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Personal and Political Commentary on Salary Sacrifice to Superannuation

This topic is related to Valian's topic on salary sacrifice.  I don't know how to provide the link but the post number that started the topic is 13621 and the topic is titled Salary Sacrificing…

Valian asked for help with an actual, complicated, technical problem which produced some interesting personal and political comments.

Placing my thoughts on those comments here is an attempt to divert the very interesting commentary away from the topic discussing the technical aspects.
LifeInsight said
Following on from my last post:

The government could have at the least made the changes apply to an excess percentage of salary sacrificed in to super,

for example over 20% of total salary,

or to apply only to higher income earners,

But to penalise low income families who can no longer afford to buy a house, who only then have their super to rely on for relief from poverty in retirement, is an unbelievable position for this government.
LifeInsight

I don't see how this penalises anyone.

The issue is not basic superannuation; it is salary sacrifices into superannuation - that is salary that was available now being voluntarily diverted to superannuation.

Of course it is desirable to save for retirement, especially for those on low incomes.

However, we also all have a responsibility to provide for our children.

Low income earners pay lower child support and they and their children have lower standards of living.

The question with salary sacrifice and child support is whether it is reasonable to reduce the support available to children right now in the present in order to make preparations for the future.  This is arguably more important for children of lower income earners than higher income earners because the children of higher earners are already better supported.  That is not to say that salary cannot be sacrificed into superannuation, only that it may not be appropriate for such sacrifice to be used to lower support for children.
Bigred said
I think the underlying principle is, or should be, that if the income is within the person's control it needs to be included.
That seems fair to me.

monster said
About the salary scrificing re:super. People who are on pensions dont have any super. Thats probably why the government took away salary sacrificing into super because it is unfair to the other party (apparently).
Monster.

I agree and I disagree.

I don't think it is because people on pensions do not have super - it is because people on pensions and others on low incomes really struggle, so it is unfair on the children to have one or both parents voluntarily foregoing income if that reduces the income available for the care of the children.

That does not mean parents cannot salary sacrifice and it does not magically create super for low income earners or pensioners, it just does not allow salary sacrifice to reduce child support.
Artemis said
 The government is always clawing back in sneaky ways - making statements like "there is no means testing" BUT you have to qualify for xyz which IS means tested. This is classic - "we are making the self support cost equal to be fair" but we will be sneaky and go through the back door next financial year and include your super.
Super is not included, just salary sacrificed to super.
Artemis said
 The last people to have the old age pension will be those recipients who have been on a pension most of their life and no other way to support themselves… Personally, it annoys me that innate laziness or inability is rewarded.
With respect, personally it annoys me that all pensioners get lumped into one category and seen as somehow privileged.

I understand that innate laziness or inability can result in a lifetime of welfare benefits, but considering our previous conversation on the cost of living and the level of pensions compared to the Child Support self support amount, I am surprised you consider any pension to be a reward. 

Also, innate laziness is one thing, inability is another.  It seems to me that genuine inability through disability or illness should not be punished with a lifetime living on an amount less than the self-support amount deemed sufficient for working parents.

I understand you probably had a particular situation or person in mind when you wrote that, but others will equally have a particular person or group of people in mind when they read it.  Just as you reacted to a comment which looked like a put-down of working women, so others who struggle on these inadequate pensions not through laziness but through genuine inability may react to your comment about inability being rewarded.
Bigred said
 Seems CSA apply different rules to payers than are applied to payees, no matter what Matt Miller says in a public forum in earshot of his Minister's lackey.
Bigred said
Sec SPCA, in my case the payee has salary sacrificed nearly 25% of their income yet CSA will NOT so much as pursue it.  I am aware of another case with an even larger amount involved.  Seems to me that there is significant bias against payers.  I wonder how many silent victims are out there?
Bigred

I think the exchange between you and LifeInsight shows what is actually happening in your case.

CSA have not refused to pursue this, they have just refused to pursue it on your terms.

While I agree that your terms are entirely reasonable, they do not fit CSA's current rules and that is the reason for their refusal.

To suggest this is an example of bias against payers or in favour of payees is, I suggest, somewhat mischievous.
LifeInsight said
Don't be so sure of that - there is always the COAT waiting for the ex to claim extras such as school fees etc…
Don't worry; you will only be assessed for school fees if you agreed to private schooling, so it is a fair cop.



