Have Your Say


Welcome to the ‘Have Your Say’ section. We have received thousands of comments on articles over the years, but here is a chance for you to set the agenda.

Cuffelinks often receives emails from readers offering opinions on subjects not directly related to any article, including feedback on the weekly editorial in the newsletter.

While Cuffelinks is not licensed to give person financial advice and often cannot respond directly, ‘Have Your Say’ is a place where you can share your opinion and engage with each other.

We also receive many approaches from market experts, especially fund managers, wanting to write articles and asking what topics to cover. Raise any subjects you would like addressed.

You can also include comments about Cuffelinks itself. Do we cover some subjects too much? Not enough? Too complicated? Too simple? Articles too long?

Comments must meet our community standards of no product flog and no personal attacks. Keep it respectful and constructive.

Of course, comments relating to a specific article should be posted with that article.

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37 Responses to Have Your Say

  1. Sean September 19, 2018 at 9:37 AM #

    Soon after Labor announced its proposals on changes to franking credits, Cuffelinks said there would be an article on whether industry funds would continue to access franking credits and distribute them. Did such an article appear, and if so when? If not could one be organised?

  2. Chris H September 16, 2018 at 4:14 PM #

    I often read about the advantages of having a SMSF. Which I do happen to have. However, I can find very little about when or if, someone should close a SMSF.

    The Royal Commission has illustrated the advantages of having superannuation in an industry fund and I’m finding it hard to rationalise having my own fund. Performance would be better and costs lower.

    Could you comment?

    • Graham Hand September 16, 2018 at 5:20 PM #

      Hi Chris, for most investors with modest super balances and lack of interest in investing, a balanced fund from an industry fund, retail fund (where contrary to popular opinion, a multisector retail fund can cost as little as 0.45% for everything) or some online providers, is a good option. Diversity of asset classes, professional management and reasonable cost. Give them your super and go and lie on a beach in Sicily half the year.

      The major reasons to have an SMSF are not about cost but 1) you enjoy investing and want a vehicle in which to do it yourself and 2) you want to hold assets which institutional vehicles cannot hold. For example, if you invest in a balance fund, the fixed interest exposure is mainly to high quality investment grade bonds, which is fine for most people but the yield is say 3% or less. If you want to give your performance some spice by including unlisted bonds, you will need an SMSF. Similarly with holding unlisted property and many alternative funds are not on platforms.

      My SMSF includes many assets which no balanced fund holds and it suits my circumstances. But it’s not for everyone.

  3. Jan H September 16, 2018 at 12:58 PM #

    Former Prime Minister the Hon John Howard OM AC originally introduced the GST and franking credits cash refunds into effect on 1 July 2000. In one of Howard’s speeches (13 August 1998 TRANSCRIPT OF THE PRIME MINISTER, THE HON JOHN HOW ARD MP PRESS CONFERENCE- PARLIAMENT HOUSE) launching his Government’s bold tax package, he said that cash refunds were designed to help offset the harshness of the increase in cost of living that GST would have on people who are on a “low and fixed income and modest income people including pensioners” (pp 2-3):

    “We have, of course, included in the plan a number of things that have not been widely speculated about or even thought of outside a very narrow range of people. I am delighted to be able to announce that as part of the plan provisional tax will be abolished. And that will be of enormous encouragement to many people in business, many self-employed people, and it will be a very great advantage to many self-funded and retired people. Very importantly for that group also we are introducing a system whereby we are going to fully refund imputation credits. And that is very, very important to people on modest incomes who hold shares who will get dividends franked to the tune of 36 cents, which is the company rate, and they might be on 20 and they can’t get the other 16. Well under this system they’ll get the other 16 as a refund on the franked increment from the Taxation Office. (Note: In this speech also announced company tax cut to 30%)

    Journalist’s question;
    Mr Howard what guarantee is there that the compensation package will not be
    watered down in future years?

