1 00:00:10,000 --> 00:00:12,920 Speaker 1: Hello, and welcome to The Australian's Money Puzzle podcast. I'm 2 00:00:12,960 --> 00:00:15,960 Speaker 1: James Kirkby. Welcome aboard everybody. Would you like to be 3 00:00:16,040 --> 00:00:20,239 Speaker 1: a sophisticated investor? It sounds good, doesn't it, And you'd 4 00:00:20,280 --> 00:00:25,200 Speaker 1: get access to special investments that the everyday investor can access. 5 00:00:26,200 --> 00:00:28,800 Speaker 1: And I mean I would think if you're an aspirational investor, 6 00:00:28,800 --> 00:00:31,600 Speaker 1: of which I imagine most of our listeners are, you 7 00:00:31,640 --> 00:00:33,400 Speaker 1: think you'd want to sign up for that and have 8 00:00:33,440 --> 00:00:37,720 Speaker 1: that certificate. But I have to tell you sophisticated investor 9 00:00:38,120 --> 00:00:42,239 Speaker 1: is as a status is currently under vigorous debate. Let 10 00:00:42,280 --> 00:00:46,479 Speaker 1: me tell you across the market, inside the regulation sphere, 11 00:00:46,880 --> 00:00:50,879 Speaker 1: and someone who's right across it and also across Division 12 00:00:51,560 --> 00:00:53,880 Speaker 1: two nine to six the new super tax, which we'll 13 00:00:53,880 --> 00:00:56,280 Speaker 1: talk about also in the show, is Peter Burgess. He's 14 00:00:56,280 --> 00:01:00,080 Speaker 1: the CEO at the Self Managed Super Fund Association. And 15 00:01:00,120 --> 00:01:00,720 Speaker 1: how are you, Peter? 16 00:01:01,520 --> 00:01:03,440 Speaker 2: I'm good, Thank you, James, thank you for having me 17 00:01:03,480 --> 00:01:03,880 Speaker 2: on the show. 18 00:01:04,560 --> 00:01:06,520 Speaker 1: Lovely to have you on the show, and I'm amazed 19 00:01:06,600 --> 00:01:09,920 Speaker 1: that it's actually your debut considering how often we talk, 20 00:01:10,040 --> 00:01:13,720 Speaker 1: but great to have you on. Now, Sophisticated Investors. Here's 21 00:01:13,760 --> 00:01:17,800 Speaker 1: the thing so when I tell people about this, it's 22 00:01:17,920 --> 00:01:24,720 Speaker 1: only natural that they immediately want to join this club 23 00:01:24,800 --> 00:01:28,520 Speaker 1: that they hadn't heard of. Right, so people understand there 24 00:01:28,560 --> 00:01:33,039 Speaker 1: is a status, a legal status called sophisticated investor, and 25 00:01:33,240 --> 00:01:36,760 Speaker 1: if it was introduced a long time ago, and the 26 00:01:36,840 --> 00:01:40,479 Speaker 1: idea was it was for exotic investments basically that were 27 00:01:40,720 --> 00:01:45,120 Speaker 1: risk quite risky and couldn't come under conventional consumer protection 28 00:01:45,600 --> 00:01:48,480 Speaker 1: and people were allowed access out if they signed a certificate. 29 00:01:49,480 --> 00:01:52,040 Speaker 1: That was how it worked. The issue these days is, 30 00:01:52,120 --> 00:01:54,680 Speaker 1: I won't say every time Dick and Harry has one, 31 00:01:55,160 --> 00:01:57,960 Speaker 1: but an awful lot of people are entitled to them. 32 00:01:58,000 --> 00:01:59,800 Speaker 1: Could you explain what it is? And first of all, 33 00:02:00,080 --> 00:02:02,400 Speaker 1: it's become yes. 34 00:02:02,200 --> 00:02:03,840 Speaker 2: Now I think it, James, and you're right, this has 35 00:02:03,880 --> 00:02:06,640 Speaker 2: been here for over two decades now. There was a 36 00:02:06,800 --> 00:02:09,200 Speaker 2: change is made to the legislation back in two thousand 37 00:02:09,240 --> 00:02:13,240 Speaker 2: and one to distinguish between what they call a retail 38 00:02:13,360 --> 00:02:17,959 Speaker 2: investor and a wholesale investor. So the legislation makes that distinction. 39 00:02:18,560 --> 00:02:22,000 Speaker 2: If you meet the criteria to be treated as a 40 00:02:22,040 --> 00:02:26,079 Speaker 2: wholesale investor, it means that you have access to certain 41 00:02:26,120 --> 00:02:29,480 Speaker 2: types of investments that may not be available to retail investors, 42 00:02:29,919 --> 00:02:32,200 Speaker 2: and some of these investments, as you point out, could 43 00:02:32,240 --> 00:02:35,240 Speaker 2: be higher risk type investments, but they also offer the 44 00:02:35,240 --> 00:02:40,840 Speaker 2: opportunity for achieving larger returns. Now, in order to meet 45 00:02:40,880 --> 00:02:44,320 Speaker 2: that criteria of being a wholesale investor, there are certain tests, 46 00:02:44,320 --> 00:02:46,040 Speaker 2: and you only have to meet one of these tests 47 00:02:46,080 --> 00:02:48,359 Speaker 2: in order to be classified as a whole stal investor. 48 00:02:48,480 --> 00:02:52,440 Speaker 2: So there's a test around your net wealth. You need 49 00:02:52,480 --> 00:02:55,160 Speaker 2: to have at least two point five million dollars in 50 00:02:55,480 --> 00:02:57,680 Speaker 2: net assets. That's one of the tests. One of the 51 00:02:57,720 --> 00:03:00,760 Speaker 2: other tests or income, if you have received two hundred 52 00:03:00,760 --> 00:03:02,679 Speaker 2: and fifty thousand dollars or more in income over the 53 00:03:02,720 --> 00:03:05,800 Speaker 2: two previous years, will then you satisfy the test. And 54 00:03:05,840 --> 00:03:08,560 Speaker 2: the last one is where your investing amounts in excess 55 00:03:08,600 --> 00:03:11,320 Speaker 2: of five hundred thousand dollars in one go into the product, 56 00:03:11,760 --> 00:03:13,200 Speaker 2: then you meet that test. So you only have to 57 00:03:13,200 --> 00:03:14,960 Speaker 2: meet one of those in order to be able to 58 00:03:14,960 --> 00:03:16,919 Speaker 2: be classified as a wholesale investor. 59 00:03:17,200 --> 00:03:19,600 Speaker 1: An accountant to assigned a certificate and you have that 60 00:03:19,680 --> 00:03:23,079 Speaker 1: classification and then the product seller as such can deal 61 00:03:23,120 --> 00:03:23,360 Speaker 1: with you. 62 00:03:24,320 --> 00:03:26,520 Speaker 2: That's right, So you need to be signed off a 63 00:03:26,520 --> 00:03:28,040 Speaker 2: recognized accountant. 64 00:03:28,520 --> 00:03:31,560 Speaker 1: And nothing to do with your and we might come 65 00:03:31,639 --> 00:03:34,360 Speaker 1: back to this, but nothing whatsoever to do with your 66 00:03:34,720 --> 00:03:41,200 Speaker 1: experience or competence. You could be a very bad investor, 67 00:03:41,640 --> 00:03:44,480 Speaker 1: but if you have the money, you qualify as sophisticated. 