
Speaker 1: an existing tax. And most of our listeners would know
18:17
Speaker 1: CGT as. You know how it works capital gains tax.
18:21
Speaker 1: If you hold an acid and you said it under
18:23
Speaker 1: a year, it's a fifty percent tax. If you hold
18:25
Speaker 1: it for more than a year, it's twenty five percent.
18:28
Speaker 1: That's why the vast majority of people will wait for
18:30
Speaker 1: more than a year before they said an asset and
18:31
Speaker 1: assid trading shares or something. I suppose well, thinking out
18:35
Speaker 1: loud here, there's great scope for horse trading here, you
18:38
Speaker 1: might say to the Greens, put this tax through on
18:42
Speaker 1: the Super, will you, because we need the two three
18:45
Speaker 1: billion a year revenue. It's baked into the books and
18:47
Speaker 1: we will scrap the lending in super for you. That's
18:51
Speaker 1: a possibility, isn't it. Surely?
18:53
Speaker 3: I think with the majority of the government's gosh, you
18:56
Speaker 3: might see the grains and even the coalitions that to
18:58
Speaker 3: be a lot more cooperative on certain legislation. Now, I
19:02
Speaker 3: wouldn't expect the Coalition, especially given what Tim Wilson said,
19:06
Speaker 3: who is expected to win Godstein.
19:08
Speaker 1: Here's what I mean. He had a press conference about
19:12
Speaker 1: winning it yesterday and he has won it.
19:14
Speaker 3: Yeah, but given what he has said, I don't think
19:18
Speaker 3: you're going to get any horse trading from the Coalition
19:21
Speaker 3: on this tax in particular. But I think on a
19:25
Speaker 3: bigger picture in the Parliament, the government may find cooperation
19:28
Speaker 3: between either the Greens or the Coalition compared to just
19:31
Speaker 3: saying no to everything.
19:33
Speaker 1: Which they did previously. So you're saying that the horse
19:35
Speaker 1: trading will be between the Labor and the Greens to
19:37
Speaker 1: get these things done in the Senate.
19:39
Speaker 3: Yeah, I think you will see a degree of cooperation.
19:42
Speaker 3: And therefore, as you just said, the reversal of lending
19:46
Speaker 3: in super funds and maybe some other things down the track,
19:49
Speaker 3: we may seekey and like for a minute a CG
19:52
Speaker 3: two relief, it was given for investing in productive assets,
19:56
Speaker 3: and the government may also argue will is investment housing?
20:01
Speaker 3: Is that a productive asset?
20:03
Speaker 1: Yeah, that's a good point. Yeah, yeah, absolutely, Okay, Well
20:06
Speaker 1: we will see on that interesting and Wilson a course
20:10
Speaker 1: surprise winner and one of the few Libs that senior
20:14
Speaker 1: Libs that has managed to come through this election in
20:18
Speaker 1: better shape. The only reason I bring this up, folks,
20:21
Speaker 1: is because you may remember that Wilson was the politician
20:27
Speaker 1: that was most clearly identified with the Frank Dividend campaign
20:31
Speaker 1: that time in the Morrison government, and he has got
20:35
Speaker 1: back in. He's a he's loving to be assistant treasurer.
20:38
Speaker 1: Assistant treasurer opposition treasure he'd loved to be assistant treasure
20:44
Speaker 1: but opposition treasure all right, we don't want to go
20:46
Speaker 1: to foreign politics, but it's worth knowing these key issues.
20:50
Speaker 1: All right. We'll be back in a moment, folks, and
20:52
Speaker 1: we've got some really really good correspondence about these issues
20:57
Speaker 1: we've just been talking about. Back in a moment. Hello,
21:09
Speaker 1: and welcome back to The Australian's Money Puzzle podcast. James
21:13
Speaker 1: Kirby talking to Will Hamilton of Hamilton Worth, Partner's regular
21:16
Speaker 1: contributor to the Australian Word Section and of course regular
21:20
Speaker 1: on the show. Can you see the questions on the screen.
21:23
Speaker 2: Will I've got them?
21:24
Speaker 1: Yes, okay, I'm going to enjoy you reading that first
21:28
Speaker 1: one from Oh the name is missing. We've sought that
21:30
Speaker 1: out later.
21:31
Speaker 2: Yes, it's a long question.
21:33
Speaker 1: It's a long question, but it's worth reading.
21:35
Speaker 2: It sure is.
