Latest / The Money Puzzle / Double tax on paper gains in property - welcome to the new super tax

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Double tax on paper gains in property - welcome to the new super tax · The Money Puzzle

• 0:10
  Speaker 1: Hello, and welcome to the Australians Money Puzzle podcast. I'm
• 0:13
  Speaker 1: James Kirby. Welcome aboard everybody.
• 0:15
  Speaker 2: Now.
• 0:16
  Speaker 1: The government's planned supertax, you would know, is going to
• 0:20
  Speaker 1: hit property investors' hardest, of course, because unlike share investors,
• 0:24
  Speaker 1: property owners can't quickly rearrange their finances at short notice.
• 0:29
  Speaker 1: But in recent days we've had reliable reports the tax
• 0:32
  Speaker 1: is now being actively reconsidered in Canberra. There's a chance
• 0:35
  Speaker 1: it may be delayed or even dropped entirely. Before the
• 0:39
  Speaker 1: speculation became public, I spoke to Orditor Naz Randira. She's
• 0:43
  Speaker 1: one of the leading voices against this new tax, and
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  Speaker 1: I don't think anyone else has spelled out the utter
• 0:48
  Speaker 1: debacled that's on the cards if the government goes ahead
• 0:52
  Speaker 1: as planned.
• 0:53
  Speaker 2: Hey Naz, thanks for having me.
• 0:56
  Speaker 1: James, very happy to have you on the show. I
• 0:58
  Speaker 1: talked quite regularly to Nas and in fact she was
• 1:01
  Speaker 1: one of the key people apart from you. There are
• 1:04
  Speaker 1: usual suspects obviously in this debate around super tax, but
• 1:07
  Speaker 1: one of the sort of new voices that came through
• 1:11
  Speaker 1: on super tax and what was wrong with this tax
• 1:14
  Speaker 1: in its way of taxing on realized gains was Naswandaria,
• 1:18
  Speaker 1: and she actually was the person, the first person in
• 1:21
  Speaker 1: the whole economy really to point out how frank dividends,
• 1:25
  Speaker 1: for instance, would be affected. And then people started to
• 1:27
  Speaker 1: really open up and say, well what else would be affected? Well,
• 1:29
  Speaker 1: inheritance would be affected, all sorts of things would be
• 1:32
  Speaker 1: affected by the new super tax. So it seems to
• 1:36
  Speaker 1: me now, Nas that super tax, which was sort of
• 1:40
  Speaker 1: like a big shock a year ago, that's it's established,
• 1:44
  Speaker 1: it's going to happen. It's going to happen as the
• 1:46
  Speaker 1: Treasurer said it would happen, and we can take a
• 1:49
  Speaker 1: deeper look at that in a moment. But what do
• 1:51
  Speaker 1: you think it's it leads to? What is it if
• 1:54
  Speaker 1: we see it as a stepping stone or a signal
• 1:56
  Speaker 1: of what might come down the line, what do you
• 1:58
  Speaker 1: think it would lead to.
• 2:02
  Speaker 2: Well, as a typical of an Albanesia government, spending is
• 2:07
  Speaker 2: on the rise with no accountability. In my view, you
• 2:12
  Speaker 2: should expect in not so distant future and inheritance tax,
• 2:19
  Speaker 2: possibly a reduction in abolition of fifty percent of the
• 2:24
  Speaker 2: GSC discount on capital gains, reintroduction of the policy to
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  Speaker 2: abandon franking creditory funds. And what I've been screaming about
• 2:36
  Speaker 2: and all my fears are coming through is if allowed
• 2:40
  Speaker 2: to get their way very soon. I wouldn't be surprised
• 2:44
  Speaker 2: that something you like did two ninety six will then
• 2:47
  Speaker 2: apply to private investors and other structures outside of superannuation.
• 2:54
  Speaker 1: Yes, so we'll just bring it into for the listeners.
• 2:56
  Speaker 1: You might explain what you have always compared. It's not
• 3:00
  Speaker 1: so much their tax per se, but the nature of
• 3:04
  Speaker 1: the tax. So your theory has been that if the
• 3:07
  Speaker 1: government gets the super tax up and running, which is
• 3:10
  Speaker 1: called division two ninety six, then the idea or the
• 3:14
  Speaker 1: concept of a paper gains tax is set and then
• 3:17
  Speaker 1: they could widen they could apply that more widely. And
• 3:21
  Speaker 1: if they were to do that, where would be the
• 3:23
  Speaker 1: Where do you think would it would be the first step?