68 00:03:44,640 --> 00:03:46,600 Speaker 1: But you might not be sophisticated per se. 69 00:03:47,520 --> 00:03:50,600 Speaker 2: That's right. It's based on those income and assets tests. 70 00:03:50,640 --> 00:03:53,680 Speaker 2: As I see, there is another test called the sophisticated 71 00:03:53,720 --> 00:03:57,320 Speaker 2: investor test. Now that's where the licensee, like a financial 72 00:03:57,320 --> 00:04:00,640 Speaker 2: planning licensee, makes a judgment call based on the experience 73 00:04:00,680 --> 00:04:03,760 Speaker 2: of the investor that they are sophisticated and that they 74 00:04:03,840 --> 00:04:06,920 Speaker 2: need to ensure that the investor is aware of that, 75 00:04:06,960 --> 00:04:09,800 Speaker 2: and the investor has acknowledged that they are being treated 76 00:04:09,840 --> 00:04:12,920 Speaker 2: as a sophisticated investor. So that's an additional test in 77 00:04:12,960 --> 00:04:15,840 Speaker 2: there as well. So there are a number of tests 78 00:04:15,880 --> 00:04:19,440 Speaker 2: that apply. Of course, all the controversy, I guess, all 79 00:04:19,520 --> 00:04:22,599 Speaker 2: the debate around these tests have been that they haven't 80 00:04:22,800 --> 00:04:25,680 Speaker 2: changed since they were first introduced back in two thousand 81 00:04:25,720 --> 00:04:28,840 Speaker 2: and one. So those thresholds that I talked about, the 82 00:04:28,880 --> 00:04:30,839 Speaker 2: two and a half million dollars in net wealth and 83 00:04:30,880 --> 00:04:33,960 Speaker 2: the two hundred and fifty thousand dollars income over the 84 00:04:34,000 --> 00:04:36,839 Speaker 2: last two years, those thresholds have not changed in over 85 00:04:36,920 --> 00:04:38,200 Speaker 2: twenty years, so that was. 86 00:04:38,200 --> 00:04:40,000 Speaker 1: A lot of money and two or one right, So 87 00:04:40,120 --> 00:04:42,880 Speaker 1: basically there was I don't know, let's pick a number, 88 00:04:43,000 --> 00:04:46,320 Speaker 1: fifty thousand people who could qualify then and there was 89 00:04:46,400 --> 00:04:49,120 Speaker 1: a lot of money. These days, well, I was just 90 00:04:49,160 --> 00:04:53,279 Speaker 1: reading about how construction workers are earning two fifty, mine 91 00:04:53,279 --> 00:04:56,120 Speaker 1: workers are earning two fifty and they're good salaries, but 92 00:04:56,160 --> 00:05:00,600 Speaker 1: they're actually not spectacular compared to see investment banking or whatever. Similarly, 93 00:05:00,600 --> 00:05:02,000 Speaker 1: two and a half million was a lot of money. 94 00:05:02,040 --> 00:05:05,000 Speaker 1: Then it's just the price of two houses now in 95 00:05:05,080 --> 00:05:09,599 Speaker 1: Sydney and Melbourne and so Peter, the issue is then, 96 00:05:10,320 --> 00:05:11,880 Speaker 1: I think it was the A and you came out 97 00:05:11,880 --> 00:05:14,760 Speaker 1: and said there's three million people will qualify or as 98 00:05:14,800 --> 00:05:17,960 Speaker 1: we stand today, and that proportion is going to go 99 00:05:18,480 --> 00:05:21,799 Speaker 1: through the roof in the future. The point I'm making 100 00:05:21,920 --> 00:05:24,560 Speaker 1: is so it's not so much an exclusive club and anymore. 101 00:05:25,120 --> 00:05:28,719 Speaker 1: The other thing, obviously is that it's strictly on dollars. Now, 102 00:05:28,800 --> 00:05:30,680 Speaker 1: what are the criticisms? And I want to put this 103 00:05:30,720 --> 00:05:33,160 Speaker 1: on for our listeners. Just by the way, folks, I 104 00:05:33,200 --> 00:05:35,640 Speaker 1: do not want to you not to consider being a 105 00:05:35,680 --> 00:05:40,040 Speaker 1: FA sophisticated investor absolutely, why not. You should go for 106 00:05:40,080 --> 00:05:42,320 Speaker 1: everything you can, but I think we should make it 107 00:05:42,360 --> 00:05:45,560 Speaker 1: clear that what is the price of it, Peter in 108 00:05:45,640 --> 00:05:49,039 Speaker 1: terms of consumer protection, which isn't always mentioned in the 109 00:05:49,120 --> 00:05:49,760 Speaker 1: coverage of this. 110 00:05:50,720 --> 00:05:54,120 Speaker 2: Yeah, that's right. Certainly it gives you access to board 111 00:05:54,160 --> 00:05:57,120 Speaker 2: a round's investment options. But the downside is that you 112 00:05:57,680 --> 00:06:01,080 Speaker 2: don't have the same level of protection consumer protection that 113 00:06:01,160 --> 00:06:04,960 Speaker 2: you would have if you're being treated as a retail investor. So, 114 00:06:05,279 --> 00:06:08,599 Speaker 2: for example, the financial advisor that may be giving advice 115 00:06:08,640 --> 00:06:11,440 Speaker 2: about the product is not bound by the requirement to 116 00:06:11,480 --> 00:06:13,840 Speaker 2: act in your best interest when giving that advice. They 117 00:06:13,839 --> 00:06:16,080 Speaker 2: don't need to issue you with what we call a 118 00:06:16,120 --> 00:06:19,680 Speaker 2: statement of advice or a product disclosure statement, So there's 119 00:06:20,000 --> 00:06:23,560 Speaker 2: much more relaxed disclosure rules around these things if you're 120 00:06:23,560 --> 00:06:26,240 Speaker 2: treated as a wholesale investor. But also you don't have 121 00:06:26,360 --> 00:06:29,760 Speaker 2: access to the complaints body so aftern we call it 122 00:06:29,800 --> 00:06:32,719 Speaker 2: the use join Financial Complaints Authority. And also you don't 123 00:06:32,760 --> 00:06:35,719 Speaker 2: have access to the advisor's internal dispute mechanism as well, 124 00:06:35,800 --> 00:06:38,680 Speaker 2: So if you're not happy with the advice you received, 125 00:06:39,040 --> 00:06:41,520 Speaker 2: then you don't have the ability to go to those 126 00:06:41,560 --> 00:06:45,159 Speaker 2: complaint bodies like you would if you were a retail investor, 127 00:06:45,200 --> 00:06:46,200 Speaker 2: and it's really important. 