Death and Taxes

By jimmyhutton on August 6, 2021 in Other

The former surf hand planing champion of the world. Photo: Deborah Read

“In this world nothing can be said to be certain, except death and taxes.”
Benjamin Franklin would love to be alive today. Both death and taxes are becoming less certain.
Australia has one of the best retirement schemes in the world. Superannuation is a very generous system that allows retirees to pay little to no tax in retirement. For an Australian couple with a multi-million dollar home and around $6 million in assets, you can structure your affairs to pay essentially very little to zero tax.

How?
Primary residences are not subject to income tax, land tax or capital gains tax.
As of July 1, superannuation tax-free pensions have now increased to $1.7 million. With two allocated pensions of $1.7 million each, a couple could have $3.4 million in the tax-free stage of their retirement.
Add to this around $2.6 million in defensive assets outside super earning 1.4 per cent. This income can be spread over two $18,200 tax free thresholds to also be tax free.
So, a couple could live essentially tax free with around $6 million in investible assets and a multi-million dollar house.

What a time to be alive!
We are also entering a world where death may not be a certainty in the timeframe that everyone expects.
There are a number of companies working hard to solve the ageing problem. Expert longevity specialist Aubrey de Grey from the SENS Research Foundation, believes there is a 50 per cent chance we solve the ageing puzzle in the next 15 years.
While this sounds like science fiction, it may be more likely than many can comprehend. Exciting new genome sequencing research is intersecting with increases in computing power allowing frontier research to make large strides in recent years.
Few understand the exponential increase in computing power combining with more data in recent years, which should lead to insights that were simply not possible a decade ago.
While the outcome from these research projects is unknowable, it has been a mistake to bet against human ingenuity over the centuries.
One of the outcomes from the low rate environment and essentially free money is that funding for start-ups has never been easier. This is leading to countless frauds in this space, however, there are a number of promising companies that are utilising the free-flowing money for promising research projects.
Verily Life Sciences, a subsidiary of Alphabet (Google), is one of the companies working on the problem. With Alphabet’s $135 billion cash pile as a backing for the subsidiary, there is decent potential for a breakthrough.
If Aubrey is off in his estimations on the timing of longevity increases, it is still highly likely that life expectancies continue to increase over the coming decades. In the last 50 years, life expectancies in Australia have increased from 71.2 to 82.5 years. Again, what a time to be alive!

Rob Shears is an Authorised Representative of Valor Financial Group (AFSL 405452). This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is suitable for you and your personal circumstances.