    Well, I think you ought to ask the Labor Party and the Democrats in the Senate about
    that? We won’t be changing it, I can tell you.

    Are you guaranteeing that …. ?

    Look we have put something down, it will be presented in that form when the
    legislation is introduced, I can categorically assure you on behalf of the Government
    that I lead that we will not be watering that down, and I cannot for the life of me
    imagine that any future government would be so insensitive as to do that.”

    So cash refunds were to offset GST impacts on retirees. And, clearly, Labor is proving to be extremely insensitive and possibly hiding the true purpose of cash refunds. Remember, this policy had bi-partisan support at the time.

  4. Clayt September 14, 2018 at 12:23 PM #

    If I set up an SMSF, is the SMSF able to purchase land, and then lease the land to agricultural users?
    If so, what are the rules surrounding the income generated from the leasing?

  5. Joel September 14, 2018 at 10:17 AM #

    Hi Graham,

    I found part of your introduction into the last edition to be quite misleading, in particular the following paragraph:

    “Unfortunately for Clearview, the Corporations Act includes anti-hawking provisions limiting such ‘disturbance’. And just when it seemed it couldn’t get worse, the Commission heard a tape of Freedom Insurance pressuring a young man with Down syndrome to buy insurance. Over $6 billion in commissions was paid to financial advisers by 10 life insurers in the last five years.”

    The Royal Commission investigations into Clearview have involved directly sold life insurance and not insurance recommended through licensed advisers. To link the Clearview wrongdoings with the commissions that licensed advisers receive is misleading. If anything, this is a reason to seek advice from a licensed risk adviser who can help clients make sense of the very insurance life insurance product landscape.


    • Graham Hand September 14, 2018 at 10:29 AM #

      Hi Joel, fair point, I should at least have started a new paragraph. I accept financial advisers are providing risk (insurance) advice and should be paid for it. My intention was to show readers who are not financial advisers that the insurance industry is also a major source of income for financial advisers, as many people think they only give investment advice. Graham

    • Jimmy September 14, 2018 at 1:32 PM #

      It’s also very disconcerting to bandy around the $6B in comms number in isolation. $6 Billion dollars is a lot of money, no denying that. But lets put it in some context. Over the same period there would have been $40 BILLION plus paid out to the insured and their families.

      That’s based on the numbers supplied by retail insurers to The Risk Store up to 2016 with some allowance for the growth in claims that have been exhibited over the previous 5 years. That $40+ Billion is considerably more than those individuals and their families would have received from the standard “2 units” of cover in an Industry Super Fund. Let’s ‘Compare that Pair’….

      And when we talk about the $6 Billion in comms, if we divide that by 5 years and then divide that among the 20,000 or so advisers listed on ASICs Financial Adviser Register and you get an average revenue of $60,000 per adviser per annum. Hardly earth shattering numbers.

  6. Alex September 13, 2018 at 10:51 PM #

    I think most useful would be model portfolios depending upon economic outlook from your various contributors. How to invest in bond funds (traps, pitfalls, opportunities, &c.) How to invest in international direct shares (traps, pitfalls, opportunities – e.g. do you really own them?) Hedge funds – how an average SMSF investor can invest – where best to invest – is it better to invest in a fund, or the manager itself? – e.g. K2 Asset Management, Oaktree Capital, etc.

  7. George September 13, 2018 at 10:49 PM #

    SMSF in Pension mode is challenging -articles on asset allocation,income sources generating safe returns, all designed to get to or close to minimum pension payments -in my case 5% of balance -I find my Advisor, the press etc focus too much on people in accumulation phase- I would like to see minimum pension rates reduced by 1%.

  8. Jack September 13, 2018 at 10:46 PM #

    Every month Cuffelinks should have say 3 brokers provide their best 3 stocks and why. These same brokers to return to Cuffeliks in 6 months time to see and assess their recommendations. Do this on a monthly basis with 3 new brokers and same process. Make it like a game within the broker industry and kudos to the winner and all brokers can explain the reasons why the stock did what they suggested or why the stock stalled or nosedived. Make it fun and not too competitive because the results will speak for themselves. All of your readers will be interested with the picks and the outcomes. Something like an ASX game but for brokers only with a 6 month focus/horizon….ongoing of course.