128 00:06:46,279 --> 00:06:48,560 Speaker 1: If your investment gets wiped up, you're on your own. 129 00:06:48,760 --> 00:06:50,880 Speaker 1: You're on your own. You're saying the document, you've presented 130 00:06:50,920 --> 00:06:55,680 Speaker 1: yourself as a sophisticator's investor, and so that's it. That's 131 00:06:55,720 --> 00:06:57,080 Speaker 1: the kind of price of it, is it. 132 00:06:57,960 --> 00:07:00,240 Speaker 2: That's right, you don't have access to it is a 133 00:07:00,279 --> 00:07:02,760 Speaker 2: compensation like you would have if you were all. 134 00:07:02,640 --> 00:07:05,839 Speaker 1: Potentially it's a bit scary that the financial advisor doesn't 135 00:07:05,880 --> 00:07:08,600 Speaker 1: have to act in your best interest. That's scary because 136 00:07:08,640 --> 00:07:10,760 Speaker 1: of what I'm leading to is I know because I 137 00:07:10,840 --> 00:07:14,280 Speaker 1: cover financial advice very thoroughly, and we publish a survey 138 00:07:14,280 --> 00:07:16,320 Speaker 1: of course every year the top one hundred and fifty 139 00:07:16,440 --> 00:07:20,280 Speaker 1: financial advisors that, for the sake of efficiency and side 140 00:07:20,280 --> 00:07:24,240 Speaker 1: stepping a mountain of red tape, many top advisors now 141 00:07:24,480 --> 00:07:27,960 Speaker 1: just say we're wholesale only. They just say, sorry, our 142 00:07:27,960 --> 00:07:30,800 Speaker 1: client book we're pretty full. You know, we just have 143 00:07:30,880 --> 00:07:33,880 Speaker 1: to be efficient, so we're just taking people on who 144 00:07:33,920 --> 00:07:37,960 Speaker 1: are strictly sophisticated. Are you familiar with that development. 145 00:07:38,760 --> 00:07:41,280 Speaker 2: Yes, Look, there are certainly advisors out there that only 146 00:07:41,320 --> 00:07:44,160 Speaker 2: give advice to wholes you know, to wholesale clients on 147 00:07:44,160 --> 00:07:48,520 Speaker 2: that basis. Yes, that's true, and yeah, I think it's 148 00:07:48,520 --> 00:07:50,880 Speaker 2: fair to say that there are some that provide advice 149 00:07:50,920 --> 00:07:53,120 Speaker 2: to both types of clients. But absolutely there are some 150 00:07:53,240 --> 00:07:55,680 Speaker 2: out there that are just focusing on wholesale clients and 151 00:07:55,720 --> 00:07:58,000 Speaker 2: because of that, they don't need they're not subject for 152 00:07:58,000 --> 00:08:00,440 Speaker 2: the same regulatory the supervision that others are. 153 00:08:00,600 --> 00:08:03,800 Speaker 1: So, yeah, you can include your house in this. 154 00:08:05,360 --> 00:08:07,840 Speaker 2: Yes, true. So the threshold that I mentioned that two 155 00:08:07,840 --> 00:08:09,920 Speaker 2: and a half million dollars in net asset, you can 156 00:08:10,040 --> 00:08:12,680 Speaker 2: include your house in that. And of course that's why 157 00:08:12,680 --> 00:08:15,280 Speaker 2: there's so much discussion around these thresholds, because we know 158 00:08:15,360 --> 00:08:18,760 Speaker 2: that house prices have significantly increased over the last two decades. 159 00:08:18,840 --> 00:08:21,440 Speaker 2: So when these thresholds were first putting back in two 160 00:08:21,480 --> 00:08:24,320 Speaker 2: thousand and one, housing prizes are certainly not what they 161 00:08:24,320 --> 00:08:26,960 Speaker 2: are today. And you were saying before some of the figures, 162 00:08:26,960 --> 00:08:29,160 Speaker 2: but you know, when these thresholds were first put in 163 00:08:29,200 --> 00:08:31,720 Speaker 2: place in two thousand and one, around two percent of 164 00:08:31,760 --> 00:08:35,000 Speaker 2: the adult population would classify or qualify potentially as a 165 00:08:35,000 --> 00:08:38,559 Speaker 2: wholesale investor. Now it's close to twenty percent of the population, 166 00:08:38,640 --> 00:08:41,480 Speaker 2: and they're forecasting by twenty forty one that you know, 167 00:08:41,520 --> 00:08:43,760 Speaker 2: that percentage will be over forty percent of the adult 168 00:08:43,760 --> 00:08:47,040 Speaker 2: population would actually meet the definition of a wholesale investor 169 00:08:47,120 --> 00:08:48,320 Speaker 2: based on those thresholds. 170 00:08:48,840 --> 00:08:51,760 Speaker 1: So it's it's gone up by ten times. Quick question, 171 00:08:51,880 --> 00:08:56,600 Speaker 1: simple question in technical or academic investments work, and you 172 00:08:56,600 --> 00:09:01,320 Speaker 1: would be you were previously course the tactical chiefs, you'd 173 00:09:01,320 --> 00:09:05,480 Speaker 1: be right across this. A house is not seen from 174 00:09:05,480 --> 00:09:08,640 Speaker 1: a textbook perspective as an investable asset. Is it a home? 175 00:09:09,520 --> 00:09:12,160 Speaker 2: Not from a seal phone perspective? If you're living in it, 176 00:09:12,200 --> 00:09:16,839 Speaker 2: obviously you can't hold those type of investments, and. 177 00:09:16,080 --> 00:09:19,400 Speaker 1: So do you think it should be excluded. 178 00:09:20,080 --> 00:09:22,560 Speaker 2: Well, it's an open question, James, as to whether the 179 00:09:22,800 --> 00:09:25,400 Speaker 2: house should be included in the in that threshold. Now, 180 00:09:25,640 --> 00:09:28,559 Speaker 2: there was a parliamentary inquiry that looked at this very 181 00:09:28,600 --> 00:09:31,800 Speaker 2: issue as to whether these thresholds should actually be increased, 182 00:09:31,800 --> 00:09:35,120 Speaker 2: and that inquiry was completed for the report came out 183 00:09:35,120 --> 00:09:38,160 Speaker 2: earlier this year, and it may surprise some that they 184 00:09:38,240 --> 00:09:41,440 Speaker 2: came to the conclusion that the thresholds shouldn't be changed. 185 00:09:41,600 --> 00:09:44,920 Speaker 2: There were certainly plenty of submissions to that inquiry suggesting 186 00:09:44,960 --> 00:09:47,679 Speaker 2: that the threshold should change because obviously it's been as 187 00:09:47,679 --> 00:09:50,240 Speaker 2: we're saying it's been two decades now and they haven't changed. 188 00:09:50,840 --> 00:09:53,839 Speaker 2: There are plenty of submissions suggesting that they shouldn't change. 189 00:09:53,920 --> 00:09:55,960 Speaker 2: And some of the reasons that were put forward for 190 00:09:56,040 --> 00:09:58,599 Speaker 2: that is that these thresholds are actually not out of 191 00:09:58,640 --> 00:10:01,080 Speaker 2: step with the rest of the world. In other places 192 00:10:01,120 --> 00:10:02,960 Speaker 2: around the world that they have these type of tests 193 00:10:03,040 --> 00:10:06,280 Speaker 2: and our thresholds here are consistent with that. And there's 194 00:10:06,320 --> 00:10:09,200 Speaker 2: an argument that as a community, we are more financially 195 00:10:09,280 --> 00:10:12,160 Speaker 2: literate today than we were perhaps twenty years ago. There's 196 00:10:12,640 --> 00:10:14,199 Speaker 2: access to information. 