Good idea to start a new topic.

Artemis said
 The government is always clawing back in sneaky ways - making statements like "there is no means testing" BUT you have to qualify for xyz which IS means tested. This is classic - "we are making the self support cost equal to be fair" but we will be sneaky and go through the back door next financial year and include your super.
I stand by this. My family tax benefit will be affected next financial year. My point is to illustrate that the government often market their policies to be more beneficial and broader reaching, while leaving the minor details of how they restrict the benefit, in the small print.
 
I'm not sure what you mean by

Briar Rose said
 Super is not included, just salary sacrificed to super.

Super is included as taxable income. Salary sacrifice (of super) was a legal way to lower taxable income. The unfairness is that I do not have access to this additional income, until I retire. My contribution is also mandatory. I cannot opt out of contributing. What you did not quote, is that what annoys me is the inconsistency of the ATO, FAO, Centrelink and CSA having inconsistent policies toward it.
 
  
Artemis said
The last people to have the old age pension will be those recipients who have been on a pension most of their life and no other way to support themselves… Personally, it annoys me that innate laziness or inability is rewarded.
 
Briar rose said
With respect, personally it annoys me that all pensioners get lumped into one category and seen as somehow privileged.

Briar rose said
I am surprised you consider any pension to be a reward.

Just to clarify my comment. Inability is not disability.

I am talking about people who have made a lifestyle choice. I went to school with many people who's attitude was exactly that.
Fit of body and capable of work, but being to bone lazy to get themselves into employment. The boys went on jobsearch and live off mum and dad. The girls got knocked up a couple of times. Have a look on some of the parenting sites - single mums by choice, is the cry. It makes me embarrassed to have been a single mum.

Unfortunately, I do think receiving a pension, when you've put nothing (and in some cases no future intention) of putting anything back into the system, is a reward.



Junior Executive of SRL-Resources

Executive Member of SRL-Resources, the Family Law People on this site (Look for the Avatars). Be mindful what you post in public areas. 
BriarRose, my terms are identical to those expressed by Matt Miller in his answer to a question on the issue at Barry William's do.  I have had a conversation with a CSA officer since who has told me that they do not commence a reassessmemnt on the basis that a parent has raised the issue.  

If pointing this discrepancy out is mischevious, I am guilty as charged.  
Artemis said
 I'm not sure what you mean by

 
Briar Rose said
 Super is not included, just salary sacrificed to super.
I was just responding to you comment that super is included as income next financial year.  Super as such is not looked at for CS or FTB unless it is in the payment phase - the changes only relate to salary sacrificed to super.

Your mandatory contribution will not be counted, just the salary sacrificed amount.  For most people that is income that is available now, that is why it is called salary sacrifice.  Super as such is not available now, but money voluntarily put into super above the mandatory contribution is available now if you choose it to be.

 
Artemis said
Just to clarify my comment. Inability is not disability.

 I am talking about people who have made a lifestyle choice.
I agree with you totally on laziness and lifestyle choice, but if inability is not disability, what is it?

Laziness is not inability and lifestyle choice is not inability either. So what did you mean by inability?

Inability to me is inability and putting unable people into the same category as the lazy and those who have made a lifestyle choice is something I cannot endorse.

If someone has never put in because they could not rather than would not, I think they are deserving of compassion not condemnation.

Sometimes, working your whole working life does not involve working until the normal retirement age. If someone has worked for their whole working life even though there were only a few years before they became ill, then spent what little superannuation they had accumulated by age thirty-five supporting their dependent children, then I think living from age forty for example onwards on a paltry pension is not a reward but a very harsh punishment. 

 So, my only problem with your post is the use of the word inability which, if I understand you, and I hope I don't, you equate with unwilling. I think the genuinely unable get a really bad deal in these so-called enlightened times.

As for pensions for the lazy being a reward, I get your point, but I really think they are just too stupid to realize what a bad deal their laziness gets them.

I am sorry you feel ashamed of having been a single mother.  My friend who was widowed while pregnant went back to work far too soon after the birth of her second son because of the harsh judgments she faced as a 'single mother', so the issue you raise is close to my own heart. I think the real problem comes when we judge all by the actions of some.  My friend did not choose to be a single mother and she was certainly not a freeloader or a lazy person.

