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Is the hype around the new super changes warranted or simply codswallop?

 

There has been a lot of media coverage regarding the superannuation law changes proposed in the recent federal Budget. 

There is even the suggestion that the government was “punished” in the recent election as a result of these proposed changes. But is all the hype warranted or is it based on ignorance?

           

 

In my view, much of the media coverage has been based on emotional hype, tugging on the heart strings that the government is somehow taking money off struggling pensioners. But if we delve into exactly what is being proposed, that’s not entirely the case. 

The $1.6m cap

Much has been made of the move to limit the amount of money a retiree can have in superannuation to $1.6m and pay no tax when in pension phase. The hype around this, in my opinion, is absolute codswallop.

According to ATO statistics, the average size of a self-managed super fund (SMSF) is around $1m and consists of two members – usually this is your average “mum and dad” super fund. This means the average individual SMSF balance is around $500k – a long way short of $1.6m.

One point that has been lost in all the media hype is the fact that the $1.6m limit is per member, not per fund, meaning an average “mum and dad” joint fund could have $3.2m in it before this change becomes an issue.

I suspect the number of joint funds with more than $3.2m in them will not be that high but even for those in that category; the earnings on the $3.2m will still be exempt from tax when in pension phase. It is only the income earned on the excess above the $3.2m fund balance that is taxable and even then it is only taxable at 15 per cent (or 10 per cent for capital gains). Even low income taxpayers earning over $18,200 pay a marginal tax rate of 19 per cent, which is higher than the 15 per cent that someone would pay on a fund balance of over $3.2m.

Given that the broad intent of compulsory super is to reduce dependence on the government to fund the age pension, in my opinion, the above mentioned change is not unreasonable. And according to the government’s budget papers, this change should impact only 1 per cent of super fund members.

That is not to say that I don’t think the proposed changes will result in some retrospective tax implications. There are bound to be some and those who will be affected will need to obtain professional advice in order to manage this.

Reducing the super contribution cap

The move to limit the maximum deductible super contribution limit to $25,000 – down from $35,000 (for those over 50) and $30,000 (for those under 50) is of serious concern to me, primarily because it appears to ignore business owners. Most business owners that I have worked with over the last thirty years invariably reinvest all their available cash back into growing their business; this is in addition to paying off their home loan and educating their children. For most people, the financial pressure of paying off mortgages and Uni fees doesn’t ease until well into their forties. Often, business owners don’t draw a full salary so don’t get the benefit of the 9.5 per cent compulsory superannuation guarantee levy (SGC).

It is only by the time they reach their fifties that they are in a financial position to contribute significantly into super and make up for the lack of opportunity in earlier years. The budget papers argue that this change will affect only 3 per cent of super fund members, however, I believe it will impact a significant number of business owners. After all, if the government is going to impose a $1.6m cap on the amount that can be concessionally taxed, why does it matter what the contribution limit is?

On the other side of the fence, I applaud the proposed changes to allow “catch up” contributions for unused caps over five years for those with a fund balance of less than $500k.

The $500k non-concessional contribution cap

Another proposed change is to limit the maximum amount a member can contribute to the fund and not obtain a tax deduction for. Previously, this was $180k per annum with no cap over your lifetime. In addition, you could “bring forward” up to three years contributions and make one contribution of $540k and repeat this every three years.

It is now proposed that there be a lifetime cap of $500k and that this includes all such contributions made, backdated to 2007. There will be no adverse consequences if contributions in excess of the $500k cap have already been made prior to budget night. However, if you have already exceeded the $500k contribution cap prior to budget night, then no further contributions will be allowed. This could result in unforeseen consequences (e.g. if future contributions were to be made in order to clear debt in the super fund). Hopefully the government will consider these implications as part of their “transitional measures”.
The government budget papers argue that less than 1% of super fund members will be affected by the change. Once again, I believe the business community has been forgotten about and that a significantly higher number of business owners will be affected.