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  Speaker 2: I think it will actually first step would go to
• 3:29
  Speaker 2: other structures, family trusts, private companies, private investors. I wouldn't
• 3:35
  Speaker 2: be surprised. I read an article the other day and
• 3:38
  Speaker 2: we'd said, you know, talking about these larger homes, and
• 3:42
  Speaker 2: what stops the government from saying, oh, your residential home
• 3:46
  Speaker 2: over three million dollars, you now start paying unrealized and
• 3:50
  Speaker 2: given to the Greens. They'd make that threshold to too.
• 3:53
  Speaker 2: It's not that you cannot collect these tax in any
• 3:57
  Speaker 2: other form. You know, you, if you wanted, you could
• 4:01
  Speaker 2: just increase the tax on contributions by say, from fifteen
• 4:06
  Speaker 2: percent to seventeen percent. You could start taxing pensions a
• 4:11
  Speaker 2: bit if you wanted. But now they don't want to
• 4:15
  Speaker 2: look at any other model. There is a message behind it.
• 4:19
  Speaker 2: They want to get unrealized and it's unprecedented. It's absolutely unprecedented.
• 4:25
  Speaker 2: They want to get unrealized tax into the tax regime
• 4:31
  Speaker 2: in some form of the other and then look going here,
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  Speaker 2: this is what we've been doing in this structure, so
• 4:38
  Speaker 2: why not in this structure.
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  Speaker 1: Yes, so, once you've broken the taboo as such of
• 4:42
  Speaker 1: having paper gains paper gains taxes in the system, if
• 4:45
  Speaker 1: you can do it in super then obviously you can
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  Speaker 1: do it elsewhere. That's an interesting point, you Mede about
• 4:50
  Speaker 1: the pension access. I would have thought that that's actually
• 4:53
  Speaker 1: on the cards as well, because quietly, if you like,
• 4:58
  Speaker 1: while everyone was distracted over the debate around the supertax,
• 5:00
  Speaker 1: the government did actually lift the deeming rates, didn't they
• 5:03
  Speaker 1: for the first time in four years? I mean maybe
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  Speaker 1: that was coming anyway, or do you see it as
• 5:08
  Speaker 1: a signal of a wider effort.
• 5:11
  Speaker 2: Look, you know we've My point James is we've we've
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  Speaker 2: had a finite population. Yeah, to a certain extent, you
• 5:20
  Speaker 2: can only collect that much of direct tax from a population.
• 5:26
  Speaker 2: The government has to look at the indirect tax regime
• 5:31
  Speaker 2: like DSD has to look at and this tax is
• 5:35
  Speaker 2: a finite tax to a certain extent.
• 5:38
  Speaker 1: So when you say this tax, the new supertax is
• 5:40
  Speaker 1: a finite taxes because there's only so many people in
• 5:43
  Speaker 1: ultimately in the catchment, is it correct?
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  Speaker 2: And they are older Australians that have accumulated, saved all
• 5:50
  Speaker 2: their lives, paid all their taxes and wanted to live
• 5:54
  Speaker 2: on a comfortable retirement. Yeah, they are the people so that,
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  Speaker 2: according to the government, is most impacted by this tax.
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  Speaker 2: But the average Australian does not realize with the cost
• 6:07
  Speaker 2: of living pressures, with inflation, three million dollars is never
• 6:11
  Speaker 2: going to be enough in retirement. And this is not
• 6:14
  Speaker 2: even indexed.
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  Speaker 1: You're talking in twenty years time. It's not enough, is
• 6:19
  Speaker 1: that what you mean?
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  Speaker 2: That's right, that's right, It's not going to be enough.
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  Speaker 2: It is absolutely not going to be enough. And it's
• 6:26
  Speaker 2: how this tax is designed. It's how this tax is designed.
• 6:31
  Speaker 2: It's an absolute disaster. Why don't we have round tables
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  Speaker 2: for public spending? Why don't we question that?
