New tax laws prompt changes in retirement plans nationwide. Here's what we know
- Replies 63
For Australians keeping an eye on the news, many have been paying attention to the changes in some of Australia's services.
Many Aussies have also been abuzz with the government's new super tax changes.
So, what's all the fuss about, and should you be worried?
Starting Tuesday, 1 July, superannuation balances of over $3 million will have a tax increase from 15 per cent to 30 per cent.
However, this is not limited to the money made by selling assets.
The tax would also apply to unrealised capital gains, such as the increase in value of investments despite not being sold.
This tax rule was the first of its kind for the superannuation system.
It has also caused quite a stir among Aussies, especially seniors.
Financial advisers have observed a 'tangible sense of unease' among their clients.
As such, some wealthy retirees have already resorted to 'panic selling' their investment properties to avoid the new rules.
For those with a self-managed super fund (SMSF) and a residential property, should the property's value jump from $2.5 million to $3.5 million, they may be taxed for the $500,000 gain above the $3 million threshold.
Unlike shares, which one could sell off in small chunks to cover a tax bill, property is an all-or-nothing asset.
This change could create a real headache for SMSF trustees.
For those who do not have enough cash reserves in their fund, they may be forced to sell the entire property or find other ways to pay the tax.
And with strict rules in place about how residential properties in SMSFs can be used, the taxpayer's options are limited.
What does this mean for the property market?
Ray White's Vanessa Rader warned that these changes could make residential property a much less attractive option for investors.
If people decide to sell up before the new tax kicks in, Australians could see a surge in property listings.
This change could push property prices down for a short period.
If SMSFs start pulling out of the residential property market altogether, there could be fewer rental properties available, which might drive up rent prices.
On the flip side, some argued that the changes were targeted at a small percentage of Australians.
Yet, with property values rising across the country, more people could find themselves bumping up against that threshold soon.
What to do if you're affected by this change
Since unveiling the tax last May, it has sparked fiery debates and discussions online.
Supporters of the tax shared that it could be a fair way for the wealthiest Australians to pay their share.
However, critics argued that taxing unrealised gains could be unfair and may force people to sell assets at the wrong time.
Seniors with a self-managed super fund (SMSF) with property assets may have to sit down with a licensed financial adviser soon.
They could review portfolios, check cash reserves, and weigh in people's options and strategies fitting the new tax laws.
These advisers may also consider other investment options or restructuring holdings to avoid a tax surprise later on.
For those who have not reached the $3 million mark yet, property values could change quickly, and preparation should be the key.
Is this new tax a sensible move to make the system fairer, or is it an overreach that could hurt seniors and retirees? Have you been affected by the changes, or are you considering changing your investment strategy? We'd love to read your thoughts and experiences in the comments below.
Many Aussies have also been abuzz with the government's new super tax changes.
So, what's all the fuss about, and should you be worried?
Starting Tuesday, 1 July, superannuation balances of over $3 million will have a tax increase from 15 per cent to 30 per cent.
However, this is not limited to the money made by selling assets.
The tax would also apply to unrealised capital gains, such as the increase in value of investments despite not being sold.
Aussies with a high superannuation balance may be forced to pay more taxes soon. Image Credit: Freepik
This tax rule was the first of its kind for the superannuation system.
It has also caused quite a stir among Aussies, especially seniors.
Financial advisers have observed a 'tangible sense of unease' among their clients.
As such, some wealthy retirees have already resorted to 'panic selling' their investment properties to avoid the new rules.
For those with a self-managed super fund (SMSF) and a residential property, should the property's value jump from $2.5 million to $3.5 million, they may be taxed for the $500,000 gain above the $3 million threshold.
Unlike shares, which one could sell off in small chunks to cover a tax bill, property is an all-or-nothing asset.
This change could create a real headache for SMSF trustees.
For those who do not have enough cash reserves in their fund, they may be forced to sell the entire property or find other ways to pay the tax.
And with strict rules in place about how residential properties in SMSFs can be used, the taxpayer's options are limited.
What does this mean for the property market?
Ray White's Vanessa Rader warned that these changes could make residential property a much less attractive option for investors.
If people decide to sell up before the new tax kicks in, Australians could see a surge in property listings.
This change could push property prices down for a short period.
If SMSFs start pulling out of the residential property market altogether, there could be fewer rental properties available, which might drive up rent prices.
On the flip side, some argued that the changes were targeted at a small percentage of Australians.
Yet, with property values rising across the country, more people could find themselves bumping up against that threshold soon.
What to do if you're affected by this change
Since unveiling the tax last May, it has sparked fiery debates and discussions online.
Supporters of the tax shared that it could be a fair way for the wealthiest Australians to pay their share.
However, critics argued that taxing unrealised gains could be unfair and may force people to sell assets at the wrong time.
Seniors with a self-managed super fund (SMSF) with property assets may have to sit down with a licensed financial adviser soon.
They could review portfolios, check cash reserves, and weigh in people's options and strategies fitting the new tax laws.
These advisers may also consider other investment options or restructuring holdings to avoid a tax surprise later on.
For those who have not reached the $3 million mark yet, property values could change quickly, and preparation should be the key.
Last edited:
.png){kind=icon}
What is it with Australians & the tall poppy syndrome. If it wasn't for the people who have worked hard all their lives & don't depend on the tax payer to look after them & often have a business & employ people, you maybe without a job! And then they are punished for their hard work & trying to get ahead & support themselves comfortably. And you are right! The politicians don't pay this tax until they retire. Now is that fair??