  9. Wayne Ryan September 13, 2018 at 3:10 PM #

    I understand why people don’t want to lose their imputation credits. No one wants to give up existing benefits. I would lose a significant refund myself.

    There was a time before imputation credits and subsequently a time before refunds to non tax paying pensioners and the sun still rose every morning. The current system can be seen as a concession and the question is whether we can afford it.

    I am happy to be corrected but doesn’t the current system mean that the part of a company’s earnings paid as a dividend to a pension fund mean that no tax is paid on that part of the company’s income? I reckon the tax loss could be spent better elsewhere such as in our health and education systems or even a decent unemployment benefit.


    • Warren Bird September 13, 2018 at 9:50 PM #

      Hi Wayne, let me attempt to correct you.

      It’s not a ‘benefit’, the introduction of imputation corrected a wrong in the tax system that was identified in the Campbell Inquiry in 1981 under which company earnings were taxed twice and at the ‘wrong’ tax rate. Tax is paid, but at the tax rate of the company’s shareholders.

      It also had the effect of encouraging individuals to invest in the local stock market, making more capital available for Australian companies and reducing their cost of capital. It played a part in the enhancement of the strength of the Australian economy compared with the old ‘bucking bronco’ days that Paul Keating spoke about.

      To the extent that no tax is paid it’s because the person who owns that income is someone who has a zero tax rate. Mostly these are low income earners, but there are also charities and self-funded retirees with a relatively modest pension payment from their super (Viz those with no more than $1.6 million in their fund – which for a lifetime of saving is not as much as it might seem and most of the people in this category have a lot less than that.) Where no tax is due, none should be paid.

      The system also means that tax on company earnings is paid at 47% if the shareholder is a higher income earner, rather than the 30% company tax rate. It’s not just about those on tax rates lower than 30% getting a ‘refund’ or a tax credit – it’s about all the earnings being taxed once at the tax rate of the shareholders.

      The system also means that tax on company earnings is paid at 47% if the shareholder is a higher income earner, rather than the 30% company tax rate. It’s not just about those on tax rates lower than 30% getting a ‘refund’ or a tax credit – it’s about all the earnings being taxed once at the tax rate of the shareholders.

    • Ian Thomas September 17, 2018 at 10:13 AM #

      You might also apply the same argument to workers who have exess tax deducted from their wages. Deny them a tax refund?

  10. Jon Kalkman September 10, 2018 at 4:40 PM #

    As always we need to distinguish between the tax paid by the fund and the tax paid by members (or their beneficiaries) when they make a withdrawal from the fund. Pension funds have paid ZERO tax on income and capital gains since 1992. That has never changed, even when Mr Shorten was Minister for Superannuation in 2010. Accumulation funds pay 15% tax on income and two thirds of that (10%) on realised capital gains. That has also never changed.

    On death a member’s super balance must be cashed out, unless it is a reversionary pension, usually paid to the surviving spouse. This means the pension continues to be paid to the new recipient on the same terms as before.

    Before it was changed by Treasurer Wayne Swan in about 2012, a pension fund ceased to be a pension fund on death and reverted to an accumulation fund where the assets were then subject to 10% capital gains tax when they were sold for cash. After the rule change, the pension fund remained a pension fund until all the assets were sold, free of capital gains tax, and the death benefits are distributed to beneficiaries.

    The tax paid by beneficiaries of the death benefits depends firstly on whether they are entitled to be beneficiaries under the super rules and secondly whether they are entitled to receive it tax free under the tax rules. A spouse, dependents under the age of 18 (students under 25) or someone who was in an interdependent relationship with the deceased generally receive the death benefit tax-free. Adult children are entitled to be beneficiaries but must pay tax. Refer to Noel Whittaker’s article on death tax in this edition.