For the reasons mentioned earlier, business owners often reinvest most of their wealth back into growing their business. Over the years I have seen a number of business owners with minimal wealth inside super, albeit that they may have accumulated some wealth outside of super. They will now be denied the opportunity to shift this into super to fund their retirement.

To conclude

In my opinion, much of the hype around the proposed changes has more to do with emotion than logic due to a lack of understanding of the proposed changes. None of the proposed changes in super will affect your average Joe, your average parents or grandparents; however, there could be serious consequences for small business owners. Considering 99.7% of actively trading businesses in Australia are classified as SMEs*, these changes could affect over 2 million business owners, so the media hype is warranted, it’s just directed at the wrong people.

 

GRANT FIELD
Wednesday, 03 August 2016
accountantsdaily.com.au

 

Locking Up Bank Accounts

 

It seems that banks are being drawn in into financial disputes with couples.  And they are responding somewhat predictability.

         

 

If any joint account holder tells the bank, or the bank find out that the joint account holders are in dispute, they may ‘block’ access to the account.

This means that no-one will be able to withdraw funds from the account.  That means that no expenses can be paid from that account – not even joint household costs.

Deposits to the account may continue. 

The bank will continue to pay interest on the credit balance in the account.  The bank will only ‘unblock’ access to the account when they receive authorisation from all account holders.

Turmoil results.  And in a protracted divorce or dispute funds would be locked up for a very long period.

 

 

 

 

Making sense of NALI

 

NALI – Non-arm's length income

Non-arm’s length income has received a lot of attention recently, particularly in regard to LRBAs. What do practitioners need to be across when reviewing the income their clients have received from their non-arm’s length investments?

         

 

NALI has not historically received a great deal of attention and many practitioners may never come across a super fund that receives NALI. However, attention has recently been drawn to the issue with the increased interest in related party lending for limited recourse borrowing arrangements (LRBAs).

In this article we will review the definition of NALI, discuss relevant case law and outline the latest position by the Australian Taxation Office (ATO) on NALI in connection with LRBAs.

Non-arm’s length income

As most SMSF practitioners are aware, the NALI provisions are an anti-avoidance measure designed to prevent income that would otherwise be taxed at personal marginal tax rates being diverted to a super fund.

The non-arm’s length component of taxable income is a super fund’s NALI less allowable deductions. NALI is taxed at the top personal marginal tax rate (MTR) which is currently 47 percent. 

NALI is excluded from exempt current pension income for assets that are supporting income streams.
Non-arm’s length income definition

The definition of NALI is contained in section 295-550 of the Income Tax Assessment Act 1997 (ITAA 1997) and involves four classes of income:

  1. Income from non-arm’s length transactions. 
  2. Private company dividends. 
  3. Trust distributions where there is no fixed entitlement. 
  4. Trust distributions where there is a fixed entitlement. 

Income from non-arm’s length transactions

Income derived from non-arm’s length transactions has three components to the definition:

  1. The income is derived from a scheme. 
  2. The parties were not dealing on arm’s length terms.
  3. The income is more than the super fund would be expected to derive if the parties had been dealing at arm’s length.

A scheme is defined as:

  • Any arrangement 
  • Any scheme, plan, proposal, action, course of action or course of conduct.

An arrangement is defined as: 

Any arrangement, agreement, understanding, promise or undertaking, whether express or implied, and whether or not enforceable (or intended to be enforceable) by legal proceedings.

As such, the definition of a scheme is very broad.

Definition of arm’s length:

In determining whether parties deal at arm’s length, it is necessary to consider any connection between them and any other relevant circumstance.

The definition of arm’s length is therefore also very broad.

Case law

The Darrelen case considered the issues of private company shares and arm’s length transactions. 