21:36
Speaker 3: We've covered some of it, but the recent podcast with
21:38
Speaker 3: Jeff Wilson alerted me to the text of unrealized capital
21:41
Speaker 3: gains and superannuation accounts. I believe that superannuation was conceived
21:45
Speaker 3: by pul Keating to take the pressure off the government
21:47
Speaker 3: pension liabilities in the future. I provide a way for
21:50
Speaker 3: people to accumulate enough wealth to retire in dignity and
21:53
Speaker 3: not rely on the pension. What I do not think
21:57
Speaker 3: was intended to do is provide a means by which
21:59
Speaker 3: people can shelter large amounts of generation wealth in a
22:02
Speaker 3: lower tax environment. I can't believe that people could put
22:05
Speaker 3: large farms or properties into self managed super funds. If
22:08
Speaker 3: they have, I have no sympathy for them, as they're
22:11
Speaker 3: avoiding paying their fair share of tax no capital gains
22:13
Speaker 3: tax on a property that is sold once in pension phase.
22:16
Speaker 3: I assume, as is the case with equities, a three
22:18
Speaker 3: million super balance should at worst provide a healthy one
22:21
Speaker 3: hundred and fifty thousand dollars tax free income and retirement.
22:24
Speaker 3: How much does an individual need for a comfortable retirement
22:27
Speaker 3: post sixty years of age? So good on the Labor Party,
22:31
Speaker 3: with help of the Greens and their balance of power
22:33
Speaker 3: in the Senate, will see the legislation enacted.
22:36
Speaker 1: Now, our listener, apologies the name has fallen off. We
22:40
Speaker 1: will get that, but I know it was a mail.
22:42
Speaker 1: He didn't believe basically that people put farms into s
22:45
Speaker 1: manefs and said they were tax avoiding if they were
22:48
Speaker 1: doing so, what's your view on that statement?
22:52
Speaker 3: They did it really for asset protection on generations. I
22:56
Speaker 3: think that's a big thing on for farms.
22:58
Speaker 1: But his point is super cut be used for that well.
23:01
Speaker 3: As I said before, the fact is they did things
23:04
Speaker 3: under the laws that existed at the point in time,
23:06
Speaker 3: and I think don't think you should be penalized for
23:08
Speaker 3: the laws that existed at the point in time. There
23:10
Speaker 3: is no doubt, you know, And I'm aware of even
23:12
Speaker 3: some clients of ours that have very very excessive balances
23:15
Speaker 3: in super and it's interesting their viewers. It's worked, yes, however,
23:20
Speaker 3: good on it for the time, and some of them
23:22
Speaker 3: do say we've got X in here and that's excess
23:26
Speaker 3: to really what should be allowed. So you know the
23:28
Speaker 3: fact is the laws allowed it.
23:30
Speaker 1: They were taught by their advisors here's the law. They
23:33
Speaker 1: were told by previous administrations put poor money into super
23:37
Speaker 1: I mean Peter Costello, who everyone thinks was a great treasurer, said,
23:41
Speaker 1: put in as much as you like, which must have
23:43
Speaker 1: been greatful, because all you can put in now is
23:45
Speaker 1: thirty thousand a year on a concession basis, which is
23:49
Speaker 1: not much compared to how much people were putting in. Then, okay,
23:52
Speaker 1: I did want to cover that aspect now on a
23:55
Speaker 1: different perspective from a different listener, deve love the part. God,
24:00
Speaker 1: the last episode was unbalanced. I hoped you would have
24:04
Speaker 1: rained in Jeff Wilson on the lack of indexing. Now,
24:09
Speaker 1: for what it's worth, that was Jeff Wilson pretty rained in.
24:13
Speaker 1: Might I add on the show. But Jeff's point was
24:17
Speaker 1: if you don't index, right, So if you say, and
24:20
Speaker 1: there's a new text coming in the threshold is X
24:22
Speaker 1: number of dollars, and there's no application for inflation index.
24:26
Speaker 1: But inflation running at three four percent a year at
24:28
Speaker 1: the moment, sometimes higher very quickly. A hell of a
24:32
Speaker 1: lot more people that get caught in there than the
24:35
Speaker 1: government of the day is saying. Dave says. A recent
24:39
Speaker 1: note from Meg Hefron and Meg is a very good
24:43
Speaker 1: SMSF specialist, and we've had some people from the Hefron
24:46
Speaker 1: group on the show. Hefro Meg Hefron suggested, while the
24:51
Speaker 1: legislation previously presented the Parliament didn't include indexation of the threshold,
24:56
Speaker 1: many other indexed amounts in tax law are increased every
25:00
Speaker 1: now and again. It's unreasonable to assume this slimmit would
25:03
Speaker 1: remain at three million in twenty or thirty years time.
