smh.com.au
Proposed Super Tax: Clarifying Franking Credits and CGT Implications
The article clarifies that the proposed tax on unrealised capital gains in superannuation above $3 million is calculated separately from the franking credit system and future capital gains tax, and that it only applies to the portion above the $3 million threshold remaining in the accumulation phase.
- Does the tax on unrealised capital gains affect the cost base for future capital gains tax calculations?
- The proposed tax on unrealised gains in superannuation above $3 million doesn't affect the cost base for future CGT calculations. The tax is calculated separately from existing CGT rules. This means any tax paid on unrealised gains won't be credited against future CGT liabilities.
- How does the proposed tax on unrealised capital gains in superannuation interact with the existing franking credit system?
- Franking credits are not contributions; they offset tax. A franking credit refund increases a super fund's net position, but this isn't double taxation. The proposed tax on unrealised capital gains is levied on the difference between opening and closing fund values, not on the cost base for CGT.
- How will the proposed tax on unrealised capital gains in super affect individuals who have already reached the transfer balance cap?
- The new tax interacts with the transfer balance cap by only taxing gains above the $3 million threshold within the accumulation phase. The tax does not affect the cap itself, and only the portion exceeding the threshold in the accumulation phase is subject to the additional tax.
Cognitive Concepts
Framing Bias
The framing of the article is biased towards skepticism of the proposed tax. The author uses phrases like "real problem" and "complete diversion" to frame the tax negatively. This framing influences the reader's perception of the proposal before presenting a balanced analysis.
Language Bias
The author uses emotionally charged language such as "real problem" and "complete diversion" to describe the proposed tax. More neutral alternatives would be "significant concern" and "substantial departure from established practice".
Bias by Omission
The analysis lacks specific examples from the article to support claims of bias. The author mentions concerns about the article's accuracy regarding the interaction between unrealised capital gains tax and existing CGT rules, but doesn't provide direct quotes or excerpts to illustrate the alleged bias.
False Dichotomy
The article presents a false dichotomy by implying that the only options regarding the tax on unrealized capital gains are either a full credit for prior tax paid or no credit at all. It neglects the possibility of a cost base adjustment.
Sustainable Development Goals
The proposed tax on unrealised capital gains in superannuation disproportionately affects wealthier individuals, potentially exacerbating income inequality. It raises concerns about fairness and the impact on retirement savings for those with larger balances.