nah. High earners shouldn't get a better tax concession than low earners.
I say this as someone who pays div293. The objective of div293 is to keep the tax benefit of concessional contributions approximately the same across brackets.
Not a div293 payer here, but the flaw in your argument is that if the definition of 'high earners' isn't adjusted with inflation then it's effectively a policy to lower that bar over time.
it makes "sense" in the way that it targets a specific group of high income earners, because those earners cannot avoid it or dodge it (like one would if one were an even higher earner but not from income).
it's not that kind of tax.
if you earn 100k your marginal rate is 32.5% so concessional contributions save you 17.5%. Without div293 at 300k your saving would be 30%. That's unfair. It's the opposite of what a progressive system should be.
> That's unfair.
the "fairness" is a post-facto justification. Is it any more unfair than CGT of 50% for holding it for a year?
I claim that div293 targets a group of high earners, because those earners don't have enough political representation nor sympathy from the majority to fight against it. That's the reason it still exists.
In other words, they're the group that's carrying a cost that others who might've been even higher earners, don't pay.
lotta mental gymnastics here.
the reasoning is pretty simple. The tax benefit of concessional contributions should be approximately the same across brackets. That's just logical really.
Wasn’t it lowered from $300k to $250k a number of years ago?
I also think we’re not too far off the TSB being increased. I believe it just missed out triggering an increase to $2.1 million this year.
I’m lucky that my total remuneration falls into the “just right” zone, so I pay the top rate of tax, but not so much that I get hit with any Div293, so it’s an easy win to just shovel all my earnings in the 45% bracket straight into super instead.
attaching it to the tax brackets makes sense, but not the concessional cap. The point is that everyone gets the same tax discount for concessional contributions.
If you want to give away more money to daddy government, make some discretionary payments to the ATO.
I already work >40% of my week to line the government’s pockets. They don’t need more.
ah yes the classic if you don't pay more than your tax obligation you can't advocate for better policy argument. Never seen that before.
if the ATO let me pay 0% that's what I'd do. Doesn't make it a good policy.
I thought it was originally calculated to kick in at about the same income level that you would hit the concessional contribution cap with just employer super guarantee? Given the contribution rate is also slowly increasing you still hit the new cap on about $250k.
Could be wrong about how the $250k was arrived at, maybe it was just an arbitrary "high income" amount.
The whole tax treatment of super lacks any consistent set of principles.
The principled approach is to:
1. Limit specially tax treated super balances to a level appropriate for tax advantages, something like $600K total balance. After that there should be other accounts which have no special tax treatment or rules, beyond the mandatory default contributions.
2. Have no tax at all for the tax advantaged super contributions, and no tax of super earnings.
3. Count any withdrawals from the zero tax super, either for retirement income or inheritance as taxable income.
4. Mandate 5% annual withdrawal from special super after pension age.
You can still put in extra an $120k non-concessional per year (+2 years bring-forward) which will allow the earnings on your investment to be taxed at the lower rate vs investing outside. Won't save you any tax when you make the contribution though.
Also carry forward of unused caps from up to last 5 years if balance is less than $500k.
SMSF now have $2,300 more debt servicing capacity. Before they could only afford $27,500 of out of pocket expenses. Now they can afford $30k of interest rates payments after rent is collected. Owner Occupiers just got a little bit harder to get in the market or to stay in the market.
They are arranged by 'top' or 'hot' thread, not by new which is Reddit's default setting.
Hence you can't apply your own experience to what other people use.
If it wasn't on the top/hot then people will miss it. I don't use order by 'new', as I don't like viewing dead threads.
/cheer Just got a pay rise so I'll leave the same contributions.
Definitely salary sacrificing more to meet the cap. Yay! More tax savings
Now raise Div 293 threshold too please
nah. High earners shouldn't get a better tax concession than low earners. I say this as someone who pays div293. The objective of div293 is to keep the tax benefit of concessional contributions approximately the same across brackets.
Not a div293 payer here, but the flaw in your argument is that if the definition of 'high earners' isn't adjusted with inflation then it's effectively a policy to lower that bar over time.
kind of. But then div293 should be attached to the tax bracket not the concessional cap
It should ALL be linked to inflation. Make it simple.
I don't disagree. But it's currently not so it makes no sense to link div293 to the concessional cap.
it makes "sense" in the way that it targets a specific group of high income earners, because those earners cannot avoid it or dodge it (like one would if one were an even higher earner but not from income).
it's not that kind of tax. if you earn 100k your marginal rate is 32.5% so concessional contributions save you 17.5%. Without div293 at 300k your saving would be 30%. That's unfair. It's the opposite of what a progressive system should be.
> That's unfair. the "fairness" is a post-facto justification. Is it any more unfair than CGT of 50% for holding it for a year? I claim that div293 targets a group of high earners, because those earners don't have enough political representation nor sympathy from the majority to fight against it. That's the reason it still exists. In other words, they're the group that's carrying a cost that others who might've been even higher earners, don't pay.
lotta mental gymnastics here. the reasoning is pretty simple. The tax benefit of concessional contributions should be approximately the same across brackets. That's just logical really.
So when raise it, under what conditions? When the median income is $250k? There has to be an anchor point.