Darrelen Pty Ltd was the SMSF trustee. The SMSF acquired four of the 100 shares on issue in a private company. The SMSF paid $51,218 for the four shares in October 1995. The private company was a passive holding company which simply held 25,609,320 shares in an ASX listed company. The SMSF had effectively acquired four per cent of the private company’s 25,609,320 shareholding in the ASX listed company, being 1,024,373 shares. In October 1995, the ASX listed company’s share price was $0.58, valuing the SMSF’s indirect holding at $594,136 (1,024,373 * $0.58).

Over the eight financial years from 1995/96 to 2002/03, the SMSF received dividends totaling $950,136.
The dividends were determined to be NALI, with the key consideration being that the purchase price of the shares was so far below market value (the SMSF paid $51,218 for $594,136 worth of shares). The dividend income derived occurred from a non-arm’s length transaction, despite all dividends being paid at arm’s length rates. 

Limited recourse borrowing arrangements

The ATO holds the view that non-commercial terms in LRBAs lead to NALI. The ATO released two interpretive decisions, ATO ID 2014/39 and ATO ID 2014/40 which cover these issues. The interpretive decisions follow a number of previous private binding rulings on the topic where there has not always been obvious consistency.

The ATO’s view is that non-commercial terms lead to NALI because without the loan there would be no investment in the asset. Without the investment in the asset there would be no income, including capital gains. Therefore all income is NALI.

Arm’s length borrowing arrangement

The ATO will look for consistency with arm’s length dealings covering a number of factors including:

 

  • the nature of the acquirable asset
  • the amount borrowed
  • the term of the loan
  • the loan to valuation ratio
  • the interest rate
  • principal repayments
  • any personal guarantees
  • the actual operation of the arrangement.

Safe harbour provisions

The ATO recently issued guidelines entitled ‘Practical Compliance Guideline 2016/5’ on safe harbour provisions regarding NALI in respect of related party LRBAs. Clients who have their LRBAs on terms within the safe harbour provisions can have comfort that this aspect of their LRBAs will not result in the application of NALI.

Importantly, clients intending to rely on the safe harbour provisions must ensure that their LRBA terms comply with the provisions by 31 January 2017 for the whole of the 2015/16 financial year.  
Alternatively, trustees can benchmark their arrangement against commercially available terms and conditions and ensure that they document and retain appropriate evidence to demonstrate that their LRBA has been established and maintained on terms that are consistent with an arm’s length dealing.  

The safe harbour provisions cover LRBAs over real property (including residential, commercial and primary production) and a collection of stock exchange listed shares in a company or units in a unit trust, which cover the majority of LRBAs. Where trustees have LRBAs over other assets, they will need to ensure that benchmarking is undertaken.

Conclusion

As with all private investment arrangements, it is important to ensure that the investment provisions of relevant superannuation law are complied with. SMSF trustees must thoroughly review all income received from non-arm’s length arrangements including related party limited recourse borrowing arrangements to ensure it is not taxed at the top marginal tax rate. 

 

Julie Steed, Senior Technical Services Manager, IOOF
​Wednesday, 17 August 2016
smsfadviser.com

 

Scammers New Ploy – “You Will Be Arrested”

 

Don’t be alarmed and don’t respond – just hang up!

           

 

If it wasn’t serious, it would be laughable.  Scammers have become serial pests.

 

Taxpayers are being telephoned by scammers who in quite a friendly way, explain that they can avoid arrest by paying a fine almost always just (less than $9,999) to the Australian Taxation Office.  Arrest will NOT happen!

Your tax agent will know what recovery action, if any, is being taken by the Australian Taxation Office.

Our advice is be prepared and assume you will receive a call from a scammer.  Some taxpayers simply never answer the phone – let the answer machine screen your calls and only call back legitimate callers.

ATO exposes dodgy deductions, with examples

 

With over eight million Australians claiming work-related expenses each year, …..

….. Assistant Commissioner Graham Whyte is reminding people to make sure they get their deductions right this tax time.

           

 

“Australians claim over $21 billion in work-related expenses each year, and we want to support taxpayers to claim what they are entitled to – no more, no less,” Mr Whyte said.