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  Speaker 1: Yes, we let's just have a round table on the
• 6:41
  Speaker 1: nature of this tax. So tell me as an order
• 6:44
  Speaker 1: ser specificic, you've got a very specific point of view,
• 6:46
  Speaker 1: as an order show in terms of it's easy for
• 6:50
  Speaker 1: you know, it's easy for political commentators to say, oh,
• 6:53
  Speaker 1: this tax is going to be a mess, going to
• 6:55
  Speaker 1: be very hard to introduce. But as an orderer, can
• 6:58
  Speaker 1: you tell me what are the specific hurdles in introducing
• 7:04
  Speaker 1: a new taxon on realized paper gains in super like?
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  Speaker 1: What does it mean? What will actually happen? Like from
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  Speaker 1: an icing point of view, what does it mean for you?
• 7:16
  Speaker 2: Well, it from an ordering point of view, valuations will
• 7:21
  Speaker 2: be the biggest problem. Yeah, and also to see people's retirement,
• 7:30
  Speaker 2: how do I put it nowadays? What I see in
• 7:33
  Speaker 2: trend I'll give you an example here, a trend on
• 7:36
  Speaker 2: a lot of younger generations introducing and getting into cryptocurrency. Yeah,
• 7:43
  Speaker 2: some have done really well, some have probably not done
• 7:46
  Speaker 2: that well. But let's take for an example, you've invested
• 7:51
  Speaker 2: in crypto, you have reached, for example, your three million
• 7:56
  Speaker 2: threshold because crypto has gone off over the roof on
• 7:59
  Speaker 2: say third dear two. Yeah, your total superbalance has reached
• 8:04
  Speaker 2: that threshold. And say first week of August, the market
• 8:09
  Speaker 2: crashes and you have to pay the tax.
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  Speaker 1: You've just received a bill for this sort of paper
• 8:16
  Speaker 1: gain on crypto. Let's just be let's make it ridiculous.
• 8:18
  Speaker 1: Let's say it's tripled. And then you've received your bill
• 8:22
  Speaker 1: in early July and you find that actually the crypto
• 8:27
  Speaker 1: has halved.
• 8:29
  Speaker 2: Yep, how are you going to pay the tax? How?
• 8:35
  Speaker 1: That's what's on pre sidented? Is it? That's the unprecedented
• 8:38
  Speaker 1: nature of it. Yeah.
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  Speaker 2: Ok, And that's just one of the examples, just one
• 8:45
  Speaker 2: of the examples. Say, for instance, you've got farmers, farmers
• 8:48
  Speaker 2: have their farmland in there. Yeah, you will have valuations.
• 8:53
  Speaker 2: This is already a very complex regime. Super annuation is
• 8:58
  Speaker 2: a very complex. Yeah, you've added one more layer of complexity.
• 9:04
  Speaker 2: And we are still billy dallying about that. He's not
• 9:07
  Speaker 2: introducing it this week or next week. He is not
• 9:10
  Speaker 2: giving any definitive timeline to the introduction either. Software companies
• 9:17
  Speaker 2: have to update their softwares to be able to you know,
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  Speaker 2: program this calculation. There is a whole industry of advisors
• 9:29
  Speaker 2: accountants that will have to re educate. And all he says,
• 9:35
  Speaker 2: this tax has been there for two years. It's very
• 9:37
  Speaker 2: hard to put advice and it's very hard to put
• 9:41
  Speaker 2: legislation into practice if you don't actually legislate and you
• 9:46
  Speaker 2: have to give a twelve month period. That's what he promised.
• 9:49
  Speaker 2: But I know what he's going to say.
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  Speaker 1: You had two years, that's right, but we haven't had
• 9:53
  Speaker 1: two years because there's no clarity. Do you think he
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  Speaker 1: might Ultimately a lot of people say, look, you're all
• 10:01
  Speaker 1: getting wound up about this. And in the end, the
• 10:05
  Speaker 1: government always indexes these measures, But do you think the
• 10:09
  Speaker 1: indexing is inevitable or not.
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  Speaker 2: I don't trust the government to come through with any promises.
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  Speaker 2: I do not. Even if they say i'll index it,
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  Speaker 2: you've already brought something which is unrealized. It's payper it.
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  Speaker 2: It does not serve the purpose. It is a counter
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  Speaker 2: intuitive tax, it is regressive measure. It's punitive. People have
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  Speaker 2: not people have done the right thing by saving, they
• 10:46
  Speaker 2: have been interested in their retirement and are not relying,
• 10:52
  Speaker 2: and let me just get this right. They are going
• 10:55
  Speaker 2: to reduce the future spending on aged pensions. If you
• 11:02
  Speaker 2: say you will be self funded in your retirement, you
• 11:07
  Speaker 2: should be looking at reducing your future spend on aged
• 11:11
  Speaker 2: pensions rather than the other way. So it's actually a
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  Speaker 2: counterintuitive tax. It just doesn't apply to common logic. And
• 11:21
  Speaker 2: the frustration I have with this government is they seem
• 11:25
  Speaker 2: to make this whole over the past so many years,
• 11:31
  Speaker 2: they've made this into a divide and role kind of concept.
