News & Current Affairs
16 January 2015
by John Passant
Don Argus, superannuation and the end of the age of entitlement
Don Argus is the former Chairman of BHP Billiton and before that was CEO of the National Australia Bank.
Argus is in dispute with the Australian Tax Office over his superannuation. As a generalisation if you are over 60 years old any superannuation payments you receive are, thanks to Peter Costello, tax free. The ATO is arguing that Argus breached certain age related payment requirements so that in fact the payments aren’t exempt from income tax.
The interesting thing in all of this is that for the year in question the pension payments (maybe to both Argus and his wife, rather than just Argus alone,) were about $1.2 million.
Assuming a five percent rate of return on the fund’s assets, this means the capital in the Argus superannuation fund is about $20 million. Now, in normal cases this $1.2 million superannuation income would be tax free.
That is fair isn’t it? After all it must be hard for a couple to live on $1.2 million a year. That’s almost $12000 a week each, tax free.
Assuming an average tax rate of 45% on the $1.2 million, if tax were paid on that superannuation income it would total about $500,000. That would still leave the Arguses with $700,00 a year after tax to survive on.
In a fairly weak response to the disgraceful benefits the super rich get from the myriad of superannuation tax concessions, in April 2013 the then Labor government announced plans to tax fund earnings (not pensions) greater than $100,000 a year. The tax was to be capped at 15% and would have caught just 16,000 people, about 0.4% of the over 4 million retirees. Labor didn’t implement this minor tax before the September 2013 election and the current Abbott government, having pooh poohed the idea in Opposition, did not go ahead with it.
The top ten percent of income earners receive about one third of all the superannuation tax concessions, that is about $15 billion worth of tax expenditures annually. A couple in a similar position to the Arguses, if they stay within the rules, will get payments totaling $1.2 million per year tax free.
Far better to slug poor and sick people between $5 and $20 to go to the doctor or put the GST on fresh food than to tax the rich eh Mr Abbott and Mr Hockey?
Tell me again about the end of the age of entitlement.