    A death benefit can be paid directly to the beneficiary or to the beneficiary via distribution through the estate depending on any binding nominations and the provisions of the will. The death benefit is distributed by the trustee of the super fund and does not form part of the estate unless that is the express wish of the deceased. The ultimate tax payable is determined by the beneficiary’s relationship with the deceased.

  11. Adrian September 6, 2018 at 10:18 PM #

    Could you please explain what happens regarding unrealsied capital gains in the super fund on the death of the last surviving member. For example, is CGT payable on these and then the whole taxable part of the fund taxed at 15% plus medicare levy (assuming no dependents)?

  12. burrow September 6, 2018 at 12:46 PM #

    If there was a 15% tax on Super pensions (like there was when the refund thing first started) wouldn’t the refund-of-franking-credit problem go away? The problem, as I see it, is unsustainable changes to legislation (0% tax on pensions) which lead to (necessary) claw-back (no refunds) down the track.

    • Jon Kalkman September 6, 2018 at 5:30 PM #

      Super rules change so often people lose track. If you go back far enough, before super was made universal, retirees were forced to take all their super as a lump sum at age 65 and the tax was calculated by adding 5% of the lump sum to their taxable income in that financial year and they paid normal tax. And everyone retired on 1 July.

      In Keating’s original plan for universal super in 1992, there was no tax on contributions or earnings and 30% tax on the benefits phase (lump sums and pensions), just like in other countries. Keating then realised he would have to wait 30 years before the government collected any tax. He then settled on a system where the super fund paid 15% tax on contributions and 15% on super earnings from all its investments in accumulation mode. Since that time, a super fund in pension mode has always paid zero tax.

      We must not confuse this tax from the tax paid by the member when they take money out of the super fund after retirement. Originally this money, taken from a super fund, was taxed normally, but it was entitled to a 15% rebate to compensate for the tax paid by the fund in accumulation phase. I have shown earlier that this collected very little tax and so when Costello made all super payments tax-free after 60 he was very popular but there was little cost to revenue.

      That zero tax on a super pension fund earnings has nothing to do with the refund of franking credits. It applies to all the fund’s earnings. Franking credit refunds only apply to dividends from Australian shares and anyway came in much later.

      Taxing super pension funds at 15% raises a number of other issues:
      It would break a social contract of 25 years and severely disrupt the plans of retirees and everyone planning their retirement.

      Worse, it would make accumulation funds and pension funds identical and therefore no one would have a pension fund which require minimum pension withdrawals that increase dramatically with age. These mandated minimums force retirees to progressively remove money from the concessionally taxed area of super, often taking more than they need, when they are too old to make new contributions to super. That money is then subject to normal tax. In fact this is an option for dealing with the Shorten proposal. If I am going to lose my franking credit refunds anyway, I can move my super from pension phase back into accumulation. I still won’t get my cash refund but I will no longer be forced to take out more money than I need. My nest egg will last until the day I die.

      If all super money was retained in accumulation funds in retirement with no obligation to draw down any of it, it would require a punitive death tax to ensure that beneficiaries did not benefit from these tax concessions.

      A 15% tax on the super fund may still not soak up all the franking credits and then there would still be the question of refunding the excess as cash or not

  13. Bill September 4, 2018 at 9:16 PM #

    I have a question on franking credits, and I am possibly not the sharpest tack in the packet, but…

    A public company makes a profit and once declared, a dividend is announced, which is to be paid to the joint owners [shareholders] of the public company, now the company pays taxation on their entire earnings pre-shareholder distribution, the shareholder receives his/her dividend which has had taxation taken out, now if this dividend happens to be in a Super fund, eg, SMSF, which are taxation free on earnings, we receive the taxation paid back to us, and it’s known as Franking Credits. Is this ok so far ???

