Genders and Partners | Top 10 Estate Planning Predictions For Australia - Lawyer Adelaide

Earning the Age Pension in Australia

Genders and Partners | Top 10 Estate Planning Predictions For Australia - Lawyer Adelaide

The Age Pension was initially introduced in Australia in 1909 when the average life expectancy was below the eligibility age. It was thought that most people would not live long enough to receive it, and those that did would not get it for long.

The pension was designed to provide income support to older Australians who meet age and income requirements.

It is funded by Australian taxpayers and it accounts for a huge and growing chunk of our national expenditure.

Where Did My Pension Go

Where Did My Pension Go@2x

In our shrinking world where travel and communication are faster and easier than ever before, it seems that ‘foreigners’ are being officially targeted by every government in the world.

The issue is everywhere in the media at present. Foreign corporations not paying enough local tax. Cashed-up foreigners trying to buy big chunks of our real-estate. From anti-migration walls to offshore detention facilities, it seems that the people holding the purse-strings are blaming foreigners as the reason for our economic decline.

So how likely is it that the Government would try to reduce the pension entitlements for Australians from migrant backgrounds as part of a budget-savings measure?

Negative Gearing hot potato or poison pill?

Negative Gearing – hot potato or poison pill?

Negative Gearing hot potato or poison pill?

In Australia over the last 30 years, any spending in pursuit of rental income from an investment property is tax-deductible, unless the spending is of a capital or private/domestic nature. This is known as ‘negative gearing’.

The owner can claim a deduction for the cost of repairing an investment property, but not initial repairs when the property was first purchased.

Some commentators think that negative gearing has distorted the housing market. They point to negative gearing as one of the main factors in housing affordability having halved in real terms over the last 30 years since negative gearing has been in place.

Increased tax on Super income

Increased tax on Super income

Increased tax on Super income

Earnings from superannuation accounts for retirees in the pension phase are currently tax­free.
In April 2015 the Federal Opposition (Labor’s Bill Shorten) proposed that Super earnings $75,001 and above be taxed at 15 per cent. The Labor Party estimates that would affect about 60,000 people and raise $9.2 billion over 10 years.
I predict that the Government will introduce a threshold above which extra rates of income tax will apply to Super income. Whether that threshold is $75,000 or $150,000 or some other number, I don’t know. But I’d be willing to bet that it’s too big a honey-pot for governments to resist for much longer.

Genders and Partners | Top 10 Estate Planning Predictions For Australia - Lawyer Adelaide

Estate Planning Predictions for Australia to Compel workers to regularly disclose and remit super SGC and PAYG tax

Genders and Partners | Top 10 Estate Planning Predictions For Australia - Lawyer Adelaide

OK, OK – I admit this one is not directly related to estate planning. And I also freely concede this one is more speculative then my other predictions. However I stand by it.

At the moment, some employers do not have to withhold PAYG tax or SGC for some workers, ESPECIALLY if those workers are not classified as permanent employees: ie casual workers; workers who work below a threshold number of hours per week; workers earning less than a certain threshold amount of income; independent contractors.

There is an administrative burden for businesses to be the collection-agent for the Government, and so if a business can legitimately arrange its affairs to minimise that burden, it will probably do so. So… businesses might insist on categorising workers as independent contractors, and so leave the issues of SGC & PAYG to the worker to sort out.