As of the 1st July 2009 your net investment losses and reportable super annuation contributions will be deemed to be income
to be used in certain income tests to work out whether you are entitled to receive a range of government support programs and certain tax offsets.This is why I haven't invested in property since 2004 as I do not agree with this idiotic assumption by Centrelink and family assistance. My net investment income is positive due to having to rely on Centrelink and the family assistance office.
You don't claim 100% back on your tax return so why is 100% deemed as income and when you sell if you are lucky enough to get a capital gain you get slugged with capital gains tax.The Australian Labor Party / Rudd is discriminating against Mum and Dad investors.
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I thought the ALP's aim was to look after working families but I can't see how they are doing this by
forcing landlords who are parents to avoid buying rental properties in major cities and thus adding to the lack of rental properties for working families to rent.
Or causing them to sell their negatively geared properties and kick out their tenants.)
I have avoided any new purchases in investment property that are negatively geared ( meaning nil new purchases)
because of the idiotic centrelink definition of income from what is actually
a loss in all accounting standards internationally and in tax law with the ATO.
You can't buy groceries, petrol or a car from negative loss so how can it be deemed income.
Try getting a bank loan stating negative loss as income on the loan application form!
If you are negatively geared and lose your job you will find your employment benefits and family benefits are also affected by this imaginary income dreamed up by Centrelink and the Family office.
It really angers me that Centrelink and the Family assistance Office can state that a capital loss cannot reduce your deemed income but
when you make a capital gain they are very quick to point out that this is deemed as income and that you now have to pay back your assistance payments due to the overpayment based on capital gain income.The most shocking thing to occur is when the mum and dad investors get to the end of 2009/2010 financial year and put in a tax return only to be asked later to pay back parenting payments to the Family Assistance office.
I must thank the Family office for actually sending a letter warning me of this idiotic definition of income as Centrelink in 2004 didn't send me a letter and I had to pay back money due to capital gain and only when I enquired about the Capital Gain did they ask me about the negative loss being deemed as income.I know if I write a letter to the ALP that they will somehow distort this into somehow being fair.but the real goal is to keep welfare reciprients on welfare dependancy rather than letting them improve their financial position to a point where they no longer need the welfare.
duckster,
I can understand your point of view. I too think it stinks that the government is always out to get the small time investor who tries to get ahead. They get you in land tax and now this, it sometimes makes you think that the best approach is to sell everything , spend your money, go on the dole and let the government chase all those suckers who try to get ahead to pay for your dole.
The government seems to come up with an idea but then implement it all wrong.
Rental losses have been added back for years, and it's only salary sacrificed superannuation that is added back, not the 9%.
Strangely our federal parliament members can own a house in Canberra and still claim living away from home allowance of $215 a night which pays off their mortgages while staying in their houses they own in Canberra.
One in five claim a travel allowance while staying in their own investment home in Canberra.
see
http://news.ninemsn.com.au/national/815702/pollies-cashing-in-on-living-allowanceThey take from Mum and Dad investors while feathering their own investments !!
WJ Hooker wrote:duckster,
I can understand your point of view. I too think it stinks that the government is always out to get the small time investor who tries to get ahead. They get you in land tax and now this, it sometimes makes you think that the best approach is to sell everything , spend your money, go on the dole and let the government chase all those suckers who try to get ahead to pay for your dole.
The government seems to come up with an idea but then implement it all wrong.
You forgot to mention rental assistance.
Oh and dont forget the health care benefits. I personally know a family with 3 children who are on unemployment benefits. Both work for cash in hand jobs. Between rental assistance, family payment and the dole they are quiet comfortable. The housing commision home is a 12 yo brick and tile and it roof is currently being replaced (go figure why?!?!). Between all payments and cheap housing, I reckon it is equivalant to about a 50K per annum job. And a whole lot less stress – go figure?!?!? Me, I work, pay tax, buy investments, pay tax, sell investments, pay tax, employ a person, pay tax…..pay tax. Oh well at least it helps pay for a great health care system….what? its not great?……..bugger.
duckster wrote:Strangely our federal parliament members can own a house in Canberra and still claim living away from home allowance of $215 a night which pays off their mortgages while staying in their houses they own in Canberra.