I just wish we would all learn to judge each person by their own actions, not by the actions of others. 



So along with everything else I now have to put up with being called lazy and stupid for being on a pension. Thanks guy's my X used all the super before we split along with taking all the assets we had worth anything. I seem to be getting more confused each time I read what has been wrote, so whats the conversation about ???
D4E
 

 I for one do not see you as lazy or stupid.

 This conversation is about personal and political responses to salary sacrifice for superannuation and there are several threads running through it which is why it is confusing.

 I separated it off from the discussion on the technical aspects to save any further confusion there.

I do not seriously think Artemis intended to criticize you or any other disability pensioner. I was just asking her to clarify her use of the word inability which she uses separately to laziness in a way that suggests disability, then distinguishes from disability in a way that suggests that inability equates to a lifestyle choice which makes no sense to me.

LifeInsight

I do see the issue here.

I do know that payees also sacrifice salary, and I am usually the first to point out the balancing arguments.  The reason I only mentioned low income earners as payers was that I was talking about low income earners and their lifestyles.  Low income payers always pay relatively low child support, but they may receive anything from low to high child support depending on the other party's income, so comment on their lifestyles is not possible in the context I was exploring.


You are right that families where parents do not earn large incomes who could maximise FTB whilst putting extra money into super for their retirement will lose out here.

 I have found your previous post where you said




LifeInsight said
Salary sacrificing to super reduces taxable income so child support and tax is reduced and FTB is increased.

 In my situation if I was earning 50K and sacrificed 10k to bring income to 40k to get maximum FTB then I would get:

 An extra 2k in FTB
 Pay 3k less tax and get a good tax refund
 Pay 1k less child support

 My income would be at 46K

 People on low incomes or those that have little super (due to divorce settlement) need to put more into super as they won't have enough to retire on so I see this change from the Labour Government to be against low income earners.

  I don't entirely understand the figures, specifically how your income would add up to 46K.

Could you indulge me with an explanation?

Thanks
Katie

Bigred

This is the exchange I was talking about
 
LifeInsight said
BigRed - did you lodge a change of assessment based on "capacity to earn" basis?
 
Bigred said
Lifeinsight that was a "yes".  They told me they wouldn't consider it if I didn't provide a statement of financial circumstances.  I told them they had breached the Privacy Act and to reconsider.  They sent my application back.  I made a Privacy Complaint (they have 30 days to respond).  I also lodged a customer compliant citing Ludwig's announcement and demanding they institute a review under reason 8 without further delay - implying they were operating outside their minister's express direction.  This has all been done in writing.
 
So, basically, you lodged a change of assessment application which was returned to you because you did not provide a statement of financial circumstances.

So, what I thought was mischievous  was that you said that  'in my case the payee has salary sacrificed nearly 25% of their income yet CSA will NOT so much as pursue it' then gave another example and followed both with the comment 'Seems to me that there is significant bias against payers.', implying that the refusal to pursue it was based on bias against payers rather than your refusal to play by their rules.

Not to say their rules are reasonable, only that, in my opinion, this is not an example of bias.



roosters_64

I really appreciate the balance you show in your letter and I admire you for getting it out there into the arena rather than just having a rant.

Balanced feedback such as yours can only make things better for all - men, women and children.  As a society, we still have a long way to go.  Thanks for doing something positive.

LifeInsight

Roosters has written a really constructive letter.

Perhaps you could do the same, giving credit where it is due for the web site and suggesting some alternate posters.

Maybe you could even start a topic asking for constructive suggestions for you to put forward.



BriarRose, CSA have at least implied through Ludwig that they will pursue people avoiding CS obligations through salary sacrifice.  By implication, they are saying they will initiate a reason 8 COA review.  I agree entirely that this is reasonable and should happen.

So Matt Miller then comes out to Barry Williams group and says if either parent raises the issue CSA will follow up.  A reasonable person would assume that to mean they will instigate a reason 8 COA.  

So along comes confused payer and says "payee has salary sacrficed income, please include in assessment".  CSA says "lodge CoA form and we will think about it".  Payer gets COA form and scratching head says "but its asking about my expenditure, which will then be passed to payee maybe resulting in further agro.  Also breaches IPPs!"  Where is this stand off meeting objectives of CS Acts? Also, if statements made by Ludwig etc are accurate, there is a demonstrated bias.
Sorry Bigred, I have been very ill so perhaps that is why I am struggling to understand.

