WEBVTT - Property investors brace for new super tax squeeze 0:00:09.840 --> 0:00:13.160 Hello, and welcome to The Australian's Money Puzzle podcast. I'm 0:00:13.240 --> 0:00:17.239 James Kirby. Now, after more than a year of intense debate, 0:00:17.360 --> 0:00:21.120 the big changes to super tax appear now to finally 0:00:21.160 --> 0:00:24.200 have been settled, and you've probably heard the Treasure has 0:00:24.239 --> 0:00:28.280 put forward a pretty shrewd, politically shrewd solution to the 0:00:28.320 --> 0:00:33.680 whole thing, whereby the very rich in our country, those 0:00:33.720 --> 0:00:36.400 at more than ten million in super will play a 0:00:36.440 --> 0:00:39.720 prohibitive rate of tax and there will be some offset. 0:00:40.040 --> 0:00:42.319 It's part of this package for low income miners, which 0:00:42.360 --> 0:00:46.560 should probably ensure it goes through Arliament. Right now, most 0:00:46.600 --> 0:00:48.920 listeners to the show will not be in either category. 0:00:49.520 --> 0:00:52.800 I expect you're not a low incommner and I expect 0:00:52.800 --> 0:00:54.760 you don't have more than ten million in super. Maybe 0:00:54.760 --> 0:00:57.520 I'm wrong, but I reckon ninety percent of listeners are 0:00:57.560 --> 0:01:02.440 in the category where quite simply, the news is that's 0:01:02.480 --> 0:01:06.959 super tax rates are going to double above three million dollars. Okay, 0:01:07.040 --> 0:01:10.319 so there's no tax up to two it's fifteen percent 0:01:10.440 --> 0:01:14.480 on earnings over two million, and from July one next 0:01:14.560 --> 0:01:19.240 year it's thirty percent on earnings in super over three million. 0:01:19.440 --> 0:01:23.000 I think that this will more than anything else hit 0:01:23.240 --> 0:01:28.000 property investors. And my guest today is ideal for this. 0:01:28.200 --> 0:01:33.120 It's Stuart Williams, property and finance expert. How are you, Stewart. 0:01:33.920 --> 0:01:36.160 I'm really well, James, and welcome back from you all leave. 0:01:36.200 --> 0:01:39.040 It's lovely that the Treasurer waited until you were back 0:01:39.080 --> 0:01:40.160 to make that announcement. 0:01:40.720 --> 0:01:43.440 Very thoughtful lot, I thought too. So yes, that's right. 0:01:43.600 --> 0:01:45.640 He more. I said he was going to redesign us 0:01:45.640 --> 0:01:48.240 a month ago, and folks, I have been. I have 0:01:48.360 --> 0:01:50.320 been away for a month. We had some pre records 0:01:50.320 --> 0:01:53.000 there and I had some great shows thanks to Julia 0:01:53.200 --> 0:01:56.440 Spragg who stood in for a number of shows which 0:01:56.480 --> 0:01:59.200 she recorded on the weeks. So we're back in the 0:01:59.280 --> 0:02:02.120 saddle tod. They try very hard to catch up with everything. 0:02:02.440 --> 0:02:05.480 Glad to have Stuart with me. So Stuart, could you 0:02:05.520 --> 0:02:09.600 spell out from July one next year what are the 0:02:09.680 --> 0:02:13.040 rates of tax on super And also I was crucially 0:02:13.080 --> 0:02:15.120 spell out that the whole thing about on Relo's games 0:02:15.200 --> 0:02:15.799 is got. 0:02:16.520 --> 0:02:20.000 Yes, and that's a really important point. And I think James, 0:02:20.040 --> 0:02:23.960 before we talk about it, my observation would be the 0:02:24.080 --> 0:02:29.640 consultation process has worked like okay, yes, maybe politicians come 0:02:29.720 --> 0:02:32.120 up with silly ideas to begin with, but the whole 0:02:32.200 --> 0:02:36.560 process should be, well, we go out to constituents, the industry, 0:02:36.639 --> 0:02:40.480 we get feedback, and we reflect that feedback in policy. 0:02:40.600 --> 0:02:43.919 So I know that there's a few articles sort of criticizing, 0:02:44.040 --> 0:02:46.520 calling a backflip, all these sorts of things. Of course, 0:02:46.560 --> 0:02:49.080 you know that's true in some sense, but in a way, 0:02:50.000 --> 0:02:52.200 well unto the treasure of fullystening to the feedback and 0:02:52.240 --> 0:02:54.800 coming up with something a little bit more sensible. Because 0:02:55.440 --> 0:02:59.480 SUPER was designed to fund retirement, not to be a 0:02:59.520 --> 0:03:02.359 tax savior. And you know, I think anyone that has 0:03:02.400 --> 0:03:04.680 more than ten million dollars in SUPER, it's no longer 0:03:04.680 --> 0:03:08.120 about retirement, it's about tax saving and a tax haven. 