This article can be also found at this Hub Pages link, The Assets Test Problem.
Welcome to our
article,
How the assets test affects property owners.
Dear
readers, today it rains a lot, but a couple of years ago there was a drought, and 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. This is what we are going to write in this article.
I
believe that we have suggested that the farmers, with some government help,
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 in Australia, because it is hard to know, at what
level is the right level to apply it, as we will see as we continue to write
about 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 beside talking about the farmers, we are going to talk
about the assets test for other groups, and above all, how it affects rental property owners in a more detailed
way than we have done in our other articles, and then, about other unfair government
taxes levied on properties.
The assets test punishes rental properties owners.
The assets test is a problem for the pensioners, because it does not consider, if it is possible to earn the same amount of money that will be cut off the pension. The main problem here is that, when the treasurer makes the budget, he doesn’t even look at this possible outcome, he just wants to save money and cut the pensions. In fact, nobody is thinking about this negative issue, I would say that the entire population thinks that people that own rental properties are rich people, so, they don’t need the government pension, when rental houses are a real problem with pensioners,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 for the small property owner to break even,. The other problem that could come from these decisions, is that in the future there will be less rental property available.
Anyhow, before I write about that, I am going to suggest
that to fix this injustice about today assets test, which discriminate heavily
against the small rental property owners, since they are in a disadvantaged
position financially, the only thing that comes to my mind is that whoever
makes these budgets, 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, or I should say, at least as good as it was a few years ago,
before the assets was changed.
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.
Here I can only say; what is wrong with the people in
Canberra? Don’t they see that they are killing the will of the people that want
to progress by working hard? This is the second most important group of people
that work physically hard; the first group is the workers that work for a wage.
This first group of people politically belongs to the Labour Party, these
people are happy to work for a fair wage, and if they own their house they live
in, so, they are not self-starters.
The second group of people, the small property owners that
are usually hard-working people and self-starters can belong to both parties;
so, if the coalition wants more votes from this group and stay in government,
they need to fix the mistakes they have made, when they changed the assets test
in a way that punishes severally anyone that gets a government pension. I say
punishes them severally, as I am going to show you, how the assets test and
other things discriminate against the pensioners, so, it makes life very hard
for them. Anyhow, read my views about the assets test that discriminate against
the small property owners, in the example I am writing hereunder.
-------------------------
The assets test punishes small property owners.
Now
let us talk about how today assets test punishes
financially the small property owners. To show you that, hereunder we have
written an example. So, we have chosen a couple that we call Mr. and Mrs Smith,
they are both pensioner and receive a government pension. The figure that appears
in this example are all rounded figures, but they are close to the real
figures.
Now,
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, the only way one could describe today assets test is that whoever
made these laws are cruel people, because the assets test discriminates against
those small property owners that own a house for rent, since it is not possible
to live on the money that their property can earn, 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, minus14950 expenses, this leaves only $8450 net earnings.
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. Because some government idiots have made this huge
mistake.
I
believe that these mistakes must be fixed from the government, if they don't
the people that have been hurt will vote them out of government. The future generations, will not invest in properties, so, there will not be enough properties for rent.
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,
To see more click on this link, The Assets Test Problem.
See
you soon.
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