197 00:10:14,000 --> 00:10:16,200 Speaker 1: I wonder, and I don't say that facetiously. I'm on 198 00:10:16,240 --> 00:10:19,840 Speaker 1: the border of the Financial Literacy Foundation EXTRA and we 199 00:10:19,960 --> 00:10:22,600 Speaker 1: know that the OBCD figures showed that Australia actually has 200 00:10:22,640 --> 00:10:26,560 Speaker 1: to claimed in terms of financial literacy year after year internationally. 201 00:10:26,559 --> 00:10:29,760 Speaker 1: So that doesn't stand up. But tell me, what did 202 00:10:29,800 --> 00:10:31,360 Speaker 1: you want? What would you like to see in the 203 00:10:31,360 --> 00:10:33,840 Speaker 1: investor tests? What was your what did your submission see? 204 00:10:34,840 --> 00:10:37,600 Speaker 2: Well, we would like to see at least certification that 205 00:10:37,920 --> 00:10:40,760 Speaker 2: individuals who have been classified as a whole sil investor 206 00:10:40,920 --> 00:10:44,000 Speaker 2: absolutely are aware that they've been classified as a whole 207 00:10:44,040 --> 00:10:46,400 Speaker 2: SiGe investor and that they acknowledge that, so that they 208 00:10:46,480 --> 00:10:48,679 Speaker 2: understand the consequences of that. One of the problems with 209 00:10:48,720 --> 00:10:51,600 Speaker 2: the current sy there's no requirement for someone who's been 210 00:10:51,600 --> 00:10:55,280 Speaker 2: classified as a wholesale investor to actually acknowledge that and 211 00:10:55,360 --> 00:10:58,360 Speaker 2: to fully understand the consequences have been treated as a 212 00:10:58,360 --> 00:11:00,680 Speaker 2: whole stal investor. So, you know what we would like 213 00:11:00,720 --> 00:11:02,880 Speaker 2: to see, and this is really a recommendation coming out 214 00:11:02,880 --> 00:11:04,960 Speaker 2: of the Quality of Vice review which was undertaken a 215 00:11:04,960 --> 00:11:08,079 Speaker 2: few years ago and now by Michelle Leedy, that investors 216 00:11:08,080 --> 00:11:12,000 Speaker 2: should be required to acknowledge that yes to being treated 217 00:11:12,040 --> 00:11:14,520 Speaker 2: as a whole tale investor, and that they are fully 218 00:11:14,520 --> 00:11:17,280 Speaker 2: aware of the consequences of being treated as a whole 219 00:11:17,320 --> 00:11:18,000 Speaker 2: sal investor. 220 00:11:19,400 --> 00:11:22,959 Speaker 1: Okay, and what about competency in the form of knowledge 221 00:11:23,120 --> 00:11:26,439 Speaker 1: as opposed to just having enough money? 222 00:11:26,520 --> 00:11:29,000 Speaker 2: Yeah, look, I think you could argue that threshold and 223 00:11:29,200 --> 00:11:31,439 Speaker 2: not the only thing that should be taken into consideration 224 00:11:31,520 --> 00:11:33,839 Speaker 2: here when determining when there's someone's financial literate or not. 225 00:11:34,000 --> 00:11:36,160 Speaker 2: And there is a place for some other types of assessments, 226 00:11:36,200 --> 00:11:39,160 Speaker 2: but that could be complex as to how you introduce 227 00:11:39,240 --> 00:11:41,600 Speaker 2: those type of things. But we certainly wouldn't be opposed 228 00:11:41,600 --> 00:11:44,520 Speaker 2: to some other tests being applied that's based on experience 229 00:11:44,760 --> 00:11:47,240 Speaker 2: similar to what we see for the sophisticated investor tests. 230 00:11:47,280 --> 00:11:50,040 Speaker 2: Right now, if you're coming in through that pathway, then, 231 00:11:50,080 --> 00:11:52,720 Speaker 2: as I said earlier on the licensee already has to 232 00:11:52,720 --> 00:11:55,319 Speaker 2: get a declaration from you that you understand that you're 233 00:11:55,360 --> 00:11:57,440 Speaker 2: being treated as a whole, stole investor and you understand 234 00:11:57,440 --> 00:11:58,160 Speaker 2: the consequence. 235 00:11:58,320 --> 00:12:01,120 Speaker 1: So you're to see first of all, rock bottom. You'd 236 00:12:01,120 --> 00:12:04,080 Speaker 1: like to see evidence that the person knows that they 237 00:12:04,200 --> 00:12:06,840 Speaker 1: think lassified, because it's pretty scary to think that they 238 00:12:06,920 --> 00:12:11,200 Speaker 1: might know. Secondly, that you do some capacity for some 239 00:12:11,360 --> 00:12:13,000 Speaker 1: knowledge test of some description. 240 00:12:13,240 --> 00:12:14,960 Speaker 2: Is that right? Yeah, that's right? 241 00:12:15,320 --> 00:12:18,080 Speaker 1: And okay, Acik, the regulator whatever came out of the 242 00:12:18,200 --> 00:12:22,480 Speaker 1: parliamentary inquiry, ack the regulator, the peak regulator once it 243 00:12:22,520 --> 00:12:24,320 Speaker 1: lifted to four point five million, we know that. What 244 00:12:24,400 --> 00:12:24,840 Speaker 1: do you think? 245 00:12:26,080 --> 00:12:27,640 Speaker 2: Yeah, Look, we were in that when we made a 246 00:12:27,640 --> 00:12:29,600 Speaker 2: submission to this. We were part of a joint submission 247 00:12:29,640 --> 00:12:31,640 Speaker 2: with a number of other associations, and we were in 248 00:12:31,640 --> 00:12:33,920 Speaker 2: the camp. I was saying, well, yes, it makes sense 249 00:12:33,960 --> 00:12:37,080 Speaker 2: that the threshold should increase, Acik. We're proposing an increase, 250 00:12:37,120 --> 00:12:39,280 Speaker 2: I think in line with inflation. So if it had 251 00:12:39,320 --> 00:12:41,880 Speaker 2: been increased in line with inflation, sits two thousand and one, 252 00:12:41,960 --> 00:12:44,000 Speaker 2: we would be out around that four point six million 253 00:12:44,040 --> 00:12:46,480 Speaker 2: dollars today and so that makes sense to us. So 254 00:12:46,520 --> 00:12:49,959 Speaker 2: we were certainly in the camp of yes, increasing those thresholds, and. 255 00:12:49,960 --> 00:12:51,360 Speaker 1: Did you want it indexed as well? 256 00:12:51,559 --> 00:12:54,320 Speaker 2: Yes, we think there is grounds for indexation. It should 257 00:12:54,440 --> 00:12:56,960 Speaker 2: be a certain forget threshold. We believe it's probe to 258 00:12:57,000 --> 00:12:59,280 Speaker 2: have indexation in there as well. But you know, if 259 00:12:59,320 --> 00:13:02,040 Speaker 2: you go to incre to reach these thresholds, it rises questions, 260 00:13:02,120 --> 00:13:03,839 Speaker 2: Ryan grain fathering, what do we do with all these 261 00:13:03,880 --> 00:13:06,280 Speaker 2: people that have been in there now and there's a 262 00:13:06,280 --> 00:13:08,160 Speaker 2: lot to work through. You are going to increase the 263 00:13:08,200 --> 00:13:08,960 Speaker 2: rest thresholds. 