0:03:08.240 --> 0:03:13.960 So I totally support the revised policy. So essentially an accumulation. 0:03:14.160 --> 0:03:17.520 So as we're working, you're right, up to three million dollars, 0:03:17.560 --> 0:03:21.240 we're paying fifteen percent. Between three and ten million were 0:03:21.240 --> 0:03:24.640 paying thirty percent, and then over ten million we're paying 0:03:24.680 --> 0:03:28.799 forty percent. And that's just on realize capital gains and 0:03:29.000 --> 0:03:32.360 any investment income. So there's no tax on unrealized gains. 0:03:32.520 --> 0:03:35.280 And that's particularly important for property investors because a lot 0:03:35.320 --> 0:03:38.600 of people that have used their SUPER to invest in property. 0:03:39.000 --> 0:03:41.400 Are only really thinking about, well, one day I will 0:03:41.400 --> 0:03:44.680 sell this in retirement, and then that's when I crystallize 0:03:44.680 --> 0:03:47.680 the capital gain. So at least we've removed the unrealized 0:03:47.720 --> 0:03:51.160 gains tax. Now, of course, once we enter into retirement, 0:03:51.520 --> 0:03:53.920 the only change there is the first two million dollars 0:03:54.000 --> 0:03:56.920 is now tax free. And so as I said, you know, 0:03:57.080 --> 0:03:59.880 I think, well, SUPER is there to fun retirement, and 0:04:00.240 --> 0:04:02.960 the progressive tax rates I think make a lot of sense. 0:04:03.640 --> 0:04:05.680 And even if you look at say a balance of 0:04:05.760 --> 0:04:09.880 five million dollars in retirement, the average tax rates about 0:04:09.880 --> 0:04:12.880 fifteen percent, So it's still not bad. It's not like 0:04:12.920 --> 0:04:15.640 we're punishing those people with a lot of money inside SUPER. 0:04:16.000 --> 0:04:18.280 And I would argue, anyone five million SUPER, can I 0:04:18.279 --> 0:04:21.760 afford to pay fifteen percent and make a contribution towards 0:04:21.760 --> 0:04:24.440 sort of tax revenue. I think they could have done 0:04:24.480 --> 0:04:28.200 a lot more on the incentives for lower income earners, 0:04:28.279 --> 0:04:30.560 because it's a bit unfair that if you've got someone 0:04:30.600 --> 0:04:32.839 on a very low income with a very low SUPER 0:04:32.839 --> 0:04:36.599 balance and they do want to save for retirement. Sure, 0:04:36.680 --> 0:04:39.000 now about the first five and a half thousand dollars 0:04:39.040 --> 0:04:42.640 in contributions is tax free because of the offset. But 0:04:42.760 --> 0:04:45.520 I would argue that if you're in a low income 0:04:45.880 --> 0:04:48.599 and you have a low SUPER balance, that you shouldn't 0:04:48.600 --> 0:04:50.800 pay any tax to put money into Super because it's 0:04:50.839 --> 0:04:53.440 in the government's best interest because it produces a burden 0:04:53.480 --> 0:04:54.479 on the welfare systems. 0:04:55.040 --> 0:04:57.120 No, you know, you've actually pay fifteen percent as it 0:04:57.200 --> 0:05:00.200 calls in, and it's like, ah, gosh, you know I 0:05:00.240 --> 0:05:04.719 was being encouraged. Okay, now, But for property investors, here's 0:05:04.760 --> 0:05:08.560 the thing. What happens next. So we all know now 0:05:09.200 --> 0:05:11.760 in the property market that there's a new tax rate 0:05:11.800 --> 0:05:15.320 coming in, and we all know that anyone who has 0:05:15.560 --> 0:05:21.720 accumulated property assets in Super the tax rate, assuming they're 0:05:22.160 --> 0:05:28.360 total super assets, and no doubt their total superassets would 0:05:28.360 --> 0:05:33.000 be heavily chunkily if you like, composed of property assets. 0:05:33.720 --> 0:05:39.800 The tax rate's going to double on earnings over from 0:05:40.279 --> 0:05:42.240 the tax lace basically between three and ten is going 0:05:42.279 --> 0:05:44.919 to double. Isn't it used to be fifteen percent and 0:05:45.000 --> 0:05:48.040 now it's going to be thirty percent on the earnings 0:05:48.120 --> 0:05:51.880 on assets above those above the actually shold and that 0:05:51.920 --> 0:05:54.719 would apply to property earnings. What does it mean for 0:05:54.760 --> 0:05:56.000 the property marked. 