Financial Review reporter Lucas Baird wins Mid-Year Walkley Prize
The Australian Financial Review's superannuation reporter Lucas Baird has been awarded a Walkley Foundation Mid-Year Media Prize for revealing a cyberattack on some of the country's largest funds, including Australian Super and Australian Retirement Trust.
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Sky News AU
36 minutes ago
- Sky News AU
‘Net negative': Positive Economics Advisory's David Williams-Chen delivers warning as Labor mulls family trust tax changes
Labor imposing a flat tax rate on family trusts could be a 'net negative' for the economy, an expert has warned after a report arose the government is considering trusts in its raft of tax reforms. Sources told the Australian Financial Review Labor is likely to propose higher taxes on family trusts as Treasury ramps up scrutiny of the tax-friendly investment vehicles in its economic reforms. Many Australian families and businesses use the trusts to protect their assets and split income between beneficiaries to reap the benefits from the lower tax rates. The report follows Labor proposing a minimum 30 per cent tax rate on trusts as part of its failed swath of tax reforms it took to the 2019 election. Positive Economics Advisory's managing director David Williams-Chen said if Labor were to apply a flat tax rate, Aussies would find a way to avoid it. 'People will respond to incentives and we see this time and again,' Mr Williams-Chen told 'Whether it's smokers buying black market tobacco to avoid paying high price cigarettes as excise levies have increased. 'Or whether it's the wealthy who have taken advantage of lower tax settings in superannuation before balance transfer caps and contribution limits came into place. 'We know there'd be a response.' He pointed to research from US academics Shahar Rotberg and Joseph Steinberg where it was found increasing wealth taxes incentivised people to hide their assets and resulted in lower tax revenue. Mr Williams-Chen urged the government to keep in mind taxpayers' capacity to avoid other taxes and even warned this could lead to a situation shown in the work of Rotberg and Steinberg. 'The evidence from the US shows that once the behavioural responses to wealth taxes on capital are factored in, there's a likelihood that they're actually negative for the economy,' he said. 'Rotberg and Steinberg in 2024 found wealth taxes would cause an overall decline in economic welfare between 0.3 and 0.4 percent.' The individuals who are the beneficiaries of a trust pay their personal income tax rate on the distributions. This means the tax paid on a trust can vary from zero per cent to 47 per cent. Labor considering changes to family trusts, alongside plans to tax high earning super accounts and wind back electric vehicle rebates, come as Labor faces a decade of deficits and ballooning costs of the NDIS and defence. The Albanese government also faces reduced tax revenue from lower tobacco excise and falling fossil fuel exports as Australia continues on its renewables shift.
Sky News AU
15 hours ago
- Sky News AU
About $125k nest egg bump for 30-year-old Aussie on average salary amid super hikes, Australian Retirement Trust shows
A 30-year-old Australian earning the average salary will be $125,000 better off by the time they retire under recent changes to superannuation launched over the past five years. This is the finding of Australian Retirement Trust (ART) which said the gradual increase of the mandatory superannuation contributions from 9.5 per cent in 2020 to 12 per cent from the start of July will contribute more than six figures into young Australians' super accounts. ART's executive general manager for advocacy and impact Anne Fuchs said a 30-year-old on $100,000 per year – the average salary in Australia – will reap massive benefits of the increases since 2020. "In a fortnightly pay statement, the increase in the superannuation guarantee rate may seem tiny,' Ms Fuchs said. 'But over a working lifetime, the magic of compound returns can turn those small increases into hundreds of thousands of dollars.' It comes as working Aussies will receive a 0.5 per cent super contribution bump from the start of the coming financial year. Mrs Fuchs likened the increase to 'reaching the summit of your own financial Everest' for many working Australians. 'Since the superannuation guarantee was introduced in 1992, it has become the cornerstone of Australia's retirement system – evolving from a modest three per cent contribution to a robust framework that provides you with meaningful savings for your future,' she said. 'An increase in superannuation contributions means you'll be adding that little bit extra to your super and over time, that really adds up.' The gradual super contribution changes from 9.5 per cent to 12 per cent was originally proposed under the Rudd government and enacted under former prime minister Scott Morrison. Other research from the Association of Superannuation Funds of Australia showed a 30-year-old worker earning $75,000 will be $20,000 better off due to the 0.5 per cent super change. The bump comes as Australia's $4.2 trillion super nest egg will grow from the fourth largest super pool in the world to the second over the coming decade. This is according to a report from the Super Members Council which showed Australia will surpass the United Kingdom's and Canada's pensions amid growth in Australia's superannuation guarantee scheme. Super Members Council CEO Misha Schubert lauded Australia's super system as the 'envy of the world'. 'Australia has the fastest growing super system globally – twice the rate of international peers,' Ms Schubert said. 'We're the only OECD country where spending on government-funded pension payments is falling and will continue to fall.'
Sky News AU
17 hours ago
- Sky News AU
Labor mulling family trusts and electric vehicle rebates in major tax reform shakeup for second term economic agenda
Family trusts and electric vehicle rebates are likely to be in the Labor's sights as it looks to raise revenue while delivering income tax cuts and boost the nation's budget. The Albanese government has swept into its second term with a large majority and with it, the promise of tax reform. Treasurer Jim Chalmers on Wednesday hammered in this pledge during an address to the National Press Club where he put forward Labor's case in the productivity-boosting agenda. Sources told the Australian Financial Review Labor is likely to propose higher taxes on family trusts as Treasury ramps up scrutiny of the tax-friendly investment vehicles. Many Australian families and businesses use the trusts to protect their assets and split income between beneficiaries to reap the benefits from the lower tax rates. The individuals who are the beneficiaries of a trust pay their personal income tax rate on the distributions. This means the tax paid on a trust can vary from zero per cent to 47 per cent. Labor at the 2019 election proposed a minimum 30 per cent tax rate on trusts as part of its failed swath of tax reforms, including changes to franking credits, negative gearing and capital gains tax discounts. The possibility the Albanese government is considering changes to family trusts comes as Mr Chalmers on Wednesday flagged a new road-user charge for electric vehicle drivers that would replace the fuel excise. The typical household with a car running on petrol pay more than $1200 in fuel tax while EV drivers are exempt from the levy as they don't use traditional fuel sources. 'We will also continue to work with states and territories on the future of road-user charging,'' Mr Chalmers said. 'All of this represents a big agenda on the supply side of our economy. None of these reforms are simple.' The AFR in March reported the estimated $55m cost of the EV rebate for the 2024-25 financial year had ballooned out to $564m per year in missed tax revenue. Mr Chalmers was also questioned on possible changes to GST ahead of Labor's upcoming productivity roundtable - where Australia's economic agenda will come under the microscope. 'I suspect the states will have a view about the GST. It's not a view I've been attracted to historically, but I'm going to try not to get in the process of shooting ideas between now and the round table,' Mr Chalmers said. AMP's chief economist Shane Oliver urged Labor to hike the GST and apply it across the board to minimise income tax. 'In an ideal world you would have less reliance on income tax and reduce the disincentive effects associated with it and have more reliance on GST,' Mr Oliver told Labor is also embarking on making changes to large superannuation accounts, which includes taxing unrealised capital gains, and has met fierce opposition from business leaders and economists. The changes come as Labor faces a decade of deficits and ballooning costs of the NDIS and defence. Labor also faces reduced tax revenue from lower tobacco excise and falling fossil fuel exports as Australia continues on its renewables shift.