Please bear with me.

You know I agree with you about the content of the forms, but if Ludwig said they will pursue people avoiding CS through salary sacrifice but trhe agency won't process it without the form fully filled in, how is that bias rather than pigheaded stupidity?

If they would treat any applicant, male/female, payer/payee in the same way when they lodge an incomplete reason 8 application, isn't that pigheaded determination to stick to their own processes no matter what?



Fair call without a solid attributable statement BriarRose. While I may run my conspiracy theory on this, which is supported by strong anecdote, I am yet to garner the evidence.  Might FOI their compliance strategy and see what happens?  
LifeInsight

I have posted earlier in this topic asking you to help me out before I comment.

I am totally confused.

Sorry.



I have been doing some further thinking on the issue.  It seems that Ludwig's statement has to be treated with a grain of salt because the ATO will only have access to data on "grossed up FBT" amounts because that is what is collected from employers.  So while they might say they want to include things such as super etc, in practical purposes they cannot.  Sorry folks, we have been conned.  
According to CSA at a meeting recently, they stated that they only make assessments based on what gross amounts are given to the ATO. So if your gross amount is minus salary sacrifice then how would they know you sacrifice? I asked the question in the first place, then followed it with questions of where do they get information from relating to your earnings. I agree with Bigred regarding false information from CSA. They stated they only receive earnings via the ATO after you file a return, but when asked what information and how much information they receive from the FAO relating to earnings they could not comment as it was a FAO issue.

Last edit: by imadad


If you don't talk about it, how can anyone help you move forward!
Yes, considering the amount of child support payable is determined by reference to both parents income this is a scandal.  I suggest that the CSA has misled their Minister and must be called on this.  Anyone care to ring Ludwig's adviser (not DLO) on CSA matters and discuss this further?
  I dont think CSA are to blame directly, I personally think they are just the front line troops for the FAO to collect monies that would normally be paid out by FTB & FTA benefits. I think the changes to the system are a way of reducing payouts from the federal budget to parents that have the capacity to earn a living on their own.

If you don't talk about it, how can anyone help you move forward!
imadad said
According to CSA at a meeting recently, they stated that they only make assessments based on what gross amounts are given to the ATO. So if your gross amount is minus salary sacrifice then how would they know you sacrifice? I asked the question in the first place, then followed it with questions of where do they get information from relating to your earnings. I agree with Bigred regarding false information from CSA. They stated they only receive earnings via the ATO after you file a return, but when asked what information and how much information they receive from the FAO relating to earnings they could not comment as it was a FAO issue.
 

Well not exactly accurate. What they have done in my case is not accepted my ATO figures , (because my ex lodget an obkection) actually rang my employer , got my pre tax salary & based my CS on that!!! Not only that they are asking me to comment upon my ex's demand that this be backdated for all of 2007. I have objected too both those suppositions , but have not heard back yet.
  So just that I understand, your ex filed a change of assessment form, would that be correct?  When CSA spoke regarding income they did say an ex partner could file this form but pushed it more along the lines of people hiding earnings from second jobs or earning extra income whilst on government support and there was the subject of earning capacity as well. So thats it,similar job, award says ex-amount of dollars and tax return does not match the award rate. 

If you don't talk about it, how can anyone help you move forward!
imadad said
So just that I understand, your ex filed a change of assessment form, would that be correct?  When CSA spoke regarding income they did say an ex partner could file this form but pushed it more along the lines of people hiding earnings from second jobs or earning extra income whilst on government support and there was the subject of earning capacity as well. So thats it,similar job, award says ex-amount of dollars and tax return does not match the award rate.
Yes that's correct.
Just to clarify my arguments, just got my CSA file including comments from CSA officers.  Even though I have raised salary sacrifice in just about every conversation with CSA, they have not so much as asked the question of ex about if she does or does not.  Tone of notes also indicates marked bias against payer.
Bigred said
Just to clarify my arguments, just got my CSA file including comments from CSA officers.  Even though I have raised salary sacrifice in just about every conversation with CSA, they have not so much as asked the question of ex about if she does or does not.  Tone of notes also indicates marked bias against payer.
Sounds about right.
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