0:05:57.000 --> 0:05:59.960 Well, they're being a bit silent on how these util 0:06:00.000 --> 0:06:03.479 tax rates will apply to capital gains, because at the moment, 0:06:04.160 --> 0:06:08.039 super funds get a third reduction in capital gains tax rates. 0:06:08.080 --> 0:06:11.640 So income is taxed at fifteen percent, you know, between 0:06:11.760 --> 0:06:15.679 zero and three million dollars in accumulation, whereas capital gains 0:06:15.680 --> 0:06:17.799 are taxed at ten percent, so you get a third 0:06:17.839 --> 0:06:22.800 reduction on the tax rate. I would imagine they're going 0:06:22.880 --> 0:06:25.599 to apply the same principle to the new tax rates. 0:06:25.640 --> 0:06:28.880 So if you're paying, if you've got more than ten 0:06:28.880 --> 0:06:32.200 million dollars and you're paying forty percent, well you'll pay. 0:06:32.520 --> 0:06:34.640 You know, you'll probably get a third discount on that. 0:06:35.839 --> 0:06:38.600 And remember it's marginal as well. So even if you 0:06:38.640 --> 0:06:41.280 look at the average tax rate on say twenty million dollars, 0:06:41.800 --> 0:06:45.040 it's about thirty one percent on income, so it might 0:06:45.080 --> 0:06:48.720 be about twenty percent or so on capital gains. Well 0:06:48.760 --> 0:06:51.839 that's still probably the same more slightly less than what 0:06:51.880 --> 0:06:54.640 you'd pay if the if you crystallize that capital gain 0:06:54.680 --> 0:06:58.080 in your personal name, I'm not sure. I mean for 0:06:58.200 --> 0:07:02.200 someone that crystallizes a huge, huge capital gain, you might say, well, 0:07:02.320 --> 0:07:05.320 it's not worth it being side super and you should 0:07:05.320 --> 0:07:08.640 pull it out before you sell it or now. But 0:07:08.760 --> 0:07:11.560 I think for most people and most people listening to this, 0:07:11.800 --> 0:07:13.880 I don't think it changes very much. I still think 0:07:14.160 --> 0:07:16.840 the tax benefits aren't as great as they used to be, 0:07:17.160 --> 0:07:20.080 but they're still their relative to say, holding it in 0:07:20.080 --> 0:07:22.800 a family trust, to hold me in individual names or 0:07:22.880 --> 0:07:24.040 even in a company name. 0:07:24.680 --> 0:07:27.320 Okay, So you're saying, all right, So the point your 0:07:27.440 --> 0:07:31.800 first point is that in relative terms, compared to outside super, 0:07:32.600 --> 0:07:34.080 though it's not as good as it used to be, 0:07:35.040 --> 0:07:38.520 it remains better than many options outside super. Okay. And 0:07:38.640 --> 0:07:41.920 also then property income does property income coming in? So 0:07:42.080 --> 0:07:45.080 someone has saved has and their key acid in their 0:07:45.160 --> 0:07:48.600 super is let's say a small apartment and that small 0:07:48.600 --> 0:07:51.800 apartment block pays income each year, and the apartment block 0:07:51.920 --> 0:07:54.600 is worth more than three then their tax is going 0:07:54.640 --> 0:07:57.520 to double. Is that right? Yeah? 0:07:57.600 --> 0:08:01.520 It will. But if there's a balance is five million dollars, 0:08:01.640 --> 0:08:04.880 they're paying an average rate of fifteen percent. Well, you're 0:08:04.880 --> 0:08:07.080 probably going to pay more than that if the asset 0:08:07.160 --> 0:08:09.560 was held personally. If it was in a company, you're 0:08:09.560 --> 0:08:12.000 going to pay thirty percent. If it's in a family trust, again, 0:08:12.040 --> 0:08:14.160 it will end up in an individual name, so you're 0:08:14.200 --> 0:08:17.480 going to pay more than fifteen percent. So yes, there's 0:08:17.480 --> 0:08:22.000 a tax hike, but still Super remains attractive. And James, 0:08:22.000 --> 0:08:23.840 this is something that I talk to clients about a 0:08:23.840 --> 0:08:25.440 lot because a lot of people go, well, I don't 0:08:25.480 --> 0:08:28.200 want to concentrate on Super. They're always moving the rules, 