    Surely, to simplify matters, could the public company pay all shareholders first, the remaining would be their company profit, to be taxed at their going rate – the funds distributed to shareholders would be untaxed, so, shareholders outside the super umbrella would pay at their own marginal rate and the SMSF’s in pension mode, would have no need to apply for their now non existent franking credits as they pay no tax on earnings.

    I realise I must be missing something, could you enlighten me as to where I am missing something, because the last thing I want to do is give Shorten my money to waste from my earnings,


    • Jon Kalkman September 5, 2018 at 5:48 PM #

      Bill, Australian companies are required by law to pay tax on the profits generated in Australia. They have no choice, they are required to pay tax on all their profits. Dividends are paid out of some or all of the after-tax profits. The after-tax profits retained by the company are reinvested to grow the profits in the future. In theory, a lower company tax rate should mean higher dividends and more reinvestment.

      Before 1987, shareholders also paid personal income tax on the dividends received. Profits were then taxed twice; tax was paid by the company and then again by the shareholder. Treasurer Keating introduced a system of imputation or franking credits. This system requires the shareholder to include the company tax portion of their share of the profit as part of their taxable income, because the whole (before-tax) profit actually belongs to the shareholder, but when they receive the dividend, they find the company has already paid tax on their behalf. That is why it is often referred to as franking because it is pre-paid.

      As tax is pre-paid on the dividend, imputation allows the shareholder to claim a tax credit for the company tax already paid when they complete their personal tax return. Before 2001, these tax credits could be used to pay some or all of the shareholder’s personal tax liability. If the tax credits exceeded the tax liability, they were simply forfeited.

      This was changed in 2001 so that, just as a PAYG taxpayer, if the tax pre-paid exceeds the personal tax liability, the taxpayer is entitled to a cash refund. If the tax paid is insufficient, they need to pay the difference.

      This system ensures that Australian shareholders always pay tax on their dividends at their marginal tax rate. It also ensures that foreign investors, who do not have access to franking credits, always pay the company tax rate on their Australian dividends.

      If the company tax rate was zero, Australian shareholders would still pay tax on their dividends at their marginal rate even if no tax would be pre-paid, but foreign investors would pay no tax in Australia. This is the genius of the imputation system; Australian shareholders only ever pay tax on their dividends at their marginal tax rate. Foreign investors always pay tax at the company tax rate on their Australian dividends.

      Mr Shorten’s proposal is that franking credits would still be allowed to pay a personal tax liability, but excess credits will no longer be refunded as cash to taxpayers whose marginal tax rate is lower than the company tax rate, unless the taxpayer is a member of an exempt group. This proposal has created many difficulties that have been well canvassed on this website and others. Suffice to say, that if taxpayers on low tax rates no longer receive a cash refund for the excess tax paid, they will no longer be paying tax on their dividends at their marginal tax rate. SMSFs in pension phase have a zero-tax rate. If they are denied this cash refund, they will be treated the same as foreign investors, paying the company tax rate on their dividends but zero tax on the income from all their other investments.

      So, Bill, firstly, companies do not have a choice. They are required by law to pay the tax office first. Australian taxpayers with low marginal tax rates can then claim a cash refund for excess tax paid that they are entitled to under the law. Secondly, the company cannot pay the shareholder first because then the foreign investor would never pay tax in Australia as the ATO has no jurisdiction over them.

      • Tony Reardon September 6, 2018 at 12:26 PM #

        I think that altering the taxation rules to allow companies to classify dividend payments to shareholders as expenses and thus deduct them from profits before tax would be an excellent move. I see a number of arguments for this.

        Currently companies can raise money from shareholders or from debt. Interest payments are deductible expenses whereas dividends are not, which distorts the relative costs of funding.

        The current system of franking credits is convoluted and complex. Expensing of dividends would be in line with treatment of other company outgoings. The treatment of the dividends in the hands of the recipients would again be straightforward and no different to any other income.