One in five claim a travel allowance while staying in their own investment home in Canberra.
see
http://news.ninemsn.com.au/national/815702/pollies-cashing-in-on-living-allowanceThey take from Mum and Dad investors while feathering their own investments !!
All part of the public service mentality – you get paid a set daily rate for LWA regardless of where you stay (fee differs for each city/town), unless the employer pays the provider the cost of accommodation/food etc. They don't need to provide an invoice, just put in their claim.
When I worked for Telstra prior to 2000 the workers had to show the receipt for the motel to get LWA paid because you could be staying at a mate's place rather than staying in your other house.
Question: What are reportable superannuation contributions as opposed to non-reportable super contributions?
Reportable employer superannuation contributions are the voluntary amount that you get slary sacrificed above the amount that the employer has to pay on your behalf due to law on super guarantee.
Why you would want to put money of your own into super that you can't access till your 65? .
Non reportable is the amount that has been paid by the employer.
see
Thanks for that. Super came into Aust. when I was living in the USA so I'm still getting my head around it.
Wouldn't people put their own money into Super if they didn't want it included in the amounts of savings that Centrelink "deems" as income and assets?
And isn't it accessible if you declare that you have retired after 55 (?)
Speaking as someone who has had to report losses in income from a business in the past when my first business went belly up around the time our daughter was born, I fail to see how a net investment loss can be deemed as anything other than a negative income (after all, it's reduced your income for the year).
I mean, for those of you with shares, you would have to declare that investment and any income on it regardless.
Say for example you have $5K in shares and because of the downturn you have lost 50% of their value: well you had to declare the value of those shares in your income estimate anyway, and your tax return etc will prove that you went backwards by $2500. So hey presto, you can take more money from them because your annual income estimate has gone down. That is *really* what happens, and I would be surprised if this announcement actually changes anything major (although if I had seen this before I rang them this afternoon, I would have asked for you, but I can't sit on the phone for another half hour!)
Not having ever made salary sacrificed contributions to my super fund, I am not really in a position to comment. I guess, like the rest of us, you'll have to declare your annual income in full.
I mean: how many parents with combined incomes under 90k can honestly say that they are able to salary sacrifice anyway? The FTB A +B cuts out at $90K altogether, drops to a grand total of $48 per fortnight at around $60p/a, and family assistance cuts out at around $35K from memory. If you're not struggling to hold a mortgage on that kind of income while parenting, I would be surprised.
So what is the point of whingeing about income punishments that you probably a) can't get because you're above all of these thresholds or b) can't afford to take part in anyway?
Once again, the question has to be asked: how many people in this income bracket (knowing the impact of CGT on their investments are part of Australian law – crappy though that is…) are going to realise an end of FY capital gain of anything more than $20K? In this climate? Even Steve says now is the time to buy positive geared and rent out, not sell for a quick "gain" (more like a loss right now!)
Please don't think I am having ago. I am simply being pragmatic here.
Personally, I think that FTB A+B should be given out (in full) to every family under, say a $250,000p/a income threshold. Then you can be darned sure that you're not screwing any of the little income earners. Having quite recently experienced being taxed at 56% (8% higher than the highest tax bracket, which cuts in at $180K anyway) while earning less than $25K p/a as a new mum, and not much better while earning higher (and then HECS cuts in… and extra childcare payments… hence the whole 56% thing in the first place…), yes, there is *definitely* room for improvement.
FWIW I hate Centrelink and having to deal with the idiots that run it as much as the next person (and I don't work for them!), but I really did have to think about how much that really was going to affect the average Joe, having quite recently been through the exercise of juggling an ever-changing set of goalposts handed out by them as my income changed over 18 months. My answer has to be "not much".
Hi Elizabeth,
The investment losses are income losses, not unrealised capital losses. eg, say you have a margin loan to buy shares, and your income from the shares is $3,000, and your interest bill is $5,000. You have a tax-deductible loss of $2,000.