0:08:28.320 --> 0:08:31.480 right they are. They will they will always change the 0:08:31.560 --> 0:08:34.400 Super rules. It's been like that since the early nineties 0:08:34.440 --> 0:08:36.200 when Super began, and it's going to be like that 0:08:36.240 --> 0:08:39.160 for the next twenty or thirty years. But it will 0:08:39.200 --> 0:08:42.760 always be concessionally taxed right at the end of the day, 0:08:42.800 --> 0:08:45.280 So it's always going to be an attractive proposition. Now 0:08:45.280 --> 0:08:47.040 that's not to say you put all your money into it, 0:08:47.600 --> 0:08:50.440 because someone with ten million dollars might start thinking about, 0:08:50.520 --> 0:08:53.360 you know, diversifying on your ship structures. But I think 0:08:53.400 --> 0:08:57.240 for most people listening to this podcast, it doesn't change. 0:08:57.440 --> 0:09:00.520 It doesn't really change the outcome. Super is still an 0:09:00.559 --> 0:09:02.439 attractive environment as well. 0:09:03.080 --> 0:09:05.760 Now, what about the impact at the upper end of 0:09:05.800 --> 0:09:10.120 the market. So there is a report already that perhaps 0:09:10.200 --> 0:09:14.160 you know, obviously the family home remains free of allttax 0:09:14.320 --> 0:09:18.080 couple of games exemption, so you would think the top 0:09:18.200 --> 0:09:22.200 end of the market even be juicier basically will even 0:09:22.240 --> 0:09:24.000 be more attractive than it used to be. So we 0:09:24.040 --> 0:09:26.679 may find even more heat coming into the housing market, 0:09:26.720 --> 0:09:28.800 particularly at your brand. What do you think of that 0:09:29.400 --> 0:09:30.440 Hereio it look? 0:09:30.640 --> 0:09:33.640 I think so at ten million dollars, the average traits 0:09:33.679 --> 0:09:36.040 twenty three percent, So if you have more than ten 0:09:36.040 --> 0:09:38.800 million dollars, you start to think about maybe pulling some 0:09:38.880 --> 0:09:40.720 of that money out. It's a little bit of a 0:09:40.720 --> 0:09:43.240 cautionarytail for most people. For some people as well, because 0:09:43.240 --> 0:09:46.440 I've spoken our advice to this day to our clients 0:09:46.480 --> 0:09:48.200 is don't do anything until it's law. We're not going 0:09:48.240 --> 0:09:50.800 to do anything now. I know there's been a lot 0:09:50.800 --> 0:09:53.280 of stories about people pulling money out of Super, giving 0:09:53.400 --> 0:09:57.520 early inheritance, upgrading the family home, all those sorts of things. 0:09:57.520 --> 0:09:59.800 So that's the thing we can learn from this exercise. 0:10:00.120 --> 0:10:03.880 Don't jump at shadows, don't make changes until something is law. 0:10:04.320 --> 0:10:06.040 But I think you're right, James. I think if for 0:10:06.080 --> 0:10:10.199 those people that have super high balances inside Super excuse 0:10:10.200 --> 0:10:12.600 the pun, I think that there's an incentive there to 0:10:12.640 --> 0:10:16.400 start pulling out and maybe the early inheritance, maybe upgrading 0:10:16.440 --> 0:10:19.720 the family home, taking those opportunities to try and avoid 0:10:19.760 --> 0:10:22.680 that tax. But it's only going to impact a small 0:10:23.160 --> 0:10:27.080 proportion of the community, of course. And I don't think anyone, 0:10:27.280 --> 0:10:29.800 I don't think anyone ever criticized right from the beginning 0:10:29.800 --> 0:10:32.079 that you know, someone with a one hundred million inside 0:10:32.080 --> 0:10:35.000 super can afford to pay more tax and it's not great. 