        In the case of amounts paid to foreign entities, the ATO already has a withholding tax system whereby amounts are deducted for payments of interest, royalties and unfranked dividends. If all dividends were simply deductible and thus unfranked, the withholding tax would thus capture a share for the ATO without any further changes needed.

  14. Gary September 3, 2018 at 11:59 AM #

    Just been talking to a Cronulla real estate agent.
    What were routine sales are now falling. Example- a 62 year old employed guy can’t borrow $200k on a $1million property ie he has $800k deposit available but because of fear of regulatory sanctions re concerns about ability to repay, no one will advance funds.
    I am also hearing from my line banker about 40% of applications that would have got through are now dead in the water.

  15. Carlo September 2, 2018 at 9:07 AM #

    Graham – I was taken with Adam Creighton’s recent article in The Australian suggesting that it might be time to cease our compulsory superannuation system. Without any intent to malign those in the investment management and administration of superannuation I personally agree in general with his rationale – as you might expect from previous comments of mine regarding super generally. I would clearly support all Australians having to contribute to an eventual State pension such as the Brits or the Americans but Creighton didn’t mention that and in any case I suspect Australians wouldn’t favour it either. Do you or any of your contributors anticipate responding to Creighton’s suggestion? Regards Carlo

  16. Rod August 30, 2018 at 9:25 PM #

    My 13 yr old granddaughter asked her father “ Dad, what’s the difference between Left & Right in politics?” Her dad explained as best & fair as he could. She replied “ Why would anyone vote left? Yep 13 yrs old. Didn’t need to discuss SMSF’s or Franking credits!!!

  17. David August 30, 2018 at 6:24 PM #

    Hi Graham

    Housing affordability has to be the critical social and investment issue for our times. The boomer generation are largely sitting pretty, having bought in when prices were reasonable and then benefited from just about every favourable tailwind imaginable (ie. low interest rates; lax bank lending standards; foreign buyers; favourable tax arrangements, such as negative gearing, and lastly, encouragement for SMSFs to pile in also). The property market surged on and on. The result is that now whilst many of the boomers own their homes outright or hold extensive property portfolios, the next generations have had their home ownership dreams dashed.

    The key question now facing many boomer parents is to what degree should they factor in assisting their children to buy a home into their retirement plans. And how should they manage their children’s expectations about this. Cuffelinks has explored this issue in the past and it warrants further examination.

    In the meantime here’s hoping for a thumping Labor majority in both houses following the next Federal election and they we can at least see negative gearing on property given the bullet it deserves.

    • David (a different one) August 31, 2018 at 9:05 AM #

      This is a very interesting topic. I’m a late-stage boomer and although I’ve only ever owned property to live in, I found myself almost automatically adopting the “Yes, but interest rates were XX%” defence on the question of whether housing was more affordable then or now when under relentless attack via those pesky younger types.

      I’ve also always opined that very few people have the actuarial skills to understand if their investment in investment real estate was a good thing or not – it was more a “faith-based” investment.

      So because I love a good spreadsheet, I went back and followed my (relatively simple) real estate history, and allowing for inflation, wage trends, interest rates and the like came to the unmistakable and informed opinion that it simply was much, much easier “back in the day” and so I had to change my thinking on the issue and admit that the noisy young people had a point.

      I don’t have kids so it’s not going to be a problem for me, but you raise a good point about the expectations – to decide an amount, from zero upwards, that will satisfy everyone, perhaps involves laying out the family finances in a way that may not be comfortable. And I worry about the need for larger capital sums later in life for nursing homes etc. Not every family will be in a position to offer this help, especially if you have a large brood.

      Perhaps, instead of a $ gift, joint-ownership is a possibility, on the grounds that the kids get it all in the end anyway? But I’m sure that will present its own problems.

      And whether you think it’s a good thing or not, I think a thumping Labor victory is now more or less inevitable.