264 00:13:11,240 --> 00:13:15,280 Speaker 1: Okay, Interesting about the indexing, which is a most perfect 265 00:13:15,320 --> 00:13:17,680 Speaker 1: segue to what I want to talk to you about next, 266 00:13:18,120 --> 00:13:20,080 Speaker 1: which is the super tax, which of course you are 267 00:13:20,360 --> 00:13:24,160 Speaker 1: in the vanguard of that debate representing self managed super 268 00:13:24,200 --> 00:13:27,520 Speaker 1: fund investors who were very much in the frame, if 269 00:13:27,559 --> 00:13:30,760 Speaker 1: not in the target, of the measure. We'll be back 270 00:13:30,760 --> 00:13:32,200 Speaker 1: in a moment and we're going to catch up on 271 00:13:32,280 --> 00:13:44,000 Speaker 1: exactly what's going on with the new supertax. Hello, welcome 272 00:13:44,000 --> 00:13:46,800 Speaker 1: back to The Australian's Money Puzzle podcast. I'm James Kirby 273 00:13:46,840 --> 00:13:50,480 Speaker 1: talking to Peter Burgess of the Self Managed Super Funds Association, 274 00:13:50,880 --> 00:13:53,480 Speaker 1: the CEO and someone who is in the thick of it. 275 00:13:53,559 --> 00:13:56,959 Speaker 1: Let me tell you about the new supertax. Okay, how 276 00:13:56,960 --> 00:13:59,240 Speaker 1: do I do this? How about I say to you, Peter, 277 00:13:59,360 --> 00:14:01,600 Speaker 1: this is what I think is going on with the 278 00:14:01,640 --> 00:14:05,720 Speaker 1: new supertax. It is technically has happened. 279 00:14:06,320 --> 00:14:07,360 Speaker 2: It's a law. 280 00:14:07,880 --> 00:14:11,600 Speaker 1: It adds fifteen percent tax on earnings above three million 281 00:14:12,040 --> 00:14:16,960 Speaker 1: and it is based on realized gains. It started on 282 00:14:17,080 --> 00:14:21,720 Speaker 1: July one, being roughly seven weeks ago. However, it hasn't 283 00:14:21,720 --> 00:14:23,600 Speaker 1: passed parliament yet. That's all I know. 284 00:14:24,280 --> 00:14:24,880 Speaker 2: What do you know? 285 00:14:27,160 --> 00:14:32,000 Speaker 1: That's why ally of that it hasn't been passed. It's 286 00:14:32,040 --> 00:14:34,480 Speaker 1: not even on the list as I understand. But what 287 00:14:34,520 --> 00:14:35,320 Speaker 1: do you understand? 288 00:14:36,000 --> 00:14:39,479 Speaker 2: Yes, there's been no sign of the legislation being reintroduced 289 00:14:39,520 --> 00:14:41,960 Speaker 2: into parliament because of course it was introduced into the 290 00:14:41,960 --> 00:14:45,080 Speaker 2: previous parliament but didn't pass prior to the election being 291 00:14:45,080 --> 00:14:47,920 Speaker 2: called to it lapsed and we haven't seen it reintroduced 292 00:14:47,920 --> 00:14:50,640 Speaker 2: into the new parliament yet. Now the Treasurer has made 293 00:14:50,640 --> 00:14:53,440 Speaker 2: it very clear that he intends to proceed with this measure, 294 00:14:53,560 --> 00:14:57,840 Speaker 2: so we are expecting to see this legislation introduced into Parliament, 295 00:14:57,920 --> 00:14:59,720 Speaker 2: possibly in the next sitting, which will be at the 296 00:14:59,840 --> 00:15:03,160 Speaker 2: end of October. Now, at this point in time, the 297 00:15:03,200 --> 00:15:05,800 Speaker 2: government is saying that they want this to apply from 298 00:15:05,880 --> 00:15:08,720 Speaker 2: one July twenty twenty five, which was the There has 299 00:15:08,720 --> 00:15:11,200 Speaker 2: always been the start date for this particular measure, which 300 00:15:11,520 --> 00:15:14,120 Speaker 2: you know, if it's not passed until late October, we're 301 00:15:14,160 --> 00:15:16,800 Speaker 2: well into this financial year and that's going to be 302 00:15:16,880 --> 00:15:20,040 Speaker 2: backdated to the first July twenty twenty five. We have 303 00:15:20,120 --> 00:15:22,400 Speaker 2: to take the Treasure on face value that he is 304 00:15:22,600 --> 00:15:25,720 Speaker 2: certainly keen to proceed with this. We think it is 305 00:15:25,920 --> 00:15:28,480 Speaker 2: likely to happen. I think what the debate right now 306 00:15:28,640 --> 00:15:31,680 Speaker 2: is all about is what should that start date be. Now. 307 00:15:31,800 --> 00:15:35,720 Speaker 2: In our view, it's inappropriate, we think, and unfair for 308 00:15:35,840 --> 00:15:37,840 Speaker 2: this tax to be backdated to the first of July 309 00:15:37,920 --> 00:15:41,280 Speaker 2: twenty twenty five. What it means, of course, is that 310 00:15:41,320 --> 00:15:43,520 Speaker 2: people will won't have a lot of time to make 311 00:15:43,600 --> 00:15:48,160 Speaker 2: adjustments to their financial affairs for this tax, because what 312 00:15:48,200 --> 00:15:51,040 Speaker 2: we call the first test time, which is thirty June 313 00:15:51,080 --> 00:15:53,720 Speaker 2: twenty twenty six, assuming it does start from one July 314 00:15:53,840 --> 00:15:56,680 Speaker 2: twenty twenty five, we've got our first test time Now 315 00:15:56,680 --> 00:15:59,160 Speaker 2: that's the first date in which people will be assessed 316 00:15:59,160 --> 00:16:01,760 Speaker 2: against the three minute, not a threshold they're collecting. 317 00:16:01,800 --> 00:16:06,320 Speaker 1: Basically, they're collecting tax revenue from that date looking back 318 00:16:06,400 --> 00:16:07,800 Speaker 1: over the previous twelve months. 