“Most Australians want to do the right thing, but we are seeing mistakes, and while the amounts at an individual level are relatively small, collectively the overall impact is significant. That’s why, it is important for people to get their deductions right.

“From time to time we see people deliberately making incorrect claims. We’ve seen claims for car expenses where log books have been made up and claims for self-education expenses where invoices were supplied for conferences that the taxpayer never attended.

“Deliberately making incorrect claims is an easy way to get into some serious trouble. It’s just not worth it.”

Mr Whyte said while most tax agents are there to help you do the right thing, sometimes the ATO identifies tax agents offering special deals, inflating claims to generate larger refunds.

“If it sounds too good to be true – it usually is. The ATO takes action against tax agents who make dodgy claims, but to protect yourself, make sure your tax agent is registered. You can check on the Tax Practitioners Board website.”

Mr Whyte said in 2014-15, the ATO conducted around 450,000 reviews and audits of individual taxpayers, leading to revenue adjustments of over $1.1 billion in income tax.

“Cases involved omitted income or over-claimed entitlements like deductions. This included people making claims significantly different to those made by taxpayers in similar circumstances,” Mr Whyte said.

“Every tax return is scrutinised using increasingly sophisticated tools and data analytics developed by our ‘Data Doctors’ at the ATO. This means we can identify and review income tax returns that may omit information or contain unreasonable deductions.

“When a red flag is raised, our staff investigates further and if your claims seem unusual we will check them with your employer.

“If you’ve made a mistake, this will hold up the processing of your tax return, so it’s best to make sure you claim the right deductions from the start.”

My Whyte said this year the ATO has introduced real-time checks of deductions for tax returns completed online.

“If your claims are substantially higher than others in similar occupations, earning similar amounts of income, a message will appear, asking you to check them. This new process is just about helping you to make sure your claims are correct,” Mr Whyte said.

“If you are doing the right thing you have nothing to worry about. If you make an honest mistake we will help you fix it up and correct your tax return. We will not penalise you if you genuinely tried to get it right.

“But, if you didn’t make a reasonable or genuine attempt to get it right or are intentionally doing the wrong thing, you may receive a penalty.

Mr Whyte said it was easy to keep on the right track with your work-related expense claims by remembering three golden rules.

“One, make sure you spent the money yourself and were not reimbursed. Two, make sure it is related to your job, and not a private expense. Three, keep a record to prove it,” Mr Whyte said.

“We’ve got a range of guides including specific occupation guides on our website to help people understand what they can claim. If you use a tax agent, you can also ask them for advice on the right things to claim.

“You can also make it easier on yourself by using the myDeductions tool in the ATO app to record your work-related expenses on the go. You can then upload directly into your next tax return just like your pre-filled information.”

For more information on work related expenses, visit ato.gov.au/deductions
For guides on deductions for specific industries and occupations, visit ato.gov.au/occupations

Case Studies

Case study one

A railway guard claimed $3,700 in work-related car expenses for travel between his home and workplace. He indicated that this expense related to carrying bulky tools – including large instruction manuals and safety equipment. The employer advised the equipment could be securely stored on their premises. The taxpayer’s car expense claims were disallowed because the equipment could be stored at work and carrying them was his personal choice, not a requirement of his employer.

Case study two

A wine expert, working at a high end restaurant, took annual leave and went to Europe for a holiday. He claimed thousands of dollars in airfares, car expenses, accommodation, and various tour expenses, based on the fact that he’d visited some wineries. He also claimed over $9,000 for cases of wine. All his deductions were disallowed when the employer confirmed the claims were private in nature and not related to earning his income.

Case study three

A medical professional made a claim for attending a conference in America and provided an invoice for the expense. When we checked, we found that the taxpayer was still in Australia at the time of the conference. The claims were disallowed and the taxpayer received a substantial penalty.

Case study four

A taxpayer claimed deductions for car expenses using the logbook method. We found they had recorded kilometres in their log book on days where there was no record of the car travelling on the toll roads, and further enquiries identified that the taxpayer was out of the country. Their claims were disallowed.

