use 16 to calculate how much is enough for retirement

Originally posted by cafa ↑

'Just wondering if you can tell me - I hear we are taxed 15% twice in our Super - is that once at 15% with our Employers contributions for the year and then second, for any profits of that year? Is that right? Do we get slugged a third time to take the Super out? Sorry if this is basic - I'm just not sure. Regards.'

Is the glass half empty?

Lets take a top rate taxpayer. If the earn an extra $100 it is taxed at about 50%, and then the remaining 50% that is invested will be taxed at almost 50%.

By putting the funds into super , the funds pay 15% (rather than the above ~50%), and the earnings are taxed at 15% (rather than the ~50%). Now compound this advanatge over 5,10,20,30 years and it really is very significant

The glass is now half full!

When you take the super out it is tax free, assuming you are over 60. Some jurisdiction allow full tax relief on the funds going in, but tax all the returns in pension phase at full marginal rates.

For anyone who is happy to tie up the funds until age 60, it really s a gift from the taxpayers of Aus.

PS if you really want to game the system, work in the US and get full tax relief on your contributions, and then return to Aus. The bi lateral tax treaty means zero tax in either jurisdiction. And that is a gift from the taxpayers of the US

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Cafa , you touch on a couple of interesting points.
Firstly, some smarter countries , as you mention , do not tax contributions or in fact earnings during accumulation phase. That way individuals end up with a much larger balance, and again as you say , are then taxed at normal rates upon retirement. In Australia , depending upon what you earn, contributions are taxed at 15% and 30% ? , which means that the Govt gets its hands on our super 30 or 40 years before we get it. (Smart move by Paul Keating back in the day to get an instant access to tax revenue). Over my working life I paid 15% and 30% contribution tax, tax on earnings in the fund , and tax on pension upon retirement.
When you start taking this into account , it does not look like much of a gift from taxpayers as you put it.
If our system only taxed at normal rates at the final pension phase and we got the benefit of the tax free threshold , we might be a lot better off than the present system. Unfortunately, politicians and public servants , driven by greed , incompetence and the need to spend money , have totally messed the system up and made it the most complicated in the world, not to mention the most highly taxed.
The last change to super rules introduced by the current Govt was possibley one of the dumbest I have ever seen . Not so much because they introduced yet another tax, although that was bad enough and we just know that they will make new changes in a few years, but because of the complexity and cost of administering the new changes.
Don’t get me wrong , super is still a reasonable proposition , but if I had my time over, I would build up more assets outside of super,....maybe property, but even that bubble will burst with a change of Govt and changes to negative gearing and capital gains taxes.