0:10:35.040 --> 0:10:36.840 I got the yeah, and I think that was broadly 0:10:36.880 --> 0:10:40.280 accepted across all investment markets. That's fair enough. Nobody was 0:10:40.360 --> 0:10:44.000 Marchmont Streets or indeed to bort of having people having 0:10:44.120 --> 0:10:48.119 enormous amounts and Super tendillion is an enormous amount. Very interesting, 0:10:48.320 --> 0:10:50.160 great to get you on this morning. We take a 0:10:50.160 --> 0:10:52.120 break and we're going to come back with one of 0:10:52.160 --> 0:10:54.560 our favorite topics with the new anger that you may 0:10:54.600 --> 0:10:57.400 not have considered before, which is where they're the big 0:10:57.520 --> 0:11:01.200 in basement of the national property market is turning or 0:11:01.240 --> 0:11:13.960 not Talk to you in a moment. Hello, Welcome back 0:11:14.000 --> 0:11:17.160 to the Australians Money Puzzle podcast. James Kirby here with 0:11:17.240 --> 0:11:21.120 Stuart Weens. Okay, so now we've got you up to date, 0:11:21.240 --> 0:11:24.560 I hope with the new super tax. Folks, if you 0:11:24.640 --> 0:11:27.320 want to know more, send in some questions the Money 0:11:27.360 --> 0:11:29.959 Puzzle at the Australian dot Com Dot I know people 0:11:30.000 --> 0:11:33.199 had any many questions about this during its sort of gestation, 0:11:33.880 --> 0:11:37.079 it's trouble gestation, and they probably have even more questions 0:11:37.120 --> 0:11:40.080 now because it's clear to us because we're watching it 0:11:40.120 --> 0:11:41.720 every day, but it may not be clear to you. 0:11:41.800 --> 0:11:43.360 So send let us know what you need to know 0:11:43.840 --> 0:11:47.800 and we will answer that promptly. Okay. Now, the theme, 0:11:47.840 --> 0:11:51.120 of course that I'm mentioning is Melbourne the bargain basement 0:11:51.240 --> 0:11:54.520 were told of the national property market, and boy, it's 0:11:54.520 --> 0:11:58.480 certainly cheap compared to the other cities, and some historically 0:11:58.520 --> 0:12:02.439 are likely anomalous situations where for instance, it's cheaper than Adelaiding, 0:12:02.480 --> 0:12:05.319 you don't mind, it's cheapid than Brismond, it's cheaper than Perth. 0:12:05.840 --> 0:12:09.360 How can that be? So there are many interstated bests 0:12:09.360 --> 0:12:11.960 who believe that's going to be a bargain and they've 0:12:11.960 --> 0:12:15.160 come into the Melbourne market. Stuart Wins and his circle 0:12:15.240 --> 0:12:18.480 would have been involved in this. Stuart, I've put it 0:12:18.480 --> 0:12:20.560 to you recently. I've looked at the numbers of the 0:12:20.600 --> 0:12:24.920 September quarter. The Melbourne things are still helpless. 0:12:24.559 --> 0:12:26.480 They are, but if you look at the fundamentals, they're 0:12:26.480 --> 0:12:30.199 pretty strong. James, you've got Melbourne, Victoria has the second 0:12:30.480 --> 0:12:34.040 highest population growth in percent each terms, but in absolute 0:12:34.120 --> 0:12:37.880 terms one hundred and twenty five thousand people. That population 0:12:37.960 --> 0:12:40.240 increased one hundred and twenty five thousand people over the 0:12:40.280 --> 0:12:43.679 last twelve months. That's more than double Perth and New 0:12:43.679 --> 0:12:46.600 South Wales is about one hundred thousand. So in absolute terms, 0:12:47.000 --> 0:12:51.040 strongest population growth. Unemployment, I mean, because everyone sort of 0:12:51.040 --> 0:12:55.520 criticizes the economy. Unemployment is four point four percent nationally 0:12:55.800 --> 0:12:58.120 or at four point two percent. There's not a big 0:12:58.120 --> 0:13:01.480 difference there. Vacancy rates over the last twelve months have 0:13:01.640 --> 0:13:03.920 reduced from about one point eight percent to about one 0:13:03.960 --> 0:13:06.960 point three percent. Having said that, those other markets you 0:13:07.080 --> 0:13:10.320 just mentioned in are below one percent now, so the 0:13:10.360 --> 0:13:13.600 fundamentals are very strong. What we're seeing on the ground 0:13:13.720 --> 0:13:17.760 from feedback from buyers agents, the results are patching. So 0:13:17.920 --> 0:13:21.320 if a couple of sales on the weekend, one exceeded 0:13:21.400 --> 0:13:24.360 expectations by about three hundred thousands so sold for one 0:13:24.400 --> 0:13:28.120 to five, they were creating one two. Another property that 0:13:28.240 --> 0:13:32.040 was considered superior failed to sold for one point four 0:13:32.080 --> 0:13:34.040 to five, so failed to even get to one five. 0:13:34.080 --> 0:13:35.720 And even though it was probably worth more. 0:13:35.880 --> 0:13:38.439 Seeing a grounds for just yit so just to put 0:13:38.480 --> 0:13:40.560 the numbers in, like, there is some growth in the 0:13:40.559 --> 0:13:45.720 Melbourne market, but considering it is anomalous in its in 0:13:45.800 --> 0:13:50.040 its law price against all other cities, and considering everyone 0:13:50.080 --> 0:13:54.320 knows this. Now Sydney grew faster than the September quarter 0:13:54.400 --> 0:13:56.760 the national average group if I've got it right, it's 0:13:56.760 --> 0:13:58.880 coming up on six percent of Milduran was over three. 