Case study five

A taxpayer claimed self-education expenses for the cost of leasing a residential property, which was not his main residence. The taxpayer claimed he had to incur the expense of renting the property as he ‘required peace and quiet for uninterrupted study which he could not have in his own home’. This was not deductible.

In addition to the rental expenses, the cost of a storage facility was claimed where ‘the taxpayer needed to store his books and study materials’. They claimed they needed this because of the huge amount of books and study material associated with his course and had no space in his private or rented residence where these could be housed. This was not deductible.

The cost of renting the property was around $57,000, with additional expense of $7,500 for the storage facility. The actual cost of the study program he attended that year was only $1200.

 

ATO
16-8-2016

Ransomware – BEWARE!

 

In our role as a domain hosting company we see much of the dark side of the Internet including hacking, viruses and server attacks.  Of these, Ransomware is one of the worst and most insidious.

However, if attacked and if you’re quick to shut down your computer (even pull the power cord out if need be) then you may be able to avoid issues even if the ransomware encrytion process has started.     

                 

To most of us an e-mail, with an attachment or a link, that’s supposedly from a credible source such as the Australian Federal Police (AFP), ATO or Australia Post (a popular faux-sender because of the levels of online shopping) appears like something that should be opened.   Unfortunately, too many think this and every day more computers are being taken-over and people extorted (see Symantec’s example below).  Be very careful.  
 
A test: If something seems important but comes from a source that seems wrong (the AFP notifying you of a traffic fine) then just delete the e-mail immediately.   However, this is being made more difficult as some organisations are increasingly using e-mails to send documents as a way to cut mailing costs, and most don’t advise of this change.  At the moment, scam e-mails claiming to come from Australia Post are being clicked on way too often.  If unsure you can always check the ‘sender’s’ website (the AFP site, for example, mentions the e-mail scam that relates to them) or give them a call. 
 
If you are hit then there is little time to act but you have a chance if you’re quick.  Also if you’re on a network and the other computers have shared files and folders then they too will be infected instantly.  All such computers need action taken immediately as well.  Tip:  Ensure what's ‘shared’ between computers is minimised as much as possible.
 
Firstly, your security software should react immediately when it detects the fact you’ve just unleashed some malware and display a pop up message.  Often these displays are quick so be vigilant, and if you can set them to display for longer, then do so. 
 
Secondly, if there is ANY indication of Malware/Ransomware THEN SHUT YOUR COMPUTER DOWN IMMEDITELY.  Ransomware needs a bit of time to encrypt/lock files, etc and only shutting your computer down will stop it.  Ransomware is usually an executable file so when restarting your computer, in most cases, it should not restart the malware itself.  
 
Finally, scan the computer using your security software such as Microsoft Security Essentials or Norton. But equally important is to run specialist malware software as well.  If you don’t have such software then a good option is Malwarebytes Anti-Malware software.  Go to their site, install the free software (you can upgrade later if you want) and scan again.  When done and all malware is removed then re-boot your computer again.  With any luck you will be able to continue.
 
Preventive maintenance: 
1.      Make sure your security software is always up to date, this usually happens automatically.
2.      Updated system and application software helps also.    
3.      Scan regularly.
4.      Back-up your data regularly, even if only your personal files, to an external/cloud drive or a flash drive.
 
It’s not uncommon to receive 3-4 Ransomware e-mails a day, so be careful.  Ransomware can also be downloaded by visiting malicious or compromised websites, so be careful there too.
 
A bit of history:
 
Ransomware first emerged in Russia and Eastern Europe in 2009 and is largely run by professional cybergangs.  
 
An example of why criminals do this sort of thing as investigated and documented by Symantec:  
 
$33,600 in one day!!
 