• 11:35
  Speaker 2: They are either putting the yes and nose in the place.
• 11:38
  Speaker 2: Now we've got the older generation and the younger generation
• 11:43
  Speaker 2: playing one against the other, saying that it's not going
• 11:47
  Speaker 2: to be you know, it's not going to affect that many people.
• 11:51
  Speaker 2: It actually is going to affect many people.
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  Speaker 1: Quite prominent people say back, coming in who heads COmON Bank.
• 11:58
  Speaker 1: Chris Cofft, the fund manager now philanthropist, says, look, it's
• 12:02
  Speaker 1: such trouble, why don't you just put in a hard
• 12:04
  Speaker 1: cap that they would actually accept a hard cap more
• 12:08
  Speaker 1: than this unrealized gains. Let's say forget about the unrealized gains.
• 12:11
  Speaker 1: Just have a hard cap. Put a number on it,
• 12:13
  Speaker 1: three million, four million, and that's it. And if you've
• 12:15
  Speaker 1: more than that, take it out of the superannuation system.
• 12:18
  Speaker 1: What do you think of that as an alternative? If
• 12:22
  Speaker 1: the paper gains is such a problem, what about an
• 12:25
  Speaker 1: alternative that removes that issue.
• 12:29
  Speaker 2: Look, it would work when it is for there is
• 12:35
  Speaker 2: effectively a cap in place. Yeah, there is effectively a cap.
• 12:40
  Speaker 1: There is effectively a cap. But it's not a hard cap.
• 12:43
  Speaker 2: It's not a hard gap. Yeah, it's a soft gap.
• 12:46
  Speaker 2: It's a soft gap. The government is still collecting the tax.
• 12:51
  Speaker 2: But if it is a hard gap, you have alternatives.
• 12:55
  Speaker 2: And that's what I'm saying, there are better alternatives. The
• 12:58
  Speaker 2: hard gap could work, or you get taxed at a
• 13:01
  Speaker 2: higher rate if you breach the hard can no problems
• 13:05
  Speaker 2: with that, But do not bring unrealized gains into the mix,
• 13:11
  Speaker 2: because what will happen is people that can withdraw, and
• 13:14
  Speaker 2: that I mean people who are over the retirement age,
• 13:18
  Speaker 2: who can withdraw over six day sixty five when you've retired,
• 13:22
  Speaker 2: they will with for example, we draw that excess amount. Yeah,
• 13:27
  Speaker 2: the government is not going to collect the tax it
• 13:30
  Speaker 2: anticipated it's going to collect. Yeah, so what are they
• 13:35
  Speaker 2: going to do? What would common sense dictate? They are
• 13:38
  Speaker 2: going to do. They are going to follow the trail
• 13:41
  Speaker 2: of money into these other structures, and that is the
• 13:46
  Speaker 2: risk that.
• 13:47
  Speaker 1: They follow it to family trust, et cetera.
• 13:49
  Speaker 2: Yes, yeah, absolutely give targeting.
• 13:52
  Speaker 1: I think that goes without saying that. All right now,
• 13:55
  Speaker 1: I want to talk to you about from being an
• 13:57
  Speaker 1: orderer and about putting this through, how it goes through
• 14:01
  Speaker 1: the system. You might just outline to people what they're
• 14:03
  Speaker 1: expected to do. I think it would be very useful
• 14:05
  Speaker 1: how it works a little by CGT, for instance, how
• 14:08
  Speaker 1: you pay the tax. It's a bill that goes to
• 14:10
  Speaker 1: you the person. We haven't had much of that in
• 14:12
  Speaker 1: super either before. How you can't claim losses, you can
• 14:17
  Speaker 1: only carry them forward. I think people have a lot
• 14:19
  Speaker 1: to learn on this, so we'll do that in the
• 14:21
  Speaker 1: second segment. Back in the moment, Hello and welcome back
• 14:32
  Speaker 1: to The Australian's Money Puzzle podcast. I'm talking to Nasrandaria,
• 14:37
  Speaker 1: and I didn't introduce it properly as usual in the
• 14:40
  Speaker 1: first segment. What's your operations name?
