The Assets Test Problem
Welcome to our
article,
Dear
readers, we started to write these articles about what is happening in
Australia, when we saw that the farmers were having problems to survive,
because of the drought, so, we thought that the Australian government should
help. But they cannot help the farmers, because they own properties and the
assets test exclude them from government help; it is like other property owners
that are excluded also. So, here we are going to write, how the assets test affects property owners.
I
believe that we have suggested that the farmers and the government,
need to make something like a collective farming association, where all the
farmers can pool a percentage of their farming products and money, which should
be tax free from the government, then this pool can be used to help each other
when they need help.
We
hope that somebody high up reads our suggestion and then do something about it,
we hope they do. We also noted that the farmers cannot ask help from the
government, because they are self employed and because they have properties, so,
their property are assets that stops them from receiving help from the
government.
The
assets test is a real problem, because it is hard to know, at what
level is the right level to apply it, but that is only part of the farmers problem, because also they
cannot ask any government assistance since they are self-employed. But when one
cannot make money for a long time, and here in the case of the farmers we are
talking about years, I think that it would be fair to help them. But the
farmers are not the only people that are affected from these government rules
of the assets test, because there are other groups of people that are affected
adversely as well.
Anyhow, today in this article, beside talking about the farmers, we are going to talk about the assets test, and how it affects rental property owners in a more detailed way than we have done before.
Because the assets test punishes rental properties owners
The assets test is a problem for the pensioners that receive a government pension, because it does not consider, if it is possible to earn the same amount of money that will be cut off the pension. Because if they get a government pension, the pension will be cut off so drastically that they would have been better off, if they didn’t have the house at all. I believe that the assets test on rental properties, is set three time as much as it should be, so, something needs to be done.
I believe that whoever makes these budget and laws, must keep in mind that he should give these properties owner a fair go, if he wants to keep the Australian economy going the best way possible,.
The aim is to achieve the most benefit for the country, I
believe that to achieve you need people that are self-starter and work hard,
like the small property owners that have worked hard during their lives and
have paid their taxes on what they have earned. They saved some money and
invested it on a second house, hoping that when they would retire they could be
better off financially, but it did not work the way they wanted, because of the
unfair assets test changes that the Australian government has made recently.
You see, these self-starter people need to believe that if they work hard, they
will be better off in the future. I could say more here, but you can find that here,
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The assets test punishes small property owners
The assets test discriminate and punishes financially the small property owners. So, let us write this example
Mr Don Smith and his wife are both on government pensions, but today they don’t get much pension, because of the assets test. The Smith couple thinks that, who made these laws are cruel people, because the assets test discriminates against them, since it is not possible to live on the money that they can earn from the property. So, let us see how it works. One of the problems exist because of the deeming setup, where the government calculate that people can earn $3.00 per fortnight per every thousand dollars you have in the bank, or anywhere else including properties. In fact, owning properties is the worst thing you can have, because it affects the owners in a disadvantaged way, like the Smiths that we are talking about here
The
house they rent is valued at $650,000, plus a few more belongings their assets
test are nearly 800,000 dollars so, they only get about $100 per fortnight
each, because of the assets test.
Now,
if they didn’t have their rental property, they would get the full pension,
which would have been, $690 each per fortnight each.
Now,
let us try to calculate how much the Smiths can earn from their rental property
in Brisbane. This property is an old three-bedroom house, on a large block of
land that is valued at $550,000, this house is rented at $450.00 PW, so, if
they are lucky and the house is rented the entire year, they would collect
$23400.00 this is before expenses.
Now,
what are the average expenses for this house; The Brisbane City Council rates
are $600.00 per quarter; the Urban Utilities average $450.00 per quarter; this
will come to $4200.00 per year; the insurance is $1200.00 per year, the land
tax (this may vary, but let us say that they have to pay it fully in this
example) so, the tax is $6550.00; maintenance can vary, but let us say
$1500.00, then there is the fee for the real estate agent say $1500.00 per
year.
Let
us add this numbers up. So, $4200 to Brisbane city Council rates and water
+1200 insurance+6550 Queensland government land tax +1500 maintenance+ 1500 to
real estate agent letting fee, it = $14,950
Calculate
total net earnings for the year, is $23400 income-14950 expenses=8450
The
Smiths have made $8450 net in one year. Do you think they can live on that?
Here some people may say that not everybody pays the land-tax, but even without
the land-tax, the Smiths will only earn $15,000.00 from their rental property.
This
is a lot less than if they were on the government pension, which would have
been nearly $36000.00 for both.
But
now they only get 20,200.00 at the best, and all the trouble to rent their
property.
I believe that these negative things must not happen, it is not right when you have worked hard to put yourself in a better financial position, then suddenly you find yourself worse off.
Well,
somehow, I have had my say, and I hope that it is clear enough what I have
said. So, see you in my next article, which will be about, The Australian
Social Security Must Be Equal.
See
you soon.
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This is, Menfranco general blog
The Assets Test Problem
IS TO BE CONTINUED;
Next time with; the Australian social security mast be equal.
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Other links from same author
http://menfranconewworldorder.yolasite.com
https://sites.google.com/site/menfrancoreconciliation/
https://sites.google.com/site/prayersofreconciliation/
https://sites.google.com/site/godintheuniverse/
See you soon in our blog, The Australian social security must be equal.
See you soon.
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