It’s going to be another super Melbourne Cup in 2021!
Incentivise for a Twilight Payment could provide a Verry Ellegant solution! If not, you may need a Floating Artist!
It is that time of year again – the first Tuesday in November when they run the Melbourne Cup. For followers of this column, once again we try and select a winner through the lens of Australia’s superannuation system.
This year’s field is very different to the profile of fields that have competed over the last decade – due to the impact of COVID-19. Alas, many of the measures that may have identified the winner in a prior year – lightly raced European bred stayer with a high cruising speed that has beaten the handicapper – are mostly absent from this year’s field. Typically, I would exclude any horses asked to carry 57 kilos or more – however this year, with the field lacking its normal depth, this year might be an exception to the rule.
Accordingly, this year – rather than relying on form, weights, barriers, breeding – I thought I’d have a bit of fun with a few names that resonate with superannuation!
The obvious topical tip is Incentivise on which our superannuation system is based. The favourite, Incentivise has taken all before him this spring including a comprehensive effort in winning the Caulfield Cup by many lengths. Superannuation, at least in the compulsory sense, is deferred wages. That is, the government has mandated the compulsory saving of an element of wages for future consumption. To make this more palpable, the government provides tax incentives to encourage this (mandated) behaviour, as well as to assist with the compounding nature of preserved savings. As our system has continued to mature, there has been much debate about whether these tax incentives are firstly, appropriated targeted and secondly, sustainable.
Another topical tip is Twilight Payment, which we all hope to receive assuming we have built our superannuation balance appropriately. Last year’s winner, Twilight Payment, returns for its third start in the Cup. Often the focus of superannuation has been on the accumulation phase. However, as more members have moved into pension phase and as the average balances have increased, the focus rightly has moved to conversations around the income needed in retirement and what a good retirement product looks like.
Australia’s taxation system for superannuation adopts what is referred to as a taxable – taxable exempt model. What this means is that contributions and income are concessional taxed with benefits largely exempt. From a Federal Government point of view, whilst still providing tax incentives, what this type of system does is that it brings the taxing point forward as compared to other systems around the world that tax in pension phase. Taxing in pension phase creates a significant deferral for revenue authorities (albeit, it would allow for a more progressive rate of tax to be applied). Hence, it is what some might say is a Verry Elleegant solution. Our third topical tip. Verry Elleegant has been one of Australia’s best racehorses for a number of years and it would be a sentimental win if she could salute on Tuesday!
And if Incentivise, Twilight Payment or Verry Elleegant don’t tickle your fancy, then perhaps you need a Floating Artist to get the job done! Floating Artist is one of the few horses in the field that meets the criteria of a lightly raced European bred stayer with a high cruising speed that has beaten the handicapper.
All said, happy Cup Day from all your friends in Super!