• 14:42
  Speaker 2: Nas? Your company Reliance Ordering Services.
• 14:45
  Speaker 1: Reliance Ordering Servicing out of.
• 14:48
  Speaker 2: Perth, Orderiting Services out of course.
• 14:51
  Speaker 1: And you were previously in one of the big groups
• 14:53
  Speaker 1: weren't you. Who were you with before you went out
• 14:55
  Speaker 1: on your own?
• 14:57
  Speaker 2: Yeah, I was with Austin Young.
• 14:59
  Speaker 1: Evil Riston Young. So you are, among other things, you're
• 15:03
  Speaker 1: dealing with these issues as both a business owner and
• 15:06
  Speaker 1: an order, so of a highly expert view. Just in
• 15:09
  Speaker 1: terms of the operation of the new supertax, just to
• 15:11
  Speaker 1: explain to listeners, as you say at the point you're
• 15:14
  Speaker 1: making in the first segment, is that because it's not
• 15:17
  Speaker 1: index folks, that means it doesn't allow for inflation. That
• 15:21
  Speaker 1: means very simply. But three million today sounds a lot.
• 15:24
  Speaker 1: Three million and ten years time won't be a lot.
• 15:27
  Speaker 1: If you think about house prices. For instance, million dollars
• 15:31
  Speaker 1: is now an average house price in major cities. If
• 15:33
  Speaker 1: you had said that to someone ten years ago, they
• 15:35
  Speaker 1: would have found it out landish. So if you don't index,
• 15:39
  Speaker 1: and there is no plan to indexes supertax, very large
• 15:43
  Speaker 1: numbers of people get caught each year in it. And
• 15:46
  Speaker 1: more than that, of course, virtually everybody in the system
• 15:49
  Speaker 1: has to be aware of it, and they will make
• 15:51
  Speaker 1: plans around it. And as Nas says, what they will
• 15:53
  Speaker 1: do is they will maneuver money away from this trap.
• 15:59
  Speaker 1: Basic and the government won't collect the tax that they
• 16:03
  Speaker 1: were hoping to collect, but in any event they will try.
• 16:06
  Speaker 1: So from a practical point of view, valuations, et cetera,
• 16:10
  Speaker 1: that's going to be just that is just going to
• 16:13
  Speaker 1: be a nightmare, I imagine coming down the line in
• 16:16
  Speaker 1: practical terms. So someone says, I've got a private company
• 16:19
  Speaker 1: it's going nowhere. I've had it for years, but you
• 16:22
  Speaker 1: know on paper it's going up, but I've never made
• 16:24
  Speaker 1: any money from it. Or a farm We've no money,
• 16:27
  Speaker 1: We've got very little income, but a farm is allegedly
• 16:29
  Speaker 1: worth the expert we don't want to sell it, but
• 16:31
  Speaker 1: we have to pay tax on it. Is that the
• 16:33
  Speaker 1: sort of thing you've been concerned about.
• 16:37
  Speaker 2: Absolutely, So we put out a publication to all our
• 16:41
  Speaker 2: account and clients and all that saying, this tax is coming. Yeah,
• 16:48
  Speaker 2: you need to start preparing for this tax in terms
• 16:52
  Speaker 2: of providing you know, comparable appraisals, valuations, making sure you've
• 16:59
  Speaker 2: got all you've got your you know, earlier the trustees
• 17:03
  Speaker 2: could give us the research that they would have done
• 17:07
  Speaker 2: to come up with the value of a particular asset
• 17:11
  Speaker 2: that they had, as long as they have given us
• 17:13
  Speaker 2: supportable information. Now I've told them going not worth taking
• 17:18
  Speaker 2: that that that call. You might as well get a
• 17:22
  Speaker 2: professional to do the job for you every year. If
• 17:27
  Speaker 2: you've got assets, as you said, you know, a private
• 17:30
  Speaker 2: company that's not been doing anything. Look at your investments strategy,
• 17:35
  Speaker 2: look at your asset mikes. You know advisors will be advising.
• 17:41
  Speaker 2: I'm sure going. Would you put growth assets into a fund?
• 17:45
  Speaker 1: That's right? Would you buy a startup in your super
• 17:47
  Speaker 1: fund in an SS? Why would you?