319 00:16:07,840 --> 00:16:10,680 Speaker 2: Is that if you're over three million dollars at thirty 320 00:16:10,720 --> 00:16:13,960 Speaker 2: June twenty twenty six, well then you will pay Division 321 00:16:13,960 --> 00:16:16,240 Speaker 2: two nine to six tax for that for the twenty 322 00:16:16,240 --> 00:16:17,880 Speaker 2: five twenty six financial year. 323 00:16:17,960 --> 00:16:21,160 Speaker 1: Now, what is your sort of rough bottom demand here? 324 00:16:21,440 --> 00:16:24,880 Speaker 2: Well, we've opposed this tax from the outset. I should 325 00:16:24,920 --> 00:16:26,680 Speaker 2: say that, you know, I'm yet to speak to one 326 00:16:26,680 --> 00:16:29,640 Speaker 2: of our members yet that disagrees that, you know, tax 327 00:16:29,640 --> 00:16:33,360 Speaker 2: concessions for those with excessively large superheroation balances shouldn't be 328 00:16:33,840 --> 00:16:36,760 Speaker 2: reduced in some way. It's the design of this tax 329 00:16:36,800 --> 00:16:41,920 Speaker 2: though that everyone is against. It's taxing the unrealized capital 330 00:16:42,040 --> 00:16:44,440 Speaker 2: gains is not the solution here. There are other ways 331 00:16:44,440 --> 00:16:46,880 Speaker 2: in which we can go about reducing tax concessions for 332 00:16:46,920 --> 00:16:50,400 Speaker 2: people that have very large supernoation balances. This is not 333 00:16:50,520 --> 00:16:53,480 Speaker 2: the solution taxing people on an unrealized capital gain. So, 334 00:16:54,000 --> 00:16:56,720 Speaker 2: you know, we have put forward different ideas to government. 335 00:16:56,840 --> 00:16:59,920 Speaker 2: We've put forward amendments to the existing legislation to make it. 336 00:17:00,800 --> 00:17:03,640 Speaker 2: If we're going to have a tax on earnings like this, 337 00:17:03,840 --> 00:17:05,720 Speaker 2: then it has to be based on what we call 338 00:17:05,800 --> 00:17:08,720 Speaker 2: actual tax bill ownings, because as soon as you move 339 00:17:08,760 --> 00:17:11,600 Speaker 2: away from that, then you are taxing people and unrealized 340 00:17:11,640 --> 00:17:14,080 Speaker 2: capital gains. And so we've been trying to convince the 341 00:17:14,119 --> 00:17:17,280 Speaker 2: government that they need to make amendments to this legislation 342 00:17:17,400 --> 00:17:20,440 Speaker 2: to get it back to actual tax will income. I think, 343 00:17:20,480 --> 00:17:23,000 Speaker 2: as I said, we will see this legislation introduced. I 344 00:17:23,080 --> 00:17:26,320 Speaker 2: expect the Government will be very keen to get this 345 00:17:26,440 --> 00:17:29,800 Speaker 2: through quickly, so they'll need the Greens support, and not 346 00:17:29,840 --> 00:17:32,560 Speaker 2: only to support the bill, but they'll also need the 347 00:17:32,600 --> 00:17:35,040 Speaker 2: Greens we think, to support what we call a guillotine motion, 348 00:17:35,680 --> 00:17:37,880 Speaker 2: because I think the government will be keen to bypass 349 00:17:37,960 --> 00:17:41,480 Speaker 2: the normal debate phase in Parliament and also committee stage 350 00:17:41,480 --> 00:17:43,760 Speaker 2: of this, and they want to go to a vote 351 00:17:43,800 --> 00:17:44,439 Speaker 2: and they'll need. 352 00:17:44,280 --> 00:17:46,160 Speaker 1: The Gun and then do a trade off. I want 353 00:17:46,160 --> 00:17:48,879 Speaker 1: to do this. What's your worst case scenario that the 354 00:17:48,880 --> 00:17:51,840 Speaker 1: Greens get their way and the whole thing goes through 355 00:17:51,880 --> 00:17:55,400 Speaker 1: as planned, except that Kapp is two million instead of three. 356 00:17:55,600 --> 00:17:56,760 Speaker 1: What's your worst case scenario? 357 00:17:57,240 --> 00:17:59,360 Speaker 2: Yeah, look, the worst cast scenario is that it does 358 00:17:59,400 --> 00:18:02,639 Speaker 2: go through with lower threshold, So it goes through without changes, 359 00:18:02,680 --> 00:18:05,240 Speaker 2: So they do tax unrealized capital gains in the threshold 360 00:18:05,280 --> 00:18:08,080 Speaker 2: applies for two million dollars. Now, you know, I would 361 00:18:08,080 --> 00:18:11,240 Speaker 2: be amazed if the government agrees to reduce the thresholder 362 00:18:11,240 --> 00:18:13,600 Speaker 2: two million dollars. It would mean even more people are 363 00:18:13,640 --> 00:18:16,040 Speaker 2: going to be infected by the taxing underrealized capital gains. 364 00:18:16,040 --> 00:18:18,200 Speaker 2: And of course they are cropping a fever of heat 365 00:18:18,200 --> 00:18:21,159 Speaker 2: about that. So I'd be very surprised if agrees to 366 00:18:21,200 --> 00:18:22,440 Speaker 2: drop it to two million dollars. 367 00:18:22,880 --> 00:18:25,000 Speaker 1: And your best case that they push it forward a 368 00:18:25,080 --> 00:18:28,160 Speaker 1: year perhaps and do some amendments, and what might those 369 00:18:28,160 --> 00:18:29,320 Speaker 1: amendments feasibly be. 370 00:18:30,720 --> 00:18:32,800 Speaker 2: Yeah, So look, our best case here would be we 371 00:18:32,840 --> 00:18:34,720 Speaker 2: want this tax to ferd by at least twelve months. 372 00:18:34,800 --> 00:18:37,480 Speaker 2: We think people need more time to make adjustments to 373 00:18:37,520 --> 00:18:40,399 Speaker 2: their financial affairs, and Treasury acknowledge this when the legislation 374 00:18:40,600 --> 00:18:43,440 Speaker 2: was first announced, that people would need a long lead 375 00:18:43,520 --> 00:18:45,840 Speaker 2: in time in order to adjust to this tax. Now, 376 00:18:45,880 --> 00:18:49,000 Speaker 2: in some cases it requires people to be selling property 377 00:18:49,000 --> 00:18:51,800 Speaker 2: out of their self many superfund That takes time. So 378 00:18:51,840 --> 00:18:53,920 Speaker 2: there was an ignowledgment back then that at least twelve 379 00:18:53,960 --> 00:18:56,199 Speaker 2: months now, we're not going to have that if they 380 00:18:56,280 --> 00:18:57,960 Speaker 2: push forward to the star date of one to low 381 00:18:58,040 --> 00:19:00,679 Speaker 2: twenty five. So yes, we want to see pherrel. We 382 00:19:00,760 --> 00:19:03,680 Speaker 2: think that we'll give the government an opportunity to sit 383 00:19:03,760 --> 00:19:06,960 Speaker 2: down with the industry and talk through some other ways 384 00:19:07,000 --> 00:19:09,880 Speaker 2: to go about this and hopefully address the taxing unrealized 385 00:19:09,920 --> 00:19:13,479 Speaker 2: capital gains. We believe there are ways amendments that can 386 00:19:13,520 --> 00:19:15,840 Speaker 2: be made this legislation to get it back to using 387 00:19:15,880 --> 00:19:18,000 Speaker 2: actual taxble earnings and if we get back to that, 388 00:19:18,440 --> 00:19:20,879 Speaker 2: then we're not taxing unrealized gains. And that's the big 389 00:19:21,000 --> 00:19:23,520 Speaker 2: problem with this tax. Big problem the designer this tax 390 00:19:23,520 --> 00:19:25,800 Speaker 2: that we've been against since day one, and we'll keep 391 00:19:25,920 --> 00:19:27,920 Speaker 2: advocating against it as long as we can. 392 00:19:30,160 --> 00:19:33,760 Speaker 1: Right one last thing. If they're pushing forward a year, 393 00:19:34,160 --> 00:19:36,720 Speaker 1: there are revenue estimates. Obviously in the budget I think 394 00:19:36,760 --> 00:19:39,399 Speaker 1: I saw our political team said it would cost three 395 00:19:39,480 --> 00:19:44,959 Speaker 1: hundred million in last revenue. So that would wear against 396 00:19:45,040 --> 00:19:46,120 Speaker 1: your hoops. 