Menzies House

The Art Of Self Managed Super

Michael Levitt argues reforming Self Managed Super Fund legilsation, particularly as applies to art, to remove the "excessive and intrusive Governmental regulation, a nanny state mentality, absurd economics, selective discrimination against the art industry and Mao-style cultural censorship":

I strongly support the Government’s right to encourage investment for the purposes of retirement by offering tax concessions for legitimate superannuation investments. Yet, despite creating these tax concessions, the Government remains uncomfortable about providing them. They seem to regret the loss of tax revenue, especially where an SMSF director also uses the investment for immediate and pragmatic benefit.

In order to eliminate inappropriate access to tax concessions for non-investment, immediate-use items, the Government has relied upon a definition of legitimate superannuation investment referred to as “The Sole Purpose Test”. According to this standard, a legitimate SMSF investment must be demonstrably for the purpose of delivering income in retirement. By irrational extension, they have also determined that anything that also provides immediate benefit must be inherently unable to provide income upon retirement.

Art as an SMSF investment represents an awkward problem for the Government. Art can be an excellent long term investment but there is widespread ignorance and scepticism about what makes any particular piece of art likely to appreciate in value over time. To the unfamiliar, art investment can seem random and illogical. Meanwhile, hanging a piece of art delivers an undeniable immediate benefit. Doubtless, many pieces of art that have been acquired by SMSFs in Australia over the last 20 years or more were, from the start, unlikely long term investment prospects; indeed, many of these will have been purchased primarily for decorative purposes while still attracting a tax concession. 

Reform

Brent explains the many failures of our compulsory superannuation system and why it needs reform.

As our great country was founded on regulation and government interference, to appease those scared of true free markets, I’m sure we’ll have plenty of ‘policy wonks’ out there able to work up a list of rules associated with this to perpetuate the need for Canberra to exist.

It surprises many, if not all those who have watched their compulsory retirement funds shrink, that the government is not held responsible for such loss. GC.Ed.

This word is as overused in politics as ‘champion’ is in sports. It’s one of those words that seemingly applies to any little change government enacts. I don’t mind the Prime Minister announcing an eight-month election campaign; it means the date-of-death for a disastrous government can be etched into its proverbial tombstone. It also, and more importantly to this punter, allows us to take a broad look across the country to prioritise areas in desperate need of genuine and worthwhile reform. One particular issue I believe needs attention is the way Australians are forced to ‘plan’ and ‘invest’ for their own retirement. While few choose to believe it, superannuation is a tax. The current ‘three pillars’ approach to retirement income is as follows:

• A safety net consisting of a means-tested Government age pension system (this requires a separate article);
• Private savings generated through compulsory contributions to superannuation; and
• Voluntary savings through superannuation and other investments.

Ex-Servicemen & Women Fight For A Fair Go

Allan Essery exposes our "Recalcitrant Labor Government" in their shoddy treatment regarding superannuation of ex-service personnel in comparison to that awarded to politicians.

This is part 1 of 3 and many will find the treatment of our ex-diggers a national shame. Watch out for parts 2 and 3.

Ex-servicemen and women on military superannuation pensions are in an acrimonious dispute with a recalcitrant Labor government that dishonestly claims that it can’t afford the equitable indexation of their contracted superannuation.
Ex-service superannuants are calling for their superannuation to be indexed at the same rate as the Aged welfare and other pensions because the present method of indexation leaves them out of pocket and does not keep pace with the cost of living.

After WWII the government of the day decided that Defence Forces personnel should be part of a superannuation scheme to prepare them for their retirement.  The scheme was called the Defence Forces Retirement Benefit (DFRB), which was later changed to the Defence Forces Retirement and Death Benefit (DFRDB) into which members of the Australian Defence Forces would make compulsory contributions of 5.5% of their pre tax wages.

In 1972 the Jess Report recommended that military superannuation pensions be adjusted annually so that relativity with average weekly earning is maintained.

Elderly pensioners are crooks?

Pensioners around Australia will be rushing to their mattresses and cookie jars as the Herald reveals the true reason for a dwindling economy. “Elderly Australians committing welfare fraud on a massive scale are behind the extraordinarily high number of $100 notes in circulation, a former senior Reserve Bank official says.”
 “One popular explanation is that they are used for illegal transactions as part of the cash economy.” Former Reserve official, Peter Mair, rejects that notion as a “furphy”.
Now that we know exactly who is buggering the economy, “elderly Australians” will be flocking to clubs and large businesses to break their stash of $100 bills into 50’s to avoid the tentacles of The Australian Taxation Office. Not to mention the evil looks and snide remarks like “tax cheat” from cash register personnel against those who prefer larger notes. Money that wicked “elderly” earned, paid tax on, and saved.

However, Mair blamed “elderly people” for hiding cash income to increase pension benefits. “The bank is basically facilitating a tax avoidance scheme by issuing high denomination notes,” he told the Herald. “They are not needed for day-to-day transaction purposes, or even as reasonable stores of value.” What poppycock Mr. Mair!

Gai Brodtmann MP Humiliatingly Tries To Explain Labor's Superannuation Changes

Gai Brodtmann, Federal Labor Member for Canberra was on 2GB yesterday trying to spruik Labor's proposal to slug small business with an increase in the superannuation levy. 

It becomes abundently clear very rapidly that she has no idea whatsoever she is talking about. 

And then becomes embarassing.

You can listen to the whole cringeworthy interview online here. 

(h/t Tamara)

Thanks to Labor, the ASX200 Index Flounders while the Dow Jones Index Booms

The Dow Jones Industrial Average closed at 12,980 points on 1^st March 2012.

The last time the Dow Jones was above 12,980 points was back on the 16^th May 2008 when it closed at 12,986 points.

The Australian benchmark index – the S&P/ASX 200 - closed at 4,255.5 points on 1^st March 2012.

On the 16^th May 2008, the S&P/ASX 200 - closed at 5,931 points.

So while the Dow Jones has recovered, the ASX200 is 1,675.5 points or 28.25% below its 16^th May 2008 closing price.

So why is the ASX200 index floundering while the Dow Jones index is Booming?

There are three key reasons.

1)      The RBA/US Fed interest rate differential.

2)      The AUDUSD strength

3)      The systematic political risk of the Gillard government

It is fairly obvious from the chart above that the once highly correlated Dow Jones and ASX200 indices started to break down around May 2010 when the then Prime Minister Kevin Rudd along with Treasury Wayne Swan surprised everyone with their planned introduction of the Resource Super Profit Tax (RSPT). As we all know it went down like a lead balloon especially with the mining companies who had probably single handedly saved Australia from the death throes of the GFC.

Think twice before investing in your pink slip

Let's have a look at how super funds are spending your money, writes Steve Blizard.

One of the crucial centrepieces of superannuation in Australia is the Sole Purpose Test.

The tax man has defined this as the requirement of trustees to maintain their funds at all times for the sole purpose of providing retirement benefits for their members, or their dependants if a member should die.

Superannuation increases help to further the cause of small government

By increasing super contributions we can ensure that there is less reliance on government in the future, writes Stephan Knoll.

When compulsory superannuation was first introduced by the Keating government the idea was to increase retirement savings so people would be able to fund their own retirement from managed investments built up over their working lives. The ideal figure quoted was 15 percent.