Our strategic partner, Elston Financial Solutions, has answered the $3 million super question.
Ever since the Federal Government announced that there would be a new tax on super, the big question has been, who will this affect?
The proposed legislation (DIV296) is expected to have an initial impact on just 80,000 super members. It's been positioned as a tax on the rich. And this 'Robin Hood' message has passed the pub test for most people.
But, as with most legislation, the devil is the detail. In this article, we're looking at the proposed legislation to see if it is just a tax for the rich or something more of us might need to talk to our advisers about.
How the tax is calculated
We first need to understand how the new tax would work.
It's not a tax calculated across the total super balance (TSB).
It's not a tax on the super balance above the $3 million threshold.
It is a 15% tax on the earnings generated by that proportion of your super that sits above the $ 3 million threshold.
How good is your math?
In general, it's the maths questions that freak quiz show contestants out the most. It's not everyone's favourite school subject, so we've put together a simple example to make the numbers easier to follow.