0:13:59.120 --> 0:14:00.560 Is that I know? There was just the biggest Which 0:14:00.559 --> 0:14:01.280 ones do you use? 0:14:01.920 --> 0:14:04.560 I use karality because they are sort of comparing apples 0:14:04.559 --> 0:14:07.160 with apples, So it looks at the attributes of property 0:14:07.160 --> 0:14:10.440 and compares like for like if you like, so five 0:14:10.880 --> 0:14:14.920 capital city aggregates about four point six percent over the 0:14:14.960 --> 0:14:17.520 last year. Melbourne's two point two is half the growth 0:14:17.640 --> 0:14:19.680 you know in yashin the national pace. 0:14:19.880 --> 0:14:22.880 Yeah, and the thing is okay, so you've taken heart 0:14:23.240 --> 0:14:28.520 with some macro facts and so some wider investments specialists 0:14:28.520 --> 0:14:31.280 and experts, and the number you really hang on to 0:14:31.400 --> 0:14:34.640 there was the fact that the population, the net migration, 0:14:35.360 --> 0:14:38.720 the population is growing, which is all very fine. And 0:14:38.720 --> 0:14:41.680 there's two things I think that I the concerns on 0:14:41.720 --> 0:14:44.720 the other side, One is hasn't Melbourne got the best 0:14:44.720 --> 0:14:47.560 supply for us two of all the states, and the 0:14:47.600 --> 0:14:51.000 second is that the net migration figure if we really 0:14:51.040 --> 0:14:56.040 burrow into it. Is it true that the explanation is 0:14:56.200 --> 0:14:59.760 that the Melbournians aren't leaving anymore because they can't afford 0:14:59.800 --> 0:15:05.000 to go the Queen's lab Yeah, possibly, James, although could 0:15:05.200 --> 0:15:07.640 could it be an interpretation of the figures? 0:15:08.120 --> 0:15:11.040 Well, like you and I've spoken about, there's other reasons 0:15:11.080 --> 0:15:14.560 while we stay in Victoria other than you know, our 0:15:14.800 --> 0:15:19.920 ability to move into state, things like family, business, jobs, 0:15:20.320 --> 0:15:22.320 these sorts of things that kind of keep us here. 0:15:22.840 --> 0:15:26.200 I guess given the whole negative sentiment, anyone that doesn't 0:15:26.240 --> 0:15:29.960 have those ties has moved, and you know, there's the 0:15:30.000 --> 0:15:32.400 rest of us are trapped here if you like, because 0:15:32.440 --> 0:15:35.720 of either jobs or family. But it's true, it's really 0:15:35.760 --> 0:15:39.840 the decline in departures rather than and there's been actually 0:15:39.920 --> 0:15:43.480 a small decline in arrivals, but departures are declined by more. 0:15:43.880 --> 0:15:47.920 That's turned the interstate migration positive. So that's kind of 0:15:48.000 --> 0:15:50.280 naturally you should expect that. And the data is very 0:15:50.320 --> 0:15:52.360 noisy over the last five years because of COVID, so 0:15:52.440 --> 0:15:56.160 it's really difficult to draw trends necessary trends that are 0:15:56.160 --> 0:15:59.200 going to repeat themselves. But the other thing, James, you know, 0:15:59.200 --> 0:16:01.800 when we talk about the data, the thing we've got 0:16:01.800 --> 0:16:05.760 to be conscious of is this first home guarantee it 0:16:06.240 --> 0:16:09.920 and its impact on the data because the price caps 0:16:09.920 --> 0:16:14.400 for this guarantee are around about the median value. So therefore, 0:16:14.480 --> 0:16:17.960 if we increase the transactions that are below the median value, 0:16:17.960 --> 0:16:21.000 it's actually going to pull the medium value down because 0:16:21.120 --> 0:16:24.280 we're looking at the midpoint of all that data. 0:16:25.040 --> 0:16:28.400 I see what you're saying, absolutely, anagress. It's unlimited, right universal, 0:16:28.560 --> 0:16:32.320 So anyone bunder Frostco Is entitled to this skin. 0:16:32.920 --> 0:16:35.200 And I'm told an agent was talking to a mortgage 0:16:35.200 --> 0:16:37.840 broker that was based in sin Killary and Melbourne and 0:16:37.880 --> 0:16:40.920 he was saying that there's fifteen he's got fifteen clients 0:16:40.920 --> 0:16:44.000 have been approved to go and buy property that if 0:16:44.000 --> 0:16:46.320 it wasn't for that guarantee, they wouldn't be there. And 0:16:46.320 --> 0:16:49.720 when other buyers agents saying definitely there's first time buyers 0:16:49.960 --> 0:16:52.480 more active out there in terms of bidding and so forth. 