All Bowen’s versions of “The nurse and the retiree” are wrong.
Looking at them both under the current tax rules——
If they both receive a gross income of $65,000, the nurse will receive $52,000 after her employer deducts $13,000 tax.
Despite the way Bowen describes it, if the retiree is in a SMSF in pension phase, the retire will receive the $65,000 net, because no tax was payable.
But the retiree does nor receive the full $65,000 from the dividend payer. 30%, or $19,500 goes to the ATO, paid in by the company.
The retiree only receives the full $65,000 when that $19,500 is refunded from the ATO.
When that $19,500 is refunded, the retiree has received $65,000 which is $13,000
more than the nurse.
This is because the nurse paid $13,000 tax. But ALL super funds in “pension phase” pay 0% tax.
That’s why the retiree receives more.
Bowen’s Alternative ?????
To disallow that $19,500 refund to the retire.
This will mean that the retiree, with a 0% tax rate will pay $19,500 tax.
The retiree with a 0% tax rate will pay $6,500 MORE tax, than a nurse paying PAYE tax.
A truly rotten policy.
Authorized by John Griffith Newcastle NSW