AN important issue that should be contemplated by the retired residents in our area is how we pass on our assets to the next generation.
This is something that we would like to happen in a tax-effective manner which provides an additional benefit to our families.
Governments of different philosophical outlooks fashion taxation remedies in order to achieve their objectives.
Our present Labor government operates on the left of the economic spectrum and believes each generation should survive on its own endeavours.
Therefore it seems they are not keen to have us pass on our savings and assets to the next generation.
The alternative major political group from the right wing of politics likes the idea of wealth creation and its eventual transfer to the next generation, so would frame their tax policies in order to assist that process.
The argument is about the perception of equality and how that might be achieved equitably.Media reports suggest that a large number of new trusts are being created to isolate current assets to a package that can be left to our children without attracting debilitating taxes which reduces their inheritance.
So why is the sudden rush to sort this issue so obvious at the present time?
Basically, it is an immediate reaction to the proposed restructuring of our superannuation benefits.
This is set to be enacted when the new year’s budget is brought forward by the Treasurer in May.
The reforms have been agreed to by the Green Party, so the numbers are there to have these changes implemented.
Under the reforms, the tax rate on earnings for super fund balances over $3m will double from 15 percent to 30 percent.
Those with balances above $10 million will face a new tax rate of 40 percent.
The stated reason is to discourage a build up of assets in order to provide an amount which can be left to our beneficiaries, rather than spent on funding the latter days of our retirement.
Whilst this situation will need to be accepted once passed into law, it will be other matters that have not been aired publicly which will become the “devil in the detail”.
We are already required to withdraw a cash amount every year as a stated percentage depending on our age at that time.
We don’t have to spend that amount but if it is sufficient to reinvest that balance, then this is done outside super and attracts a higher tax rate.
By John BLACKBOURN
You can help your local paper.
Make a small once-off, or (if you can) a regular donation.
We are an independent family owned business and our newspapers are free to collect and our news stories are free online.
Help support us into the future.