• 17:50
  Speaker 2: Yeah, that's exactly. They don't understand the why their implications
• 17:55
  Speaker 2: on the economy. You know, so many super funds invest
• 18:00
  Speaker 2: in startups, right, some do brilliantly well, some don't. But
• 18:05
  Speaker 2: it is actually funding startups, it is funding innovators, it
• 18:12
  Speaker 2: is helping with progress, it is helping with it's investing
• 18:18
  Speaker 2: in health education.
• 18:20
  Speaker 1: So do you think people will will do less in
• 18:22
  Speaker 1: their super funds or is it the case that there
• 18:24
  Speaker 1: will actually be that it will crimp super funds, that
• 18:27
  Speaker 1: people will actually be less likely to use self managed
• 18:30
  Speaker 1: super funds Because this is the hot spot, isn't it.
• 18:32
  Speaker 1: This is the area where this tax is going to
• 18:34
  Speaker 1: be largely most applicable.
• 18:37
  Speaker 2: Look, it's super self Let's talk about self managed superannuation funds.
• 18:43
  Speaker 2: The self managed superannuation funds became this popular is because
• 18:48
  Speaker 2: of the concept of its ability to control your own
• 18:53
  Speaker 2: savings and ability to do and invest what you believed
• 18:59
  Speaker 2: would be good for you in retirement or who do
• 19:02
  Speaker 2: you serve would serve you in retirement more than the
• 19:05
  Speaker 2: larger funds would be able to.
• 19:07
  Speaker 1: Yeah, yeah, with virtually no limits really yeah from bitcoin
• 19:12
  Speaker 1: ut Yeah, because.
• 19:14
  Speaker 2: You had no control over how the larger funds would invest.
• 19:18
  Speaker 2: You had a set plan and you were to follow
• 19:22
  Speaker 2: that plan, or follow that scheme, or follow that selection,
• 19:26
  Speaker 2: are balanced or aggressive or whatever. Here you had a choice.
• 19:31
  Speaker 2: You can put it in down deposits, you can invest
• 19:33
  Speaker 2: in chas, you can invest in startups, you can buy property,
• 19:38
  Speaker 2: business whatever, business property, I mean business, residential, commercial, whatever.
• 19:45
  Speaker 2: But you had control of what you invested in. Right,
• 19:50
  Speaker 2: That was the idea. That's why they have done so well.
• 19:57
  Speaker 2: Let's not let's get this right.
• 19:59
  Speaker 1: Is that jeopardy any fashion by the new text?
• 20:03
  Speaker 2: Why wouldn't it be? You tell me how would I
• 20:07
  Speaker 2: You just said would people invest in startups? Do people?
• 20:11
  Speaker 1: How many people? I mean? Is there is there much
• 20:13
  Speaker 1: startup investment in smsfs?
• 20:17
  Speaker 2: There would be. There would be. I get to see that,
• 20:19
  Speaker 2: I get to see that valuation of that is a nightmare.
• 20:23
  Speaker 1: It would be. It would be because obviously it's imaginary
• 20:26
  Speaker 1: to the day this company is sold.
• 20:30
  Speaker 2: You have people providing loans and advances to you know,
• 20:35
  Speaker 2: property developments. We're saying, you know, developed properties, we need
• 20:39
  Speaker 2: to build more houses. People will stop providing loans to
• 20:43
  Speaker 2: these developers. What are you going to do then? What
• 20:47
  Speaker 2: are you going to do? I have not got a
• 20:50
  Speaker 2: holistic view. This government has no holistic view.
• 20:55
  Speaker 1: Okay, all right, I think it's pretty clear where you're
• 20:58
  Speaker 1: coming from.
• 20:58
  Speaker 2: Now.
