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My wife and I are trustees in a SMSF. I am 68 and receiving a part-aged pension whilst my wife is not working and is turning 65 later this year. She is in “accumulation phase” because if she was “retired” our joint assets would exceed current aged pension qualification limits. My wife also has a small portfolio of income stocks that she derives dividends and currently receives franking credits at present. I was viewing your recent Switzer video that dealt with alternative investments should franking credits be changed if “Recession” Bill Shorten came to power and managed to make this become law.
I am quite concerned because I thought that retired people on pensions like myself (and their partners) would be exempt from the ALP’s new taxation changes, according to initial newspaper reports, however your dot point summary included SMSFs in pension phase. Now I am quite worried as 53% of our SMSF investments are in stocks with many having franking credits. As bank interest is currently negligible 40% of our investment balance is in senior bonds, unlisted property, managed funds and AREITs. Have I misconstrued your message?
As an aside, I feel strongly that the ALP, if elected, will be an economic disaster for this country as ideology (i.e. unions and the Greens influence) will rule its policies ahead of common sense and the retired middle class and small business will suffer the most. Unemployment will increase as large businesses take their investment offshore due to expensive, unrealistic energy policies and the new wages policy. Rents will rise as investment is turned away from buying homes and units (due to Labor’s property investment policy) and thereby creating a scarcity. The banks are hurting at present but Labor will kick them some more, if they can, resulting in a real credit squeeze. Banks are already over-concerned and cautious about lending to people that may not be able to afford repayments. So Labor’s idea of new home buyers being encouraged to buy will be thwarted by Labor’s discouragement of land and property investment and the banks not wanting to lend.
Sorry to be so pessimistic but I am not looking forward to Australia being governed by an anti-business ALP with crazy energy policies. The priority should be to safeguard base power first (coal or nuclear) before increasing the use of unreliable, heavily over-subsidized renewables. To think that I was an avid supporter of the ALP back in the days of Hawke and Keating. They at least understood business, not this current Leftist crowd.
Apart from my tirade could you answer my question above regarding whether I, or my wife, will be affected by Labor’s new “Retiree Tax” in our SMSF and individually for my wife with her small stock portfolio outside of superannuation.
A: I don’t think I can give you a definitive answer because the ALP has yet to articulate the detailed rules behind how the exemptions will work. This is not uncommon with changes of this nature – there will be a lot of “fine print” to be worked out.
You currently qualify for a part aged pension because your wife is under pension age and her super is not counted in the assets or income test. When she reaches pension age (which I understand to be age 66), this changes and her super will be counted in the assets test (which will be assessed as a couple). Based on what you have said, you will then cease to be eligible for a part aged pension.
While the ALP announced an exemption from their policy for SMSFs where one member was receiving a government benefit (as at 26 March 2018), and for individuals who
are receiving a government benefit, a case such as yours where you were exempt, but then lose the benefit that was making you exempt, has not been covered.
My expectation is:
