Laws to strip criminal MPs of taxpayer funded pension due

Legislation to strip jailed former NSW minister Eddie Obeid of his taxpayer-funded parliamentary pension is set to be introduced to Parliament within weeks.
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But it is unclear if the legislation will apply to another former minister facing a prison sentence, Ian Macdonald, who was on Thursday found guilty of two counts of misconduct in public office over awarding a lucrative mining licence to a union mate.

In December, Obeid was sentenced to a maximum five years’ jail for misconduct in public office in relation to lobbying over commercial leases at Circular Quay in which his family held an interest.

The then premier Mike Baird immediately announced he would legislate to ensure MPs convicted of a serious offence during their time in office would lose their parliamentary pension, even if they quit before charges are laid.

Presently, MPs convicted of a serious offence – punishable by at least five years’ imprisonment – can keep their pensions if they are not charged while in office.

Obeid was charged after he left Parliament in 2011. The change will ensure he is stripped of his lifetime annual pension worth more than $120,000 a year.

But it is unclear whether the legislation would apply to Macdonald, as it is not known if he took his pension in a lump sum upon leaving Parliament.

MPs qualifying for the scheme, which ended in 2007, have the option of claiming 10 times the annual benefit upfront, instead of drawing an indexed annual payment for life.

Documents released to Fairfax Media under access to government information laws show Macdonald was entitled to an annual, indexed pension of $135,545 when he quit in 2010.

This means Macdonald could have claimed more than $1.3 million as a lump sum. If he did, there is a possibility that the government will be unable to claw it back.

However, during his trial mid-last year the court was told Macdonald was “only on a parliamentary pension and was having trouble funding his defence”.

It is understood preparation of the legislation is well advanced and could be introduced to Parliament as early as next week.

If not, the next available opportunity would be when Parliament resumes in the first week in May.

After Obeid’s sentencing, Mr Baird also announced the government would claw back more than $280,000 in legal assistance the former minister was given for representation at ICAC.

Receiving gifts and bequests from abroad

My elderly mother, a citizen and resident of India, no connection with , wishes to give about $6000 to each of my two sons by means of a bank transfer (SWIFT) to help with their university (HECS) debts. Both are citizens and residents of , over 21, and have never received any kind of Centrelink payments. The elder one is now in full-time work and pays regular tax. The younger one has a small income from casual work and does not pay tax. (1) What are the n tax implications? (2) What sort of documentation will satisfy the ATO and perhaps the security establishment? (3) Can she repeat this next year if she is alive? (4) What if she dies and the money is paid as per her Indian will? S.M.
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has no gift duties and your sons can receive the money and pay off some of their HECS debt with no tax payable, nor any need to disclose the gifts in their tax return.

Your mother can do this as often as she likes and I’m sure the more frequently she does, then the happier her grandsons will be! Again, if she leaves money to family members in her will, there is no death duty in and no restrictions on the money transfer.

My partner (60) and I (65) respectively, are no longer working and we don’t receive any benefits. We are quite comfortable about selling down assets to fund our lifestyle. Estate planning is not really an issue, being a same-sex, childless couple with relatives who are very comfortably off and we will be receiving our siblings’ inheritance. We own our $2 million home outright, plus two investment properties, one worth $900,000 with a $200,000 mortgage, the second, $700,000 with a $260,000 mortgage, plus a self-managed super fund (SMSF) with about $700,000 and $300,000 in cash. My thoughts were to simplify matters and sell the first property ($900,000), pay off the second ($700,000) and sit back. There will be substantial capital gains tax (CGT), but that will always be the case. We age-proofed our home when we renovated a few years ago and intend paying for services and staying independent until physical/mental health declines. What are your thoughts, given your recent comments about not selling real estate? J.M.

When weighing up competing philosophies of (a) not selling property investments until you need the capital and (b) entering retirement without debt, then the latter ranks above the former.

In other words, being in debt is always a higher risk situation. For example, interest rates can rise to take a large slice of your retirement income, or a lender can demand prompt repayment, the borrower can suffer illness, injury or a major financial setback and so on.

So I agree with your plan to clear the debt but why not keep the larger property? If possible use the remaining months of 2016-17 to maximise contributions into your partner’s superannuation account since they are still under age 65.

Don’t underestimate the value of estate planning. You should each have in place a non-lapsing binding death benefit nomination for your SMSF (first ensure that your trust deed allows them), a will to cover non-super assets, a power of attorney to cover individually owned financial assets, with another, separate, power signed as individual trustee of your SMSF, (or as directors of a corporate trustee), guardianships to make healthcare decisions if one of you is incapacitated, plus advance care directives describing the kind of extreme care you may or may not require. If you are individual trustees of the SMSF, agree who will be asked to become the necessary second trustee if one of you tumbles off your twig. In matters of deceased estates, Murphy’s Law reigns supreme.

My husband died suddenly 2?? years ago. I live in our home, valued at $700,000, and I paid the mortgage out with my husband’s super. I sold an investment unit and am now due to pay $43,000 in CGT in March. We own the house next door as well, valued at $600,000, with a mortgage of $300,000, and my accountant advised me I would pay $63,000 in CGT next year had I sold it. My daughter is moving into it when the tenants move out and will be there for 12 months while she builds. I’ll pay the mortgage on it to help her. I am 61, still working, but long hours in retail and commuting mean I plan to go from four to three days very soon. When she moves out of the house, I’ll move in, then do a bit to my house to get it ready to sell. It would probably cost me $700,000 to get a nice unit in about 12 months. I gave $22,000 in one super and $65,000 in another. I just need to know if I’m on the right track. H.H.

It sounds as though you are on top of things. Your accountant may be able to tell you how you can use deductible super contributions to reduce CGT.

I understand you plan to sell both the remaining properties and move into a unit. Make sure you understand how much you will have left after selling the old properties and buying a new one, and how much of this can be placed into super to provide an untaxed income in retirement.

One suggestion is that you could save a lot of buying and selling costs by staying in one of your houses until you retire and hire a cleaner and gardener, they’re cheaper than stamp duty. Then, much later, look to buy an independent living unit in a retirement village with care facilities attached.

My wife (67) and I (81) are trustees of our SMSF. Her 2016 pension balance was $1,888,000 while mine was $375,000. With the upcoming transfer balance cap of $1.6 million, can my wife draw down $300,000 from her account, then give it to me to start a new pension within the SMSF? A.A.

Sorry, being over 65, you cannot make further super contributions.

Your wife’s four choices are (a) do nothing and run an unsegregated fund, using the Tax Office’s option for CGT relief at June 30, (b) rolling over the excess above $1.6m at June 30 into a separate accumulation account within the SMSF, ensuring entirely separate bank accounts and investments, which requires a great deal of operating care, or (c) rolling it over into an external accumulation fund, which I believe to be the simplest option or (d) cashing in the excess and investing it out of super.

Having too much money is a nice problem to have.

If you have a question for George Cochrane, send it to Personal Investment, PO Box 3001, Tamarama, NSW, 2026. Help lines: Financial Ombudsman, 1300 780 808; pensions, 13 23 00.

Reducing the risks of borrowing to buy an investment property

Despite increasing concern about the possibility of a sharp fall in property prices, especially for apartments, investor demand for properties continues to increase, with bank lending to investors reaching record highs.
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This demand for geared properties is largely driven by tax considerations following the steep reduction in the tax savings from superannuation, particularly for higher-income earners.

For taxpayers with annual incomes above $250,000, the maximum tax saving from deductible super contributions will soon be 17 per cent, with the maximum annual deductible amount reduced to $25,000 from July 1. Compared with this strictly controlled regime, which also deprives access to the assets involved until at least age 60, the tax assistance for geared investments is currently unlimited with all losses tax deductible at full marginal rates.

Current investor demand is also being increased by concern that the assistance to geared investors is too generous to last and the desire to take advantage of the current rules while they last. Given the large number of negatively geared investors, almost certainly, as with the 1985 capital gains tax, future rule changes will apply only to new investors.

These considerations increase the attractions of borrowing now to purchase assets to be held for a long time. The emphasis in doing so is to select assets likely to increase in value and generate long-term capital gains. While the running yield is also relevant, having income subject to capital gains tax has two large benefits.

First, the capital gains tax is payable only when the asset is sold, and transfer of assets by bequest doesn’t trigger a liability until the beneficiary sells the asset. Second, the capital gains tax rate is half the normal marginal income tax rate once the asset is owned for longer than 12 months.

Selecting the asset to be purchased is the key to a profitable outcome and careful research and evaluation of prospects is crucial. The emphasis should be on the merits of the assets purchased and not the tax savings from the transaction. Negative gearing losses will be generated from both poorly and wisely chosen investments.

Also, while the tax benefits of gearing are increased by not paying off the investment debt, investment risks can be reduced by other strategies. These include concentrating on paying off any non-deductible debt on a family home and building up assets owned by a partner with a lower marginal tax rate.

For older people able to access their super within a reasonable time, non-concessional super contributions are a tax-effective alternative to paying off an investment debt. These strategies all have the advantage of maximising the gearing tax deduction while reducing the final outstanding debt and overall risks.

Daryl Dixon is executive chairman of Dixon Advisory.

[email protected]苏州夜总会招聘.au

Renters win payout after ‘black water’ contaminates bayside home

Tenants in a bayside Melbourne suburb have won compensation by a landlord who failed to keep their home in good repair.
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A couple who lived in a house in Elwood with their children was awarded just over $6000 after they took their fight to the Victorian Civil and Administrative Tribunal.

Rebecca and Graham Matthews claimed their home and belongings were contaminated by “black water” after a major storm on December 28 last year.

Flooding damaged the walls, ceilings and carpets as well as the tenants’ clothing and posed a threat to health.

They had warned the landlord of a damp spot in the hallway ceiling in 2014, but nothing was done.

VCAT deputy president Ian Lulham found that warning put the landlord on notice about the house’s potential for storm damage, and that the landlord breached her duty under the Residential Tenancies Act to ensure premises were maintained in good repair.

The tenants were ignored again when they asked for repairs to the house after the storm, with the real estate agent, Axis Properties, threatening to take them to VCAT if they left without giving full notice to terminate tenancy.

A week after the storm, water was still coming from light fittings in the living room and bedroom.

The tenants moved out after suffering headaches, skin rashes and nausea, but continued to pay rent as a sign of good faith.

The tribunal heard that water in the carpet caused such a foul smell that the tenants could not live in the dry part of the house.

Because the agent took no action and did not concede the water damage was doing the tenants harm, the tenants obtained a report from an environment, health and safety assessor, who found the house was uninhabitable because of mould, lead paint and black water contamination.

An insurance assessor also found black water contamination, advising the tenants to get out and throw away all contaminated items.

The City of Port Phillip issued a building order, saying the “stormwater discharge system to the existing dwelling is dilapidated, allowing water ingress to the inner parts of the dwelling, posing a danger to the occupants”.

Mr Lulham found the landlord had breached an obligation to identify and rectify defects, ordering rent from December 29 to January 27 be paid to the tenants.

Also covered in the $6,023.52 payout: the cost of reports, insurance excess, unplanned moving, and an out of home fee of $100 per day.

Mr Lulham described the landlord’s position as unwarranted and irresponsible.

Spin classes won’t help China cut the fat

Profile piece on new indoor bike riding experience called Scenic Cycle that has opened. It’s a bit like a cross between a spin class and an Imax theatre, as bike riders are led on a class that via the projection of virtual scenery appears to traverse some of the world’s most scenic roads and majestic climbs. Photography Brendan Espositosmh,13th June,2014DQoNCg0KU2VudCBmcm9tIG15IGlQYWQphoto.JPG Photo: Brendan EspositoOne of the biggest battles during my life has been keeping my weight down and I think regular readers know that I once ballooned out to 150 kilograms. And being no taller than Napoleon, that was really stupid.
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So eight years ago I had stomach banding surgery and shed 60 kilograms. Nevertheless, keeping fit remains a constant battle and my method is to head out to the park at 6am with Dawn the trainer. I know that it seems ridiculous to have someone help with simple exercises like walking but in my case it works, and I’ve already lived five years longer than I was supposed to with all that weight on.

Perhaps I should have just joined a gym like the increasing number of federal bureaucrats who, according to figures released this week, are racking up an annual bill of $12 million for gym memberships and weight-loss programs at taxpayers’ expense.

The 20,000 plus ATO employees are claiming almost $6 million a year and they are still not quick enough to catch their rightful share of cash flowing out of the country from many of the multinationals.

They should do what most of us do and use the park, although the trendy ones are now heading to the super-duper gyms where you can get fit in all sorts of new ways.

Mara, Louise’s niece, is addicted to spin classes. These spin classes are expensive stationary bike rides and you can spend $100 a week on riding up and down digitally induced hills.

But the costs don’t end there. You’ve got to have the latest active gear and matching water bottle. I’m told that lemon Lycra with orange stripes is the go.

One of Louise’s other nieces, Holly, has just signed up for F45 training – a new cult, not colt, that is apparently “guaranteed to leave you breathless”.

The other cousin, Greg, is into traditional weightlifting but the fact is that all of this family pay their own way, unlike the federal public servants who increasingly use the term ” fit for purpose” to describe their bureaucratic capacities for “deliverables”.

As Charlie says, “if I knew I was going to live this long, I would have kept in better shape”.

Well the truth is that we are all going to have to pay more out of our own pockets for our health.

World Bank figures show public spending on health growing from 4.8 per cent of GDP in 1995 to 6.3 per cent in 2014. The United States grew from 13.1 per cent to 17.1 per cent over that period and Britain 6.7 per cent to 9.1 per cent. Health is the second biggest item in the federal budget after social security and welfare, at 15.9 per cent in 2016-17, and there is no doubt it will increase further as the population ages. We can’t afford it!

The government is now well into the run-up for the federal budget and I hope that we have the fittest people in the country on the job.

Our Treasurer is also fond of talking about government initiatives being “fit for purpose” but the bigger question is whether the budget itself is fit for the times we find ourselves in.

We need to lose a bit of weight as a country if we are going to have a healthy future. We must stop eating up more wealth than we can generate.

It’s that simple. We’re a bit like a family where the kids have been getting too much pocket money. It didn’t happen to me when I was young. My pocket money came from collecting bottles for their deposits and selling used newspapers to the fish and chip shop.

I know some will say Tony Abbott and Joe Hockey tried cost reduction and failed miserably. But things will only get worse for the country if we put off hard decisions again while our pollies and senior bureaucrats keep getting fitter themselves in the subsidised gym at Parliament House.

And on the other side of the ledger, we need to massively boost our earned income from overseas trade.

I reckon it should now be obvious that the two most important people in the Parliament are Health Minster Greg Hunt, who is turning into a real star, and the Trade Minister Steve Ciobo, who has picked up where Andrew Robb left off and is working the international scene very effectively.

Let’s see what our $12 million investment in a super-fit Canberra leadership comes up with in the next month or so. If they don’t get this budget fit for the purpose of growing the economy they will miss the opportunity of a decade. The first budget in the three-year term is the only chance you get to put popularity behind doing the right thing.

Less spin ??? more weightlifting.

We will be watching.