Wasn’t it lowered from $300k to $250k a number of years ago? I also think we’re not too far off the TSB being increased. I believe it just missed out triggering an increase to $2.1 million this year. I’m lucky that my total remuneration falls into the “just right” zone, so I pay the top rate of tax, but not so much that I get hit with any Div293, so it’s an easy win to just shovel all my earnings in the 45% bracket straight into super instead.
attaching it to the tax brackets makes sense, but not the concessional cap. The point is that everyone gets the same tax discount for concessional contributions.
Mate, this is /r/AusFinance. The median income *is* 250k.
If you want to give away more money to daddy government, make some discretionary payments to the ATO. I already work >40% of my week to line the government’s pockets. They don’t need more.
ah yes the classic if you don't pay more than your tax obligation you can't advocate for better policy argument. Never seen that before. if the ATO let me pay 0% that's what I'd do. Doesn't make it a good policy.
I thought it was originally calculated to kick in at about the same income level that you would hit the concessional contribution cap with just employer super guarantee? Given the contribution rate is also slowly increasing you still hit the new cap on about $250k. Could be wrong about how the $250k was arrived at, maybe it was just an arbitrary "high income" amount.
The whole tax treatment of super lacks any consistent set of principles. The principled approach is to: 1. Limit specially tax treated super balances to a level appropriate for tax advantages, something like $600K total balance. After that there should be other accounts which have no special tax treatment or rules, beyond the mandatory default contributions. 2. Have no tax at all for the tax advantaged super contributions, and no tax of super earnings. 3. Count any withdrawals from the zero tax super, either for retirement income or inheritance as taxable income. 4. Mandate 5% annual withdrawal from special super after pension age.
Not till next FY
That’s only a few months away.
You dont get the tax back for the contribution until july 25 though
You can salary sacrifice to the higher cap as of July 1 2024.
But you lose out on 30 percent for a year as you dont get refunded the tax back till later
You don't pay the tax in the first place because salary sacrificed contributions come from your income before tax, that's literally what it means.
Where did i say it was salary sacrificed not voluntary super contributions
You literally replied to a comment about salary sacrificing superannuation and claimed that you lost out on 30%. You're wrong, it's okay it happens.
I meant voluntary super contributions as i cant do salary sacrifice. I know what i meant, even if it was out of context
Awesome, you meant something other than what we were discussing. Why can't you salary sacrifice?
No you get the tax benefit each pay cycle
Not for voluntary super contributions
You do when you salary sacrifice them
Not all companies support it
Will this affect the 15k per year max contribution to the FHSS?
Different things
In that, you'll be more able to do a concessional contribution of 15k without reaching your cap, yes. Otherwise, no.
So if you are 400k a year, you will hit the cap. Is there a tax friendly way of investing in super above the cap?
You hit the cap at $273k at 11% contribution
Employers are only obligated to pay up to the max contributions cap each quarter so SG won't actually breach the cap.
Yeah you keep contributing but trigger Div 293. So not as tax friendly but more friendly than not contributing. At least I think.
You can still put in extra an $120k non-concessional per year (+2 years bring-forward) which will allow the earnings on your investment to be taxed at the lower rate vs investing outside. Won't save you any tax when you make the contribution though. Also carry forward of unused caps from up to last 5 years if balance is less than $500k.
SMSF now have $2,300 more debt servicing capacity. Before they could only afford $27,500 of out of pocket expenses. Now they can afford $30k of interest rates payments after rent is collected. Owner Occupiers just got a little bit harder to get in the market or to stay in the market.
Now adjust the tax brackets for inflation please
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Plenty of people save $10k-$30k save year for retirement.
>who’s got money to put into super? The concessional cap is based on AWOTE, so by definition the answer to your question is: "The average person".
How many times does this need to be posted? EDIT why the down votes. Was posted a day ago https://www.reddit.com/r/AusFinance/s/UNZwdXzVnt
This many because I haven’t seen this before
https://www.reddit.com/r/AusFinance/s/UNZwdXzVnt
Sorry... I checked through the sub and couldn't see any other posts... did we all post at the same time?
First time I've seen it
https://www.reddit.com/r/AusFinance/s/Mb5XxnMmxS A day ago
I didn’t know thanks!
First time I’ve seen it.
Clearly not looking very hard https://www.reddit.com/r/AusFinance/s/UNZwdXzVnt
I heard a rumour last week, haven't seen it for real yet.
https://www.reddit.com/r/AusFinance/s/UNZwdXzVnt
That thread is deader than this one. No wonder I missed it. It isn't even on the top or hot.
I just scan the sub in date order of post every day or so. That way you miss nothing.
That's cool - not something I do as I prefer discussion threads.
Isn't that how you find the thread though? How do you find them?
They are arranged by 'top' or 'hot' thread, not by new which is Reddit's default setting. Hence you can't apply your own experience to what other people use. If it wasn't on the top/hot then people will miss it. I don't use order by 'new', as I don't like viewing dead threads.
Thanks, yes I always choose new. Same for all social media. Also ignore the feed, again same.
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As a sole trader you have complete freedom to decide your contributions level.
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That's not forced.
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how is that different to anyone else?
I think there’s a humble brag about being a sole trader in there for some reason? Idk
It’s “forced” in the sense that otherwise they’d be leaving the maximum benefit on the table.
That's not forced.
Yes that’s why I put it in quotes.
Why do you say you are forced to max it out? How’s that got anything to do with being a sole trader?