Mercer actuary David Knox says the data used to determine the old age dependency ratio is “totally out of date” and overstates the severity of the problem.
From their inception, SMSFs have always attracted more than their fair share of criticism. Now it’s an ageing membership that’s being used to restrict their numbers.
‘Practical and temporary’ – Behind the 2022 budget
Treasury Josh Frydenberg delivered his long-awaited, pre-election budget this week, seeking to offer respite to a ‘surge’ in the cost of living. The Federal Government, and next Government for that matter, face a difficult challenge in navigating what is likely a short-term surge in inflation and hit to the cost of living, with demands for greater support and spending.
The Budget likely left many more people disappointed than delighted yet it raises an important fact for the population. The Federal Budget should not be expected to ‘have something’ for everyone every year, nor does it (or should it) represent the only policy actions undertaken by a government in the coming 12 months. It is, at its best, an accounting document that seeks to understand the revenue and spending of the government in the coming 12 months.
Among the biggest announcements came before the budget was delivered, with a focus on manufacturing and regional infrastructure a key plank of the investment in the future. In addition, the reduction in the minimum pension applied through 2022 will now be extended until 30 June 2023 to allow retirees to keep more money in superannuation.
According to SMSF Association CEO John Maroney “The reduction is designed to reduce instances where retirees may have to sell some superannuation investments in a volatile or depressed investment market simply to satisfy the Government’s minimum pension drawdown requirements, so, in the current geopolitical and COVID climates, extending the cut in drawdown rates is an important initiative that will help many retirees.”
On the whole, there was limited benefit provided to the masses in what Frydenberg termed a ‘practical and temporary’ budget. The government is clearly wary of stoking further inflation by injecting additional cash into the economy, but also wary that higher fuel prices and food inflation hit the less wealthy the most.
Among the biggest announcements was a temporary 6-month reduction in the fuel excise to 22 cent per litre. This is expected to reduce the tax revenue by $3 billion, barely a drop in the ocean of a $78 billion deficit. The government estimated this could save families around $30 per week.
Some 10 million Australians earning $126,000 or less will receive up to $1,500 or $3,000 for couples, in the form of higher tax offsets coming in from July 2021. In addition, six million Age Pensioners, carers, veterans and jobseekers will receive a $250 cash payment to offset the higher cost of living.
Small businesses were a clear winner, with the Coalition clearly seeking to return to their roots and support the parts of the country most impacted by lockdowns. Employers will be rewarded with 120 per cent tax deductions on external training paid on behalf of their employees beginning from budget night.
These deductions will also extend into small businesses, or those with less than $50 million in revenue, who will be rewarded for investment and spending on digital technology ranging from cloud computing, invoicing, cyber security and web design. Both are capped at $100,000 per year.
The Australian Defence Force will see a significant increase in funding as they seek to expand the workforce after being called into action during floods and throughout the pandemic. Similarly, around $10 billion has been earmarked to investments in cybersecurity over the next 10 years in the hope of creating 1,900 jobs in the sector.