25:06
Speaker 1: I don't know about that, Dave, I don't know about that.
25:09
Speaker 1: I did a bit of research here. Two things, the
25:12
Speaker 1: Sophisticated Investor Test. Do you know how long it's been
25:16
Speaker 1: since that was indexed? It's over twenty years. More pertinent.
25:21
Speaker 1: The closest tax to this tax, but if this one's
25:25
Speaker 1: called Division two nine six, the closest one is Division
25:27
Speaker 1: two ninety three. That's the tax that your superannuation concessions
25:32
Speaker 1: are peelback if you make more than two hundred and
25:35
Speaker 1: fifty thousand a year. That was brought in twelve years ago.
25:38
Speaker 1: Twelve years ago, two hundred and fifty thousand was what
25:41
Speaker 1: a hell of a lot more than it is now.
25:42
Speaker 1: If you're on two hundred and fifty thy twelve years ago,
25:44
Speaker 1: you're on a big wicket. If you're on two hundred
25:46
Speaker 1: and fifty thousand today, it's not as big as it
25:49
Speaker 1: used to be at all. However, that threshold holds, so
25:54
Speaker 1: it's not really so. I would say it's by no
25:58
Speaker 1: means a safe presumption that governments actually do index, particularly
26:04
Speaker 1: lucrative taxes. And remember the new super tax is supposed
26:09
Speaker 1: to bring in two point three billion a year when
26:11
Speaker 1: it's up and running.
26:12
Speaker 3: What do you think will I think, I sort of said,
26:15
Speaker 3: but I was hoping, which was when the transfer balance
26:18
Speaker 3: cap gets to three million, that you have suddenly removed
26:22
Speaker 3: a fifteen percent tax and it's now thirty and it
26:24
Speaker 3: just gets index from there. I hope that's what if
26:28
Speaker 3: it gets through, you resume that's what's common sense. Bash.
26:32
Speaker 3: Common sense doesn't always prevail. And one thing that you've
26:36
Speaker 3: rightly said is that it was actually under a liberal government.
26:40
Speaker 3: They changed the rules and made it. It's actually the
26:43
Speaker 3: difficulties getting money into super You can take it out
26:47
Speaker 3: once you get to a certain age and you're getting
26:49
Speaker 3: it out. Stop issue, it's getting it in.
26:51
Speaker 1: And you know what's ridiculous is that, And it's very
26:55
Speaker 1: much against younger people accumulating money in Super. The amount
26:59
Speaker 1: you can have in Super tax free gets indexed and
27:01
Speaker 1: was indexed last year by one hundred grand up to
27:04
Speaker 1: two million. The amount you can put in wasn't indexed correct,
27:08
Speaker 1: didn't move thirty grand sitting there unchanged, and that's absurd.
27:12
Speaker 1: And there's all sorts of explanations for that bus. It
27:16
Speaker 1: is completely upside down. Okay, terrific, We are running out
27:20
Speaker 1: of time. Thank you very much, Will Hamilton.
27:22
Speaker 2: Thank you, James Kirby. Terrific to be on again.
27:24
Speaker 1: Great to have you on the show. That was Will
27:26
Speaker 1: Hamilton of Hamilton Wealth Partners. Oh and by the way, folks,
27:29
Speaker 1: I meant to say my little call out about questions
27:33
Speaker 1: seems to have worked straight away and that's really good.
27:36
Speaker 1: So remember, if you're sending in a question, feel free
27:39
Speaker 1: to send in two or three. Absolutely very welcome. You're
27:42
Speaker 1: taking the effort to write in a question, then why
27:44
Speaker 1: don't you put in a couple. Just keep them short,
27:47
Speaker 1: and I will endeavor endeavor to make sure they are
27:51
Speaker 1: all covered. And they are i'd like to think almost
27:54
Speaker 1: completely covered all the questions unless they kind of double up,
27:57
Speaker 1: and sometimes I put two or three together so let's
27:59
Speaker 1: have some more the money puzzle at the Australian dot
28:02
Speaker 1: com dot Au. Today's show was produced by Joshua Burton.
28:07
Speaker 1: Talk to you soon.