0:16:52.520 --> 0:16:55.640 So I think there's going to be an increasing transactions 0:16:55.640 --> 0:16:58.000 that are sort of sub that million dollar mark, and 0:16:58.040 --> 0:17:01.920 that's actually going to pull welling medium values down. And 0:17:01.920 --> 0:17:04.480 that's why I think that coality data is important because 0:17:04.840 --> 0:17:07.840 we need to look at data for houses and apartments separately, 0:17:07.920 --> 0:17:10.400 and we try need to try and marry up some 0:17:10.480 --> 0:17:13.439 sort of comparison, so we're comparing like with like. 0:17:13.560 --> 0:17:15.720 And that's a very interesting point, Stuart. So at one thing, 0:17:16.119 --> 0:17:18.040 it will pull the media down everywhere. Right, So now 0:17:18.160 --> 0:17:20.480 yes say it's a right, yeah, very interesting. I don't 0:17:20.480 --> 0:17:22.400 thought about that. Okay, keep an eye on that, folks. 0:17:22.440 --> 0:17:24.480 We'll take a short break out some great questions I 0:17:24.480 --> 0:17:26.520 have been collecting. I want to catch up on them. 0:17:26.560 --> 0:17:28.400 We haven't had some questions for a while, so back 0:17:28.400 --> 0:17:39.000 in a moment, Hello, Welcome back to the Australians Money 0:17:39.000 --> 0:17:41.720 Puzzle podcast. James Kirby here with Sturet Wims of pro 0:17:41.880 --> 0:17:46.479 Solution on a milestone week when the new super tax, 0:17:46.600 --> 0:17:50.480 which has been a major distraction in the market for 0:17:50.520 --> 0:17:57.440 a long time, seems to have been sorted politically. And 0:17:56.840 --> 0:17:59.879 I don't have to say that there was absolutely white 0:18:00.080 --> 0:18:03.720 it Google or the decision from the treasure to chuck 0:18:03.760 --> 0:18:07.159 away a notion of on realized gains and just to 0:18:07.160 --> 0:18:10.160 have a straight tax on actual earnings and he's basically 0:18:10.160 --> 0:18:13.200 what he's done is he doubled the amount of tax 0:18:13.240 --> 0:18:16.879 you pay in super on earnings between three million and 0:18:16.920 --> 0:18:19.639 ten million. And that's the big news basically, which will 0:18:19.680 --> 0:18:21.920 hit most people. It's got a bit also, it's got lost, 0:18:21.960 --> 0:18:23.919 but it's probably a little bit sort of buried in 0:18:23.960 --> 0:18:27.640 the wider noise around it because he introduced another new 0:18:27.760 --> 0:18:32.840 tax in super. Yes, sir, for the very wealthy group 0:18:32.880 --> 0:18:34.760 who have more than ten million assets and super and 0:18:34.800 --> 0:18:37.720 they will pay in effect of forty percent tax on super. 0:18:37.760 --> 0:18:41.040 That's the news news as it hits listeners. I expect 0:18:41.040 --> 0:18:44.280 this that simple piece of information that on earning is 0:18:44.280 --> 0:18:47.360 about three million, the super tax you pay will move 0:18:47.440 --> 0:18:50.359 to thirty percent. But as Stewart said, see is in 0:18:50.400 --> 0:18:54.320 context still lower than just about anything else out there. Okay, 0:18:54.520 --> 0:18:56.960 some really good questions. Let's have the first one from 0:18:57.000 --> 0:18:59.040 Helena if you want to read that once? 0:18:59.040 --> 0:19:02.479 Sure, yeah, absolutely so. Helena writes, I hope you're having 0:19:02.480 --> 0:19:05.679 a lovely day. You recently hosted James O'Reilly on The 0:19:06.080 --> 0:19:09.120 Money Puzzle, who spoke about buying property through a self 0:19:09.119 --> 0:19:12.800 marrige superfund and that it could leave you a million 0:19:12.840 --> 0:19:16.080 dollars worse off. The problem isn't that the self married 0:19:16.119 --> 0:19:20.800 Superfund underperformed. It's that the calculations when comparing four hundred 0:19:20.880 --> 0:19:24.720 thousand fully invested into shares to only one hundred and 0:19:24.800 --> 0:19:28.600 sixty thousand deployed into property, when you actually modeled out 0:19:28.640 --> 0:19:32.280 both sides correctly, the so called million dollar loss disappears. 