      • Chris September 6, 2018 at 12:58 PM #

        Thank you David, at last, there is one boomer who understands what I have been harping on about.

        When you take the median price and the median wage, then factor in inflation, the repayments on a house back in the ‘horror days’ of 18% interest rates are actually comparable (as a function of percentage of pay) to ‘normal’ rates at around 7%. Why ? because the denominator (house price) versus wages (numerator) has far outstripped the other in terms of growth.

        Also, ‘the sticks’ back in the days when boomers bought were relatively near to the CBD (where the majority of jobs are expected to be). Advance a number of years and thanks to urban sprawl outwards, instead of upwards, ‘the sticks’ now is much further out. It’s a no brainer to see but far too many boomers are myopic and / or don’t want to or can’t accept or handle the truth.

      • Peter Taylor September 8, 2018 at 11:32 AM #

        To add balance around the era when interest rates hit 18% typically the first home buyer iliving in a single bathroom home. There was a single drive way with a single carport enclosed with wooden gates rather than a auto roller door. The kitchen was smaller and if you compare kitchen cabinets to todays homes you will see the quality was lower. Retaining walls were made from sleepers often DIY rather than the turn key house purchases today. Wooden pergola was the alfresco area of choice rather than colourbond patio. Roof insulation was often absent as was the ducted cooling system. Appliances were much more expensive, a 26 inch mono TV without stereo or remote was about $1000 in 1989 and a microwave oven $400

  18. Terry Firkin August 30, 2018 at 11:26 AM #

    Would love to see an article on how to find a specialist accountant for SMSF and lawyer for advice on will re SMSF.

  19. Adam August 30, 2018 at 11:01 AM #

    Hi Graham, re your comment on ‘the longest bull market’ …

    Technically the US had an intra-day level where the S&P500 dropped >20% from its post crisis high. By close it was <20% during Oct 2011.

    Does this suffice for a bear market, thus the bull market only being 7 years to date and not the longest bull market in history?!




    • Graham Hand August 30, 2018 at 11:04 AM #

      Good point, Adam. Note I did say “On some measures …” in my editorial, but take your point. Cheers, Graham

  20. Gary August 29, 2018 at 1:50 PM #

    All Aussies should spend a bit of time in Zimbabwe and rural South Africa(or any socialist or religious dictatorship)to get a perspective on how blessed Australia is to have the rule of law,sound institutions and governments that can be turfed out.
    Although there are a number of things like a plot of land and free housing and no income taxes for tribal people and some income earned via manual labour,personal services etc,South Africa’s unemployment rate is estimated to be somewhere between 35-40% and in Zimbabwe,85-90%.
    Before the latter’s currency collapsed a $1trillion Zmb dollar couldn’t buy a loaf of bread!
    You paid for a meal before you ate because the price could change a couple of times before you finished. Even now,with USD as base currency the most you can draw out of a bank account is $30 a week!
    The Zimbabweans are getting more confident things are improving but pessimism about SA , in part because of increasing threats of more asset grabs, incl farms a la Mugabe era Zimbabwe and massive population growth; Zulus try to have as many kids as possible and there is a constant flow of illegal migrants from the north( could be more than 10million out of a possible 58 million but no census is capable of being undertaken).White population is now around 5 million I understand.Pretoria has a low number of whites ,whereas Cape Town has a more diverse mix.
    I didn’t realise that the coloured population mainly came from Muslim Malaysia and Indonesia( to work for the Dutch,whereas the Hindu Indian population were contracted by the Brits to work in the cane fields.
    No local tribes were ever enslaved,although all non-whites were totally demeaned and degraded under the apartheid regime.
    Swaziland was a bit better than rural SA but the King ( who takes about 25% of income of selected major projects and has 11wives who all demand to go on his private jet to shop at Harrods etc and each have their own mansion and latest cars) has to be managed by his mother.
    After visiting the Apartheid and Mandela museums in Soweto ( highly recommended and sobering re the appalling apartheid era),I didn’t realise how much the ANC was and continues to be under the influence of communism and also how poorly educated some of the political leadership are.
    For example,the current Agricultural Minister,when asked was he concerned about the growing concern that South Africa may not produce enough to feed its people,responded by saying there was no concern because people could get their food from Pick n Pay and Woolworths!
    A local SA joke about the local Toyota minivan taxis that run huge numbers of people in and around from the black/coloured townships.
    How do you know when one of these taxis is full?
    When there are two people sitting on the right side of the driver( ie between him and his side door)!
    There is massive petty and not so petty crime but the vast majority of black people we have met everywhere have been extremely friendly and helpful and have a smile on their faces.

