Money

Super to feature in next budget

Noel Whittaker
Noel Whittaker

If the budget leaks are to be believed, there will be further changes to superannuation in next Tuesday's federal budget. 

Unfortunately these continual changes weaken people's faith in the system ,and more and more people will start borrowing for investment instead of making additional salary sacrificed contributions to super.

Think about two people call Bill and Mary, aged 40 who want to put a wealth building program in place.  They decide they can spare $10,000 a year from their gross salary.  Bill decides to salary sacrifice $10,000 a year to super which means he will be investing $8500 a year after the 15% contribution tax has been deducted.  If his superannuation fund earns 9%, he will have an additional $793,000 in his superannuation fund at age 65. 

After taking advice, Mary chooses a different course and borrows $120,000 to invest in a quality share trust - the interest will be around $10,000 a year, tax deductible.   If the trust earns 8.5% per annum , when tax is taken into account, she will have $998,000 at age 65 - an extra $205,000. 

The reason for the difference is that Mary has got $120,000 working for her at age 40- it will be over 14 years before Bill has $120,000 working for him because he is only investing a net $8500 a year.  Also, because Mary is investing outside the superannuation system, she is not losing access to her money. 

Investing is like a game of Monopoly - the winner is the one who controls the most assets around the board.  Borrowing for investment is still the best way for people to create wealth because the interest is tax deductible and there is no tax on capital gains until the asset is disposed of.  This may be many years after they retire.  A further benefit is that the capital gains tax is payable on just half of any gain once the asset has been held for 12 months. 

Noel Whittaker is a co-founder of Whittaker Macnaught Pty Ltd.  His advice is general in nature and readers should seek their own professional advice before making any financial decisions.  His email is noelwhit@gmail.com

Topics:  federal budget 2012 fiscal policy noel whittaker



30 domestic violence call-outs in 3 days in Bundy

DIFFERENT FACTORS: Senior Constable Danielle Loftus said it was unclear what had caused a spike in reports of family violence.

Police urge victims, perpetrators, relatives to take action

Celebrations to deliver flavours of China

YEAR OF THE ROOSTER: Councillor Judy Peters, Dylan Carter as Buddha), Tina Yuanyuan, Lilly Matthews and the PCYC Blazers dragons are gearing up for Chinese New Year.

Tea ceremony and old favourites at annual event

Local Partners

Nurse says Blue Care 'don't care about staff' at Millbank

MILLBANK Village staff members remain angry, are distressed and feel deceived over Blue Care's decision to downsize the aged care facility.”


Celebrations to deliver flavours of China

YEAR OF THE ROOSTER: Councillor Judy Peters, Dylan Carter as Buddha), Tina Yuanyuan, Lilly Matthews and the PCYC Blazers dragons are gearing up for Chinese New Year.

Tea ceremony and old favourites at annual event

What's happening in Bundy today?

Things to do in Bundaberg today.

A list of five things happening around the region today.

50 Shades actress on why she hates the film

Dornan and Johnson’s frequent sex scenes were ‘awkward’ to film. Picture: SuppliedSource:Supplied

Jamie Dornan doesn’t blame you for hating 50 Shades

Chris Hemsworth’s X-rated compliment to former co-star

Australian actor Chris Hemsworth poses on the red carpet for the European premiere of the film 'Avengers: Age of Ultron' in London on April 21, 2015.

THOR star once paid former Home and Away actress a lewd compliment.

'I can't keep my mouth shut any longer'

Singer George Michael.

George Michael’s cousin blasts singer’s boyfriend Fadi Fawaz.

Fresh faces: NCIS gets a shake up with new cast members

The new cast of NCIS, from left, Rocky Carroll, Pauley Perrette, Sean Murray, David McCallum, Brian Dietzen, Wilmer Valderrama, Emily Wickersham, Mark Harmon, Duane Henry and Jennifer Esposito.

THREE new characters join naval drama for season 14.

First the Onesie, now an Xbox One S inflatable controller

Fancy an inflatable Xbox One S controller?

Inflatable controller 'perfect sidekick' for Australia Day party

Sarah Harris: Here’s what Amber Sherlock should’ve done

Studio 10 and Shark Tank presenter Sarah Harris.

STUDIO 10 host says Sherlock could’ve avoided the subsequent uproar.

Historical home leaves family's hands after 75 years

SALE CONFIRMED: The Gympie Regional   Realty team which sold the Ramsey property are (back) Mel Gastigar, Dorothy Palmer and Margaret Cochrane, with (front) home seller Terri-Jayne Ramsey.

Ramsey family played a huge role in Gympie's growth.

What a year 2016 proved to be

Entrance Island, Birtinya

Get the inside info from the agents themselves

REVEALED: What Coast wants in an international airport

Sunshine Coast business people share their views on what's needed

Time for a cool change

43 Eckersley Ave, Buderim.

Family home goes to the auction floor

Designer home set in lush tropical gardens

This home has it all and more

Ready to SELL your property?

Post Your Ad Here!