However from (I think) July 1, this $2,000 loss will be added back for Centrelink purposes. This situation will now be the same as negatively geared property, where the losses have been added back for years.
The superannuation is being added back, I think, because people were rorting the system. People were salary sacrificing amounts to avoid child support etc. If you can afford to salary sacrifice super, you don't need government welfare payments.
Dan42 wrote:The superannuation is being added back, I think, because people were rorting the system. People were salary sacrificing amounts to avoid child support etc. If you can afford to salary sacrifice super, you don't need government welfare payments.Child support maybe but not families that are trying to improve their lot over the long term. Yes it has been years that people who suddenly loose their job or can't find work have been discriminated against that is why I haven't invested in a negative geared propery since 2004 due to this idiotic non accounting standard definition of income scheme and had to kick out a tenant when I sold my negatively geared property in 2004.
Strange isn't that Centrelink does not regard a negative loss as an income loss but readily deems a capital gain as income for Centrelink purposes and clawing back payments.
The change from net rental property losses to net investment losses to be added back on to taxable income particularly for self funded retirees who claim the Seniors Health Card is an ideological change in order to "get " those "filthy rich" (clearly not working families) who earn around $80,000 combined income.
Labour ideology is to support those who are hopeless and punish those who are successful, always has and always will be. I call it the Robin Hood party.
Just like everything the Labour party does, it is ineffective and only for show and to please the crowd who cheers.Net investment losses refers only to income and not capital losses, therefore only someone who borrowed money from the bank to buy shares and who is in negative territory and holds on to the shares and wants to wear the loss for a while hoping for a recovery need to declare such loss. If you bought shares at 10 and sold them at 5, you have incurred in a capital loss and can only offset it against a capital gain. Capital gain is income, has always been income, has very generous discounts and is part of our tax law. I don't like it either yet has nothing to do with the social security act.
Super contributions should be completely tax free, that 15% you are paying to put money in is robbery plain and simple.
As for Salary Sacrificing into super, since one is using pre-tax dollars to put away into savings (minus 15% damn it), this is clearly a voluntary action aimed at better one's financial position in the future. To do so and claim to be poor at the same time is rather hypocritical and the SSact should have been amended a long time ago.
As for money can not be accessed before 65, that is of course also wrong since it is at age 55 that you can acces your money.When it comes to have a wing, I am the first to do so with gusto, however I suggest that winging should be aimed at proper targets, not at random.
Clearly venting anger against Centrelink is a waste of air since Centrelink is an agency that delivers the government legislation just like the ATO.
The first thing to do is not voting Labour to begin with. Next is to dig into the government MP at any given occasion on issues like the ETS and call it for what it is TREASON. Demand that governments stop wasting our dollars on propaganda about "global warming". Demand that if there is to be an incentive that it is given to those business who will spend and employ people in Australia. I am sure we all know what should be done, what is wrong and what is right. We just choose the wrong targets and choose to be silent when it demands we cry out at the top of our voices.PS
Quote:Say for example you have $5K in shares and because of the downturn you have lost 50% of their value: well you had to declare the value of those shares in your income estimate anyway, and your tax return etc will prove that you went backwards by $2500. So hey presto, you can take more money from them because your annual income estimate has gone down. That is *really* what happens, and I would be surprised if this announcement actually changes anything major (although if I had seen this before I rang them this afternoon, I would have asked for you, but I can't sit on the phone for another half hour!)Lets see..you have $5k in shares vlaue drops down to half …you had to declare the value in your income estimate? Not really.
Shares value is part of your assets and not your income. You can hve millions in shares yet no income if the company decided to reinvest, and conversely you could have a bunch of devalued shares yet a sustained and growing income from a company that may be suffering from poor image yet has a sound business going.Income from share dividend is one thing, market value of shares is another entirely different. So no hey presto at all, unless you are being assessed and limited by the amount of your assets and not your income, you can not take more money from "them" at all.
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