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Sent: 12-09-2012 15:12:02
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Australia to Face More Price CyclesSMSF story in the Weekend Fin ReviewEmail Marketing For Planners
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SMSF story in the Weekend Fin Review

Click here to buy - A How To Book of SMSF's by Tony Negline
Tony Negline

The 'big' SMSF story is the Weekend Fin Review front page with threats that personally I found it quite amusing. The piece contained a list of statistics purporting to show where SMSFs are getting too many tax breaks.

The data produced is actually incorrect. It claims to show the net tax payable. But the figure provided is the net cash amount paid after taking into account PAYG Instalments raised (ie tax paid throughout the year) and the ATO supervisory levy.

The correct net income tax actually payable by SMSFs - before all offsets and rebates - in the three years should be:

2007/08 - $1.66b

2008/09 - $1.07b

2009/10 - $287m

An obvious question to ask is what do the same data items for all APRA regulated funds show?

Well in the interests of disclosure, here is the data.

June '08

June '09

June '10

June '11

Percentage Change

Cash

$23.7b

$32.4b

$36.4b

$47.5b

100%

Shares

$147.5b

$128.7b

$174.4b

$193.5b

31%

Property

$5.9b

$5.0b

$4.8b

$5.1

-15%

Total Assets

$773b

$703.5b

$795.1b

$889.5b

15%

Here is the comparable income tax data:

07/08

08/09

09/10

Percentage Change

Interest deductions

$3.4m

$3.7m

$1.5m

-56%

Capital losses

$3.1b

$41b

$52b

1,677%

Tax losses

$183m

$616m

$237m

77%

Refundable franking credits

$2.7b

$2.7b

$2.3b

-17%

Tax payable

$7.9b

$4.7b

$7.0b

-13%

The first part of the data is provided by APRA and the second half is from Tax Office statistics.

The questions has to be asked - what is the difference between SMSFs and APRA regulated funds and what are SMSFs getting that large funds don't?

If you can work this out "you're a better man than I am, Gunga Din!"

You have to wonder why a senior political journalist accepted this non-story and why the Fin Review actually thought this was worthy of their front page.

In any event, last year I wrote in The Australian,

"...there are now 440,000 SMSFs which would have about 900,000 members. There are 150 House of Representatives seats in the Federal Parliament which means there is an average of 6,000 SMSF voters in each seat.

"Based on my feedback I believe most SMSF people are very much engaged with how government policy changes will affect their financial future. It doesn't take much to join the dots here and realise that any politician who unilaterally attacks SMSFs could easily alienate many motivated voters."

On the whole I'd say most SMSF trustees are pretty realistic people who don't take too much for granted. It'll be interesting to see how of them bother to send letters and emails to their politicians telling them to keep their sticky fingers out of the SMSF honey pots.

The big story in the article is the possible return of Reasonable Benefit Limits. Is the Government really proposing to limit the amount of money you put into super via contribution caps and apply tax penalties to the amount of money you get out of it as well?

The ALP seem to have a blind spot against anyone who has made a moderate amount of money. One could be forgiven for thinking that the ALP believes such people earned this money at worst unethically and illegally. But more likely they did this by legally ripping off the 'battlers'. The only way to redress this unnaturally occurring imbalance is some wealth and income redistribution processes.

On another issue some of you might be wondering about my book. I'm happy to say that my book has been updated and is about to be published by Thompson Reuters as 'The Essential SMSF Guide". Further details are available here:

http://www.thomsonreuters.com.au/the-essential-smsf-guide-2012-13/productdetail/116875


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