    • Chris September 6, 2018 at 1:06 PM #

      With the greatest of respect, the tables have now turned and it is an era of ‘reverse apartheid’ where the white farmers are being demeaned and degraded.

      And a museum to Mandela…just like having a museum to the IRA; Mandela was convicted of ‘sabotage’ and of bombings in which innocent people died. If that’s not the definition of terrorist acts, I don’t know what is. He was in jail for that reason, beyond merely as a “political prisoner” who disagreed with the establishment. He was a terrorist, pure and simple.

      But that, and the actions of his wife re: Necklacing and Stompie McKenzie are all forgotten, and the actions in the second half of his life are lauded.

  21. Andrew August 29, 2018 at 1:47 PM #

    Graham, see the article below.

    It appears that this only had a small mention within the Royal Commission , but clearly the public is being mislead about “Balanced”


    • Joel September 14, 2018 at 10:31 AM #

      That article hits the nail on the head. If industry funds are generating such higher returns over and above the fee difference compared to their competition, then it’s more than likely as a result of higher risk than superior management. This is especially the case as much of the underlying fund management is outsourced anyway. And since the fee difference is now very small since RG97 forced proper disclosure, it seems it’s almost certainly down to increased but undisclosed risk.

  22. David A August 29, 2018 at 1:39 PM #

    Hi Graham,

    I am seeking some feedback on the Labor Party’s proposed 30% minimum tax rate on distributions from discretionary trusts.

    My situation is that I have been working and saving hard for the last several decades with the intention of self-funding an early retirement until I can access my superannuation, at which time I will be fully self funded by that. My investment vehicle of choice has been a discretionary family trust. All of my savings outside of superannuation have been invested within the trust.

    The distributions from the trust over the years have only ever gone to my partner and myself, and we have always been on marginal tax rates of over 30% prior to the distributions, so we would never have been the target of this 30% tax on discretionary trust distributions.

    I have large unrealised capital gains built up within the trust so selling assets when I retire just to turn around and reinvest outside the trust in order to avoid the proposed tax will penalise me greatly by way of capital gains tax and other costs – in this scenario the sequencing of this loss to CGT as soon as I retire would also significantly reduce my future retirement earnings.

    Am I right in saying that if the Labor Party’s proposed 30% tax were in place that I would be paying $11,100 income tax on the first $37,000 distributed from the trust in my self funded retirement, whereas someone invested in their own name would pay the normal amount of tax which is $3,572? The difference in this instance would be 22% less after tax income each year – from $33,428 to $25,900.

    If the Labor Party gets this legislation passed it could more than triple the tax on my soon to be only source of income generation in retirement compared to what it would otherwise be.

    If I had known that I wouldn’t be able to get my investment returns out again at my individual tax rate I certainly would have done things differently. It’s greatly concerning that the goal posts can be moved so easily after decades of setting myself up.

    I realise there are things I can do to minimise the effects of this tax by selling then reinvesting in my own name, but this involves me paying a high price in other ways. Seems like I’m going to be another case of collateral damage in Bill’s war on anyone he thinks is too well off.

    I have seen very little commentary on this topic in the media, possibly Cuffelinks could cover this further, looking specifically at some of the unintended consequences of this proposed policy.


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