Shifting sands of fairness
As a 57-year-old self-funded retiree (TTR), for the past two years I have managed to live on a $37,000pa allocated pension drawn from my DIY super fund. I have also been entitled to a $1,220pa Low Income Offset. With a modest lifestyle I get by, and due to the 15% rebate I have effectively paid no further tax on the income drawn as a pension, (bearing in mind I paid 15% when contributing and 15% on the fund's earnings prior to moving to pension phase).
However, under the new tax scale it would seem that my after-tax income will be reduced by $1,527pa. This will occur due to the increase in the first tier marginal rate from 15% to 19% (without any corresponding increase in the 15% rebate). The scaling back of the LIO will also impact, reducing to $445.00 pa. Under the new tax scale a single working person earning the same gross salary of $37,000pa actually receives a tax cut, as do all individuals on incomes up to $80,000pa. Taxpayers beyond this, and up to $180,000pa suffer no increase in personal income tax. For a government that boasts its mantra is to raise the living standards of low and middle income Australians, I can only conclude that that I, and many like me, are the “undeserved wealthy”. This is either a blatant and biased attack on Transition to Retirement retirees, or an incompetent oversight. I truly hope this letter finds its way to Canberra where Mr Swan might offer something resembling a plausible explanation as to why I am being more harshly treated under the new tax scale than a worker on $180,000 a year.
A Kohler (no relation)
No euphoria here
Robert Gottliebsen has said elsewhere that we are at risk of a 1960 or 1987 crash. Almost the next day he says that with the flow of foreign money coming into Australia, asset yields will fall (i.e. prices - including shares - will rise?). Does not compute.
My retirement fund dropped almost 50% following November 2007, so it had then to rise 100% to recover its value. This has not happened. We remain ever since then in a valley of despondence. (The miserable rises we have experienced in Australia are no more than peanuts). Hard working companies with transformative technologies, like Ceramic Fuel Cells, Dyesol, Silex, Linc Energy, TIS and VLA go nowhere. Gold mines with bonanza ore grades (CRC and GRY) sit unloved. There is no euphoria like was the case in '60 or '87.
If there is – and is to be – an inflow of foreign capital, we should see the sharemarket rise much further than it has in the crippled USA. It is a far out understatement to say this also has not happened.
Economics is bunk. So is the (poorly administered) sharemarket. Can any of you out there explain any of this?
I really enjoyed the article by John Abernethy on “Hybrids and the Basel bump”. A hybrid of interest to me is BOQPC. The first conversion date for these securities is December 31 this year, however they will fail the conversion test as the Bank of Queensland share price is much lower than the 50% floor price. Holders cannot be forced to convert and I think that some of the new Basel III conditions are not included in the issue terms and conditions, eg non-viability, loss absorption etc. It would seem to me that these perpetual preference shares would not meet the new Tier 1 requirements after December 31.
I am waiting for BOQ to announce their intentions with regard to these securities.
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