Symantec experts analysed how criminals monetise the scheme.  In the month-long period the experts studied one specific attack in more detail and 2.9 per cent of compromised users paid out. This may seem like a small percentage, but it pays off for the criminals:
 
•        During the month 68,000 computers were infected: the equivalent of 5,700 every day.
•        Ransomware typically charges between US$60 to US$200 to unlock the computer.
•        On a single day, 2.9 per cent or 168 users paid the ransomware, permitting the criminals to potentially earn US$33,600; which means the criminals can make up to $394,000 in one month.  There are many types of Ransomware.
 
NB:  Be careful of this also:  Another version of Malware is FAKEAV.  Instead of capturing the infected system or encrypting files, FAKEAV coax users into purchasing their bogus anti-malware software by showing fake anti-malware scanning results.  

Beware!  Beware!  Beware!  
 

Peter Graham

AcctWeb / PlannerWeb

No Change to Super Fund Borrowing Rules (yet)

 

The federal government has announced it does not agree with the Financial System Inquiry’s (FS) recommendation ….

…. to prohibit limited recourse borrowing arrangements (LRBA) by superannuation funds.
 

                 

 

At this time there is not enough evidence to justify a major policy change.

What was the mischief?

What is the loss of revenue, if any?

Many advisers of SMSF struggled to find any justification for this perceived problem and it seems that the Government agreed.  Therefore, trustees and financiers can continue with structures that include SMSF borrowing.

The government does recommend the monitoring of LRBAs by the Council of Financial Regulators and the Australian Taxation Office will review any risk associated with LRBAs, and report back in three years.

 

AcctWeb

Property to remain at top of ATO’s hit list

 

One national accounting network has tipped that SMSF property investment will be a big-ticket item on the compliance agenda in 2016.

             

Given the growth in the SMSF sector and the increasing popularity of strategies such as limited recourse borrowing arrangements (LRBAs), H&R Block predicts that property will remain a top priority for the ATO’s compliance work in the sector this year.

“I know the ATO always keeps a close eye on property investment and especially LRBAs,” director of tax communications at H&R Block, Mark Chapman, told SMSF Adviser.

The ATO foreshadowed in an announcement late last year that LRBAs could be an increased area of focus in 2016.

This particularly applies to related party borrowings which may currently be structured on non-commercial terms, with the deadline to have these structures rectified being June 30 this year.

Speaking more broadly, Mr Chapman believes the ATO will continue to insist on monitoring compliance regarding rental property income and deductions, following the 2015 campaign which saw 500 postcodes issued with warnings that urged holiday home owners to ensure deductions were not made during periods in which a property was not available for rental.

“With property rental a valuable source of extra income for millions of taxpayers, it can be expected that the ATO will follow up with some targeted reviews and audits this year,” Mr Chapman said.

He also noted that the ATO will up the ante in a crackdown and investigation of the ‘sharing economy’, “driven in part by the high levels of non-compliance amongst those driving for Uber or renting rooms through Airbnb”.

“The ATO was caught unawares by the growth of the sharing economy and has had to play catch-up to avoid being left behind in terms of tax collections and voluntary participation,” noted Mr Chapman.

They’ll now want to make up for lost time and make their presence felt.”

Small businesses are also set to find themselves in the tax office's sights, with Mr Chapman warning those businesses that are currently stretching their entitlements and utilising ‘creative’ financial measures regarding their $20,000 small business tax write-off.

“As taxpayers start to submit tax returns including claims under the instant asset write-off rules, we reckon these deductions will be closely scrutinised by the ATO and there is likely to be high-profile audit action against those who are stretching or breaking the rules,” he said.

 

Written by Katarina Taurian
​Friday, 29 January 2016
smsfadviseronline.com.au

Turnbull stands firm amid SG freeze speculation

 

Prime Minister Malcolm Turnbull has attempted to dispel talks that the government is looking to freeze the superannuation guarantee (SG) rate …..

.. ….. indefinitely at 9.5 per cent in an attempt to boost the federal budget.

           

On Friday last week, The Australian reported that the federal government is preparing to “permanently halt” any further rises to the SG.