397 00:19:46,960 --> 00:19:49,560 Speaker 2: Well well pit potentially, yes, but in the scheme of things, 398 00:19:49,600 --> 00:19:51,239 Speaker 2: I'd like to think that's a rounding error, and then 399 00:19:51,280 --> 00:19:53,200 Speaker 2: there is scope for the government to sit down with 400 00:19:53,240 --> 00:19:55,760 Speaker 2: the industry. Gives more time, as I said, to consult 401 00:19:55,800 --> 00:19:57,960 Speaker 2: on some of the design features of this tax which 402 00:19:57,960 --> 00:19:59,280 Speaker 2: have been non negotiable today. 403 00:20:00,040 --> 00:20:02,800 Speaker 1: Okay, very good, All right, well folks, there you are. 404 00:20:02,840 --> 00:20:08,040 Speaker 1: That's the latest on the new super tax. It's fascinating 405 00:20:08,359 --> 00:20:12,600 Speaker 1: that it isn't even pasted in Parliament that was supposed 406 00:20:12,600 --> 00:20:15,679 Speaker 1: to have started seven weeks ago. It's also fascinating, as 407 00:20:15,680 --> 00:20:18,040 Speaker 1: Peter said, that they may do what they call it guillotine, 408 00:20:18,480 --> 00:20:22,000 Speaker 1: and what that means is that basically, one afternoon, out 409 00:20:22,040 --> 00:20:24,040 Speaker 1: of the blue, they say it's going through now and 410 00:20:24,080 --> 00:20:26,560 Speaker 1: you've got about an hour to fix it, and there's 411 00:20:26,600 --> 00:20:28,840 Speaker 1: a deal done, a backroom deal. Basically they say to 412 00:20:28,880 --> 00:20:32,440 Speaker 1: the Green something entirely different, utterly different, like they'll put 413 00:20:32,440 --> 00:20:34,879 Speaker 1: three windmills in somewhere else, or nothing to do with 414 00:20:34,920 --> 00:20:37,199 Speaker 1: super whatsoever. It's called a guillotine. They package it all 415 00:20:37,280 --> 00:20:39,600 Speaker 1: up and they go bang, it's done. And that obviously 416 00:20:39,680 --> 00:20:41,760 Speaker 1: is the distinct risk here, I would think. All right, 417 00:20:41,800 --> 00:20:43,480 Speaker 1: back in the moment, I've got some good questions ready 418 00:20:43,520 --> 00:20:54,000 Speaker 1: for Peter. Hello and welcome back to The Australian's Money 419 00:20:54,040 --> 00:20:57,360 Speaker 1: Puzzle podcast. I'm with Peter Burgess. He's the chief executive 420 00:20:57,400 --> 00:21:01,280 Speaker 1: officer of the self managed super funds souciation, which represents, 421 00:21:01,359 --> 00:21:05,240 Speaker 1: as you may well know, something like how many people now, Peter, 422 00:21:05,400 --> 00:21:07,840 Speaker 1: one point three or four million? 423 00:21:08,440 --> 00:21:11,440 Speaker 2: Oh my, we're two million trustees, six hundred and forty 424 00:21:11,600 --> 00:21:13,480 Speaker 2: thousand odd self many super funds. 425 00:21:13,520 --> 00:21:16,639 Speaker 1: Okay, yeah, yes, one point two million people in the 426 00:21:16,680 --> 00:21:20,480 Speaker 1: self man super funds now, which is good, good to see, 427 00:21:20,520 --> 00:21:24,240 Speaker 1: and it's a marvelous way for people who do the 428 00:21:24,280 --> 00:21:27,119 Speaker 1: work and do the homework to invest. And it's something 429 00:21:27,160 --> 00:21:30,159 Speaker 1: that yes, I am enthusiastic about because I think for 430 00:21:30,240 --> 00:21:32,919 Speaker 1: someone who was an active investor, it does open up 431 00:21:32,920 --> 00:21:34,960 Speaker 1: all sorts of opportunities if you're willing to do the 432 00:21:35,000 --> 00:21:38,600 Speaker 1: work and take the responsibility. All right, now, a first 433 00:21:38,680 --> 00:21:41,520 Speaker 1: piece of correspondence is this is a piece of correspondence 434 00:21:41,600 --> 00:21:44,000 Speaker 1: that came in. The person wanted to keep their name, 435 00:21:44,040 --> 00:21:46,320 Speaker 1: didn't want their name used at all, first name or 436 00:21:46,359 --> 00:21:48,399 Speaker 1: second name, so I'll have to stick with that. But 437 00:21:48,600 --> 00:21:52,000 Speaker 1: here it is your last podcast on financial literacy as 438 00:21:52,040 --> 00:21:56,360 Speaker 1: the ultimate defense against scandals. Particularly resonated with me. Last 439 00:21:56,440 --> 00:21:58,680 Speaker 1: year we had a family member involved in a scandal. 440 00:21:58,720 --> 00:22:00,760 Speaker 1: They lost a lot of money. Family was in a 441 00:22:00,760 --> 00:22:05,560 Speaker 1: state of shock. We try to report or engaged with 442 00:22:05,600 --> 00:22:08,280 Speaker 1: the bank this person's account was with, but they showed 443 00:22:08,280 --> 00:22:12,480 Speaker 1: no interest blaming the victim. I was surprised, as with 444 00:22:12,560 --> 00:22:16,480 Speaker 1: the high level of automation based on computer processing we 445 00:22:16,600 --> 00:22:18,600 Speaker 1: currently have, someone should have been able to pick up 446 00:22:18,600 --> 00:22:21,359 Speaker 1: the sudden increase in activity with this one account, but 447 00:22:21,440 --> 00:22:24,560 Speaker 1: no one did. We tried reporting also to the local police, 448 00:22:24,760 --> 00:22:28,040 Speaker 1: again no response. We have reported it to scam Watch. 