Sophisticated taxpayers have a knack of maneuvering around the system to minimise their tax when governments shift the goalposts, writes John Kehoe.
Treasurer Jim Chalmers has shone a light on $250 billion of annual tax breaks, suggesting that the tax increase on superannuation accounts over $3 million may not be the end of Labor’s revenue raising efforts.
Treasurer Jim Chalmers and Prime Minister Anthony Albanese during a press conference at Parliament House in Canberra on Tuesday.are for superannuation contributions and earnings , the main residence exemption and discount for capital gains tax , other capital gains for individuals and trusts , rental deductions for property investors , and GST exemptions for fresh food, health, education and certain financial supplies .
Some tax breaks are benchmarked against punishingly high personal income tax rates of up to 47 per cent, which savvy tax planners don’t pay on investments. The best way to deter people shifting into tax breaks is to have lower and more flat personal marginal rates, or switching to aUndoubtedly, superannuation tax concessions on earnings on large balances and exemptions on earnings for retired people are very generous.
The biggest glaring tax concession is not on super contributions, but rather on tax-free earnings for retirees aged over 60 with balances below $1.7 million. It’s hard to justify why a 59-year-old pays a 15 per cent headline rate on earnings, but a 60-year-old pays zero.
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