Welcome to our
article,
How the assets test punishes property owners.
Dear readers, we are writing about social issues that effect our way of life, and this is blog, No. 4.
Now let me explain, sometimes the assets test prevents people in need to receive help from the government. Anyhow, 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. In a parallel way, this is what happens to other property owners
that are excluded also, and we think that this is not right. 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.
We believe that, the
assets test is a real problem, because it is hard to know, at what
level is the right level to apply, 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 in this article, beside talking about the farmers, we are going to talk about the assets test for other groups, and above all we are going to talk about the assets test, 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 of the assets test. I would say that the entire
population thinks that people that own any rental property are rich people, so,
they don’t need the government pension, when rental houses are a real problem
with pensioners that own one rental house only, 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, and this is what I am going to show you
in this article, where I will make it clear with an example.
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, because it puts them financially in a disadvantaged position, the only thing that comes to my mind is 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, and I can say here, that this is the reason why today there are not enough affordable properties for rent.
I believe that the aim of any budget, is to achieve the best 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.
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, and they would be better off, if they had no rental properties to rent. Anyhow, read my views about how the assets test discriminate against
the small property owners, in the example I am writing hereunder.
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The assets test punishes small property owners.
Now
let us talk about how today assets test discriminate and 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, and I
believe 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 $850,000, plus a few more belongings their assets
test are nearly 900,000 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, $802 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 $650,000, this house is rented at $500.00 PW, so, if
they are lucky and the house is rented the entire year, they would collect
$26000 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 can be up to 11000; 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+11000 Queensland government land tax +1500 maintenance+ 1500 to
real estate agent