The newspaper reported that the halt to further increases to the SG would “recoup billions of dollars for the federal budget” and help fund income tax cuts in a reform package to be taken to the next election.
Later that day, Mr Turnbull said the government had “no plans to change the rise in compulsory super”.

“We are having a very lively debate about tax and economic reform, and so all sorts of proposals are swirling around and […] we are considering all of those things,” he said, speaking to reporters in Canberra.

The Association of Superannuation Funds of Australia (ASFA) said the SG is scheduled to increase from 9.5 per cent to 10 per cent in 2021, and then incrementally up to 12 per cent by 2025.

Keeping the SG rate at 9.5 per cent instead, ASFA said, would only reduce the retirement incomes of the majority of older Australians.

ASFA chief executive Pauline Vamos said that due to the ageing population, Australia will need to deal with a larger proportion of retirees and greater expenditure on health and aged care in the coming years.

“Future governments need to have the flexibility to ensure that the most vulnerable are adequately cared for and as many as possible are funding their retirement needs,” she said.

“The SG is a crucial pillar of the retirement incomes system, as it enables a significant proportion of Australians to predominantly self-fund their retirement, reducing reliance on the Age Pension. However, the system is still maturing and we have not yet seen the full scope of these benefits.”

According to estimates by ASFA, retaining the SG rate at 9.5 per cent would result in around 40 per cent of retirees relying on the full age pension by 2050.

“If we are looking to the system to supplement or replace the Age Pension, and to ensure that as many Australians as possible are able to achieve a comfortable retirement, then the scheduled increase in SG is a material factor in allowing the system to meet its goals,” said Ms Vamos.

Australian Institute of Superannuation Trustees chief Tom Garcia also agreed that “leaving the SG rate at 9.5 per cent will not deliver an adequate retirement income for many working Australians, with middle-income earners and women – who currently retire with about half the super of men – particularly vulnerable”.

Mr Garcia said any further delays to reaching 12 per cent by 2025 would create unnecessary uncertainty for workers and employers alike.

He also noted the widespread benefits of superannuation for the economy, including funding much-needed infrastructure development and reducing long-term pressure on the federal budget.

“Australia’s compulsory retirement savings system is the envy of other countries, who are now battling to support unfunded pensions, such as what we’ve seen occurring in Greece,” said Mr Garcia.

“Lifting the super rate to 12 per cent is about taking the right steps now for the long-term benefit of Australia.”
 

Written by Tim Stewart
​Monday, 08 February 2016
smsfadviseronline.com.au

Tax breaks, education and access to advice key to successful transition to retirement

 

As pressure grows for the Federal Government to scrap the superannuation tax concessions, ….

…. an international survey found most respondents believed tax breaks on long-term savings and retirement products would encourage them to save more for retirement.

           

The Aegon Center for Longevity and Retirement, Retirement Readiness Survey 2015 revealed a further 18 per cent felt that better financial education would improve their ability to plan for their retirement, while another 17 per cent believed improved access to advice would be crucial to securing a successful transition to retirement.

“Given the current pressures on public finances in many countries, it is crucial that governments maintain a commitment to tax incentivized long-term savings,” the report said.

“Across many of the countries in our survey, governments recognize their role in promoting access to information and advice, but there is still much progress to make.”

The survey found that just 14 per cent of Australians aged 55 or older believed they would retire before reaching 65, compared with the global average of 26 per cent.

However, 77 per cent of Australians envisioned that they would have a flexible transition to retirement, while only 55 per cent of respondents internationally believed they would be able to follow that path.

The survey also found that Australian workers over 55-years-old were more likely to be offered retraining or reskilling opportunities (12 per cent) than their peers around the world (nine per cent).

Australian workers were also more likely to be offered the chance to more from full-time to part-time employment (38 per cent) than those overseas (27 per cent).

 

By Nicholas O'Donoghue 
29 January 2016
accountantsdaily.com.au
 

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