• 20:59
  Speaker 1: I think we'll take a break. We've got some questions
• 21:01
  Speaker 1: which I think are right hopefully right up Hereally as
• 21:04
  Speaker 1: an auditor, you know, I haven't had an order on
• 21:05
  Speaker 1: the show before. So much for auditors not having much
• 21:08
  Speaker 1: to say. Yes, indeed, all right, we take a break
• 21:13
  Speaker 1: back at the moment. Hello, Welcome back to The Australian's
• 21:22
  Speaker 1: Money Puzzle podcast. I'm James Kirby Tolkington nas Randaria of
• 21:26
  Speaker 1: Reliance Ordering, who operates out of Perth but has become
• 21:30
  Speaker 1: something of a national voice on superannuation, particularly the new
• 21:33
  Speaker 1: super tax. And it's manny fouls which we have dealt
• 21:37
  Speaker 1: with on the show, though it's rarely been articulated quite
• 21:39
  Speaker 1: so forcefully as today. Now, Nat, I have a couple
• 21:44
  Speaker 1: of very interesting questions here. What is from Chris? Is
• 21:46
  Speaker 1: there any rough pension eligibility calculator that you can determine
• 21:50
  Speaker 1: if you are in the ballpark for a pension before
• 21:53
  Speaker 1: you go through the PTSD inducing as Hugh Robertson would
• 21:58
  Speaker 1: put it, experience a full pension application. Yeah, is there?
• 22:03
  Speaker 2: Do you know? Yeah? I know exactly where Chris is
• 22:07
  Speaker 2: coming from. Well, there is an online tension eligibility calculator
• 22:12
  Speaker 2: available on the Center Link website. However, however, the pages
• 22:18
  Speaker 2: of form filling are unfortunately necessary. And that's the PTSD
• 22:23
  Speaker 2: that he's don't he about? And God help you. If
• 22:26
  Speaker 2: you have a family trans or a private company holding investments,
• 22:30
  Speaker 2: there are more forms to fill. My suggestion would be
• 22:35
  Speaker 2: talk to your accountant, to your financial advisor, make an
• 22:39
  Speaker 2: appointment with the Central Link Financial advisor. That is of
• 22:44
  Speaker 2: no costs. That is good support available there, and you
• 22:47
  Speaker 2: can confirm your minimum eligibility.
• 22:50
  Speaker 1: Okay, very good, very good. I'm sure that's useful to you. Chris.
• 22:55
  Speaker 1: It's interesting that both the ATO and Central Link do
• 23:00
  Speaker 1: actually have advisors available on the phone, and they will
• 23:04
  Speaker 1: offer advice something that's probably under appreciated, perhaps by investors generally. Okay, Tony,
• 23:11
  Speaker 1: last question. I love the show. We play episodes of
• 23:15
  Speaker 1: the Money Puzzle on our drives to the coast. There's
• 23:18
  Speaker 1: a lot of hand ringing about the horror of charging
• 23:21
  Speaker 1: capital gains tax on unrealized gains in super above three million.
• 23:25
  Speaker 1: My understanding is that this is not new in respect
• 23:29
  Speaker 1: of other assets in big Super, and I would love
• 23:31
  Speaker 1: to have someone on your show to check this. I
• 23:34
  Speaker 1: can see why it would be a pain for the
• 23:36
  Speaker 1: poor suffering three million plus crowd with houses in their SMSF. Now,
• 23:41
  Speaker 1: Tony's been facetious here, but if I am right, the
• 23:44
  Speaker 1: histronics about it being unprecedented are overblown. In fact, the
• 23:49
  Speaker 1: tax may just be making smsfs line up with the
• 23:52
  Speaker 1: current practice in big funds. Am I right? Technically? Is
• 23:56
  Speaker 1: he right or not? They do have to The whole
• 24:00
  Speaker 1: retirement bonus thing is off the back of them having
• 24:03
  Speaker 1: to put aside money for a tax, isn't it.
• 24:06
  Speaker 2: So? As I've mentioned, currently there is no regime where
• 24:11
  Speaker 2: unrealized tax is paid within the superannuation system. Irrespective of
• 24:16
  Speaker 2: whether the fund is large or small. Retail funds do
• 24:21
  Speaker 2: not currently pay any unrealized gains tax. In actual fact,
• 24:26
  Speaker 2: the unrealized games tax is introduced since unlike smsfs, large
• 24:33
  Speaker 2: funds find it complex to separate out the income.
• 24:38
  Speaker 1: But can I just don't. The large funds also basically
• 24:42
  Speaker 1: put aside money for the risk of having to face taxes,
• 24:47
  Speaker 1: and if you then retire and stay with them, they
• 24:50
  Speaker 1: give you a bonus, and that bonus is actually the
• 24:53
  Speaker 1: money they put aside for the tax that was expected.
• 24:57
  Speaker 2: There are there are plans that are available. Yes, there
• 25:00
  Speaker 2: are such types of plans. But what I'm saying is
• 25:03
  Speaker 2: that is not the unrealized That is not the tax
• 25:07
  Speaker 2: on realized.
