Fight The Power Corwin (and DU)!

http://www.zerohedge.com/news/2013-04-08/next-domino-australia-doubles-tax-retirement-savings

"Any income over A$100,000 drawn from a superannuation fund (the equivalent of an IRA in the United States) will now be taxed at 15%. Previously, all such income was tax-free."

Hmmm, there's a couple of kinds of IRA over here stateside. With the classic IRA you pay no taxes on the money you put in but you are taxed as you pull the money out. With the Roth IRA you're taxed on the money as you put it in but you can pull it out tax free. This sounds more like the latter.

Something is odd, though. It looks like the Australian dollar is pretty close to the US dollar right now. So how is it that somebody is pulling out 100 grand a year just from their IRA!? If it were the USA, I would assume it's yet another person who's developed a major medical problem, which means the medical system will be performing a complete cashectomy on them before they die.

A normal drawdown for most people on super here would be $50-65 k per year assuming they had enough invested to do so. Expect a return of 4-6% min, with 6-8% being not unreasonable, that's where the majority would like to be. Therefore, $100k is not absurd for upper middle and above. Believe me, this is not popular with retirees here, but we wouldn't vote for the current gov't at the election in Sept. anyway!! What is really annoying is that these politicians get WAY more than that every year guaranteed once they leave politics!!

The stock market will probably like this, too, as it encourages people to leave their money invested.

My broker keeps saying the Roth is tax free when it comes out but I keep telling him I'm not going to bet on it. Even with a cheesy 5% return, paying taxes on $10,000 then pulling out $43,000 30 years later is one heck of a tax break. With good investments and a few more years, you can hit $100,000! I can't believe the government is going to let me have all that interest tax free.

Sounds like its already happening down under. At least its better than I expected. If it gets locked at just 15% and only for money over 100K, it's still one heck of a deal.

Now another big question - is this retroactive? I would presume so. If it isn't, this is hardly a big deal at all.

Currently, all withdrawals from super are tax free once you reach 60. To add a 15% tax will never be popular except with politicians who will never have to pay it!!

Does the over 60 crowd not have a lot of political power there? In the US, they have a stranglehold. No politician would think to do anything that reduces their handouts. Anytime they do make a change to Social Security or Medicare, the current crop of benes are grandfathered in.

heck, we can't even pass laws that require them to retake their drivers license tests!

Sadly, grey power hasn't much traction here. I haven't seen any effective lobbying and I'm not even sure if there is any organised grey lobby. Here we have a LOT of what are called 'Grey Nomads'. They travel around the country in mobile homes, or cruise the world. We're a very laid-back bunch down here!!

Zloth said:

The stock market will probably like this, too, as it encourages people to leave their money invested.

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The ones already in the system. Those still saving could find this a disincentive for further contributions.

So this is now getting taxed on the way in and (partly) on the way out?

blatantninja said:

Does the over 60 crowd not have a lot of political power there? In the US, they have a stranglehold. No politician would think to do anything that reduces their handouts. Anytime they do make a change to Social Security or Medicare, the current crop of benes are grandfathered in.

heck, we can't even pass laws that require them to retake their drivers license tests!

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Its like that in Finland. We are unable to pay their high pensions so they force the younger people to pay them through higher pension-taxes while at the same time reducing the pensions that the younger people get once they become old.

The end result is that I for instance pay lots of money for pension that I will never get. Totally unfair but that is the world. Everytime I visit a bank they try to get me to invest for pension since in future the we propably wont get government pension.

In the last two years while Finland has been bailing out rich european investors (their winnings are private but losses are socialized) my taxes have risen by 5%. They are near 30% now and since goverment announced some new cut lists its possible that they will continue to rise in near future.

EDIT:

Just in the news I read that this month the pensions became larger than the pension payments. So government will propably increase the pension payments again meaning my taxes will rise again.

Can taxes rise forever? I mean once they are 100%…

Man, I wish my taxes were ONLY 30%! Count yourself lucky still!

The thing that annoys me most for where I live is the high property, school and utility taxes here. I could buy a much better house than I currently have but whats the point of owning a nice house and still having to pay a large amount of money every month forever which will only go up.