0:19:32.880 --> 0:19:35.920 Okay, thank you, Helena. I mean there's one key point 0:19:36.000 --> 0:19:38.920 I think that that that that MOSCIP agree with, which 0:19:38.960 --> 0:19:43.119 is having properly an SMSs, having a property asset in 0:19:43.200 --> 0:19:49.360 an SMSSI, which many people will now be pondering, especially 0:19:49.359 --> 0:19:51.760 if they already have one, because the tax has changed 0:19:51.800 --> 0:19:55.240 on it. The issue is that you pay higher rates 0:19:55.640 --> 0:19:59.120 than other people. And also the negative gearing isn't as 0:19:59.119 --> 0:20:02.720 good right because because it's insight So they're the crucial points. 0:20:02.760 --> 0:20:05.719 Of course, people can make succests out of property in 0:20:05.760 --> 0:20:08.479 an s MESSIVE. But I think James had some very 0:20:08.560 --> 0:20:14.480 valid point about the fundamental sort of hurdles that aren't 0:20:14.560 --> 0:20:16.920 very clear sometimes and certainly it wouldn't be made clear 0:20:16.960 --> 0:20:18.560 to you by someone who was trying to sell you 0:20:18.600 --> 0:20:22.160 the of putting property into your an SMSSI that's why 0:20:22.200 --> 0:20:22.920 we have this show. 0:20:23.720 --> 0:20:25.959 I just add to that. Sorry, if James you know 0:20:26.000 --> 0:20:28.439 that there's I think I have two comments. Firstly, we 0:20:28.480 --> 0:20:32.199 can model comparisons, and it's correct that you should. You know, 0:20:32.200 --> 0:20:35.520 if you if you're modeling sort of two different strategies, 0:20:35.600 --> 0:20:39.080 you should assume the same return on both asset classes, 0:20:39.119 --> 0:20:42.760 because it's about a strategy comparison rather than asset class comparison. 0:20:43.480 --> 0:20:47.159 But also the flip side is that you should strategy, 0:20:47.359 --> 0:20:51.800 you should model your own scenarios. So in James's scenario, 0:20:51.840 --> 0:20:54.000 it was like leave all the super or take some 0:20:54.119 --> 0:20:56.080 put it in as a deposit, and then leave some 0:20:56.320 --> 0:20:59.000 cash left over to investors a bit of a buffer. 0:20:59.480 --> 0:21:01.680 And so what he was modeling is what he would 0:21:01.760 --> 0:21:05.120 actually do, and so I think that's what we need 0:21:05.160 --> 0:21:08.199 to be careful and not saw a drawing conclusions on 0:21:08.640 --> 0:21:12.360 modeling outcomes unless they really apply to our own situation. 0:21:12.800 --> 0:21:15.880 And I think the general theme of what James was saying, 0:21:15.920 --> 0:21:19.120 which I totally agree with, was that not any property 0:21:19.160 --> 0:21:21.800 will work inside Super. If you're going to invest in 0:21:21.880 --> 0:21:25.160 property inside Super, absolutely make sure it's a great property. 0:21:25.600 --> 0:21:27.560 And I totally support that. If you're just going to 0:21:27.560 --> 0:21:30.200 go out and buy any property or be sold any 0:21:30.240 --> 0:21:32.800 property that it's not going to work. 0:21:33.040 --> 0:21:34.439 It's not going to work because it has to be 0:21:34.520 --> 0:21:37.440 very good because it has particular hurdles. As he is 0:21:37.480 --> 0:21:39.200 being at the bomb with the girl. All right, one 0:21:39.240 --> 0:21:43.200 final question which is from Josh, do you know why 0:21:43.240 --> 0:21:45.960 the government brought forward the starting dead for the first 0:21:45.960 --> 0:21:49.359 home buyers five percent? Positive skin and do you really 0:21:49.400 --> 0:21:53.680 need only five percent to buy a home now? Josh, careful. 0:21:56.000 --> 0:21:58.040 This has happened a couple of times, and I've noticed 0:21:58.119 --> 0:22:03.760