• 25:08
  Speaker 1: Okay, what about land tax.
• 25:10
  Speaker 2: It's more of a result. It's like money put aside, James,
• 25:15
  Speaker 2: It's not unrealized gains, it's money put us out.
• 25:18
  Speaker 1: Some people have written insane. Land tax is unrealized.
• 25:21
  Speaker 2: Gains, definitely, and that is where my frustration. I'm coming
• 25:26
  Speaker 2: to that point exactly so on the question that unrealized
• 25:32
  Speaker 2: gains already exist, there's only two aspects in the Australian
• 25:37
  Speaker 2: tax law that unrealized gains existed. Some for one is
• 25:41
  Speaker 2: land tax, yeah, and the other one is tax if
• 25:45
  Speaker 2: you become a non resident.
• 25:48
  Speaker 1: Okay, right, yes, but even there.
• 25:52
  Speaker 2: You have a choice. You can eiger pay tax when
• 25:56
  Speaker 2: you become a non resident and you won't get tax
• 25:59
  Speaker 2: when you sell that You won't get any capital gains
• 26:02
  Speaker 2: tax when you sell that asset in the future. Yeah,
• 26:05
  Speaker 2: but because you paid the tax on that time you
• 26:08
  Speaker 2: became a non resident, or for paying the tax and
• 26:12
  Speaker 2: paid capitals gains tax when you eventually sell the asset,
• 26:15
  Speaker 2: there is a choice. In this instance, there is no choice.
• 26:19
  Speaker 1: Sorry, I'm sorry about land tax. So I mean land tax.
• 26:23
  Speaker 1: So it's it's it's on realize gains, isn't it.
• 26:27
  Speaker 2: Land tax is something you pay, okay, on the unimproved
• 26:32
  Speaker 2: value of the land. And I have written about this
• 26:36
  Speaker 2: before the fact that there is already super funds that
• 26:41
  Speaker 2: are paying land tax.
• 26:44
  Speaker 1: Right yeah. Sure, Now you.
• 26:46
  Speaker 2: Have another tax on the existing property for which you
• 26:52
  Speaker 2: already paid land tax on. It's on the unimproved value.
• 26:57
  Speaker 2: Now you wanted on the improved value.
• 27:00
  Speaker 1: So you could you could have two streams of unrealized
• 27:04
  Speaker 1: paper gains taxes if you had a property and you
• 27:07
  Speaker 1: had lands being paid by your fund over the years,
• 27:10
  Speaker 1: and then you would have a new tax on the
• 27:14
  Speaker 1: alleged or paper or on realized gain of that property,
• 27:18
  Speaker 1: even though you never sold.
• 27:19
  Speaker 2: It and it's the same asset and it's.
• 27:23
  Speaker 1: The same acid. Okay, I think that is. I think
• 27:26
  Speaker 1: we will leave it right there. Nas. That is, I
• 27:29
  Speaker 1: think you've managed to capture how daft This new tax
• 27:32
  Speaker 1: is at its most extreme, and it's probably a good
• 27:35
  Speaker 1: point for people to chew on it and take it
• 27:38
  Speaker 1: on board that this is what's coming down the line.
• 27:40
  Speaker 1: We're going to need orderers like you, Nas. Thank you
• 27:42
  Speaker 1: very much on the show.
• 27:44
  Speaker 2: Yeah, thanks, James. Just want to add one more thing
• 27:47
  Speaker 2: for Tony to think about. Really in his question, is
• 27:51
  Speaker 2: that the tax in the on index. You know, he
• 27:57
  Speaker 2: talks about the poor suffering three million dollar crowd. That
• 28:01
  Speaker 2: crowd is going to increase in the next ten to
• 28:04
  Speaker 2: fifteen years with cost of living and inflation.
• 28:08
  Speaker 1: Yes, that crowd is going to become middle I supposed
• 28:12
  Speaker 1: to work is the point I suppose that some would
• 28:14
  Speaker 1: make all right, terrific, Thanks a lot for coming on.
• 28:17
  Speaker 1: And there's Brandaria of Reliance auditing services. Thanks, let's have
• 28:22
  Speaker 1: some more emails. Please love to hear from you the
• 28:24
  Speaker 1: Money Puzzle at the Australian dot com dot au. Talk
• 28:28
  Speaker 1: to you soon.