449 00:22:29,440 --> 00:22:31,879 Speaker 1: We've moved on with life, but we feel as if 450 00:22:31,920 --> 00:22:35,240 Speaker 1: the banks are only there as a big ATM, not 451 00:22:35,359 --> 00:22:40,000 Speaker 1: to help safeguard our livelihood. That's a genuine peace correspondence 452 00:22:40,200 --> 00:22:43,280 Speaker 1: from someone who was scammed, and I recommend you do 453 00:22:43,359 --> 00:22:47,359 Speaker 1: listen to last week's Peace podcast with doctor Tracy West 454 00:22:47,600 --> 00:22:50,200 Speaker 1: of the Extra Foundation, who was the education manager there 455 00:22:50,200 --> 00:22:53,040 Speaker 1: about basically, we can do a lot of regulation, you 456 00:22:53,040 --> 00:22:55,520 Speaker 1: can have piles of regulation, but there's nothing strong I 457 00:22:55,520 --> 00:23:01,160 Speaker 1: think as self defense in terms of financially financially interested 458 00:23:01,160 --> 00:23:03,080 Speaker 1: getting up to speed to yourself or getting your kids 459 00:23:03,119 --> 00:23:05,720 Speaker 1: up to speed in school, which is something we were 460 00:23:05,800 --> 00:23:09,040 Speaker 1: driving at in that podcast. All right, Don asks, well, 461 00:23:09,080 --> 00:23:15,520 Speaker 1: the fifteen percent supertax apply to both accumulation or pension 462 00:23:15,560 --> 00:23:21,840 Speaker 1: balances of a three million, and will it include pension withdraws, so. 463 00:23:21,920 --> 00:23:25,159 Speaker 2: It will include both your accumulation assets as well as 464 00:23:25,200 --> 00:23:28,160 Speaker 2: your pension So the way it works based on your 465 00:23:28,160 --> 00:23:31,159 Speaker 2: total superbalance and the movement in your total superbalance from 466 00:23:31,200 --> 00:23:33,920 Speaker 2: the start of the financial year to the end. So 467 00:23:34,640 --> 00:23:38,240 Speaker 2: your total superbalance includes money you've got in the accumulation 468 00:23:38,400 --> 00:23:41,480 Speaker 2: phase as well as money you have in the pension phase, 469 00:23:41,480 --> 00:23:46,320 Speaker 2: so it applies to both phases. In terms of pension payments, 470 00:23:46,600 --> 00:23:49,200 Speaker 2: any pension payment made during the course of the income 471 00:23:49,359 --> 00:23:52,639 Speaker 2: year will be added back to your balance for the 472 00:23:52,680 --> 00:23:56,880 Speaker 2: purpose of calculating your earnings for the years. So there 473 00:23:56,920 --> 00:23:59,760 Speaker 2: is a formula they use to calculate earnings under the 474 00:23:59,800 --> 00:24:02,199 Speaker 2: Vision two nine and six. It is based on the 475 00:24:02,200 --> 00:24:04,000 Speaker 2: movement of your balance from the start to the end. 476 00:24:04,000 --> 00:24:07,119 Speaker 2: But they do make adjustments for things like withdrawals and 477 00:24:07,240 --> 00:24:09,760 Speaker 2: contributions that you've made made during the course of the 478 00:24:09,840 --> 00:24:10,400 Speaker 2: year too. 479 00:24:10,320 --> 00:24:13,399 Speaker 1: And show And that's just a conventional accounting, isn't it. 480 00:24:13,440 --> 00:24:15,320 Speaker 1: I mean that's not as such. I mean you would 481 00:24:15,320 --> 00:24:18,280 Speaker 1: this is what you would naturally do, that's right. 482 00:24:18,400 --> 00:24:20,840 Speaker 2: They're doing it to ensure that the earnings figure is 483 00:24:20,880 --> 00:24:24,240 Speaker 2: not overstated or understated by the fact that your contributions 484 00:24:24,240 --> 00:24:25,680 Speaker 2: will will take the withdrawals out. 485 00:24:25,760 --> 00:24:30,200 Speaker 1: And just one last thing on that. So the fifteen 486 00:24:30,240 --> 00:24:34,600 Speaker 1: percent the new tax, it applies on accumulation and pensions. 487 00:24:34,640 --> 00:24:37,600 Speaker 1: So if you haven't retired, let's say you're fifty and 488 00:24:37,640 --> 00:24:40,200 Speaker 1: you cross the three million, you're you're in the tax 489 00:24:40,280 --> 00:24:42,359 Speaker 1: net from then on, even though you haven't retired. 490 00:24:42,480 --> 00:24:45,680 Speaker 2: Is that right, Well, that's right. This tax will apply 491 00:24:45,760 --> 00:24:48,200 Speaker 2: a gallus when you're retired or not. It's purely based 492 00:24:48,240 --> 00:24:51,000 Speaker 2: on your So if you have a balance and excess 493 00:24:51,000 --> 00:24:53,399 Speaker 2: of three million dollars, then you will be subject to 494 00:24:53,440 --> 00:24:56,119 Speaker 2: a division two nine six on the earnings portion above 495 00:24:56,280 --> 00:24:59,480 Speaker 2: three million dollars. So you know, division does not apply 496 00:24:59,560 --> 00:25:01,440 Speaker 2: to your whole balance, the earnings of all of your balance. 497 00:25:01,440 --> 00:25:03,639 Speaker 2: It's just that fortunate above three million dollars. 498 00:25:03,960 --> 00:25:06,240 Speaker 1: Yeah, the portion above, And that's an important point. It's 499 00:25:06,320 --> 00:25:10,480 Speaker 1: just to recap folks, sits on earnings above three million. 500 00:25:10,560 --> 00:25:13,760 Speaker 2: And it's on your One of the other misconceptions here, 501 00:25:13,800 --> 00:25:16,400 Speaker 2: it's based on the balance of your self many superfund. 502 00:25:16,440 --> 00:25:18,880 Speaker 2: But it's not based on your combined balance. It's your 503 00:25:18,960 --> 00:25:22,280 Speaker 2: individual superheroation balance that you used to determine whether you're 504 00:25:22,280 --> 00:25:24,120 Speaker 2: over that's three million dollars per capita. 505 00:25:25,400 --> 00:25:28,040 Speaker 1: So if there's two in the fund, it's divided by 506 00:25:28,040 --> 00:25:29,960 Speaker 1: two of the six in the fund that's divided by six. 507 00:25:30,080 --> 00:25:33,600 Speaker 2: Is that it? Yeah, So you could have a situation 508 00:25:33,680 --> 00:25:36,680 Speaker 2: where the total fund balance is five million dollars, but 509 00:25:36,840 --> 00:25:39,320 Speaker 2: the rise of two min two members, both who have 510 00:25:39,480 --> 00:25:42,040 Speaker 2: two point five million dollars, they don't pay division two 511 00:25:42,119 --> 00:25:44,360 Speaker 2: one six because they're not own neither of them over 512 00:25:44,440 --> 00:25:45,640 Speaker 2: that's three million dollars threshold. 513 00:25:46,119 --> 00:25:48,000 Speaker 1: Terrific. Great, great to have you on and great to 514 00:25:48,000 --> 00:25:51,440 Speaker 1: have you answering the questions. A perfectly place to do so. 515 00:25:51,840 --> 00:25:55,120 Speaker 1: That was Peter Burgess of the Self Managed Super Funds 516 00:25:55,160 --> 00:25:57,400 Speaker 1: Association the See You're great to have him on the show. 517 00:25:57,400 --> 00:26:01,560 Speaker 1: Thanks Peter, Thanks James, and keep the emails rolling the 518 00:26:01,600 --> 00:26:05,360 Speaker 1: money puzzle at the Australian dot com dot au. Talk 519 00:26:05,400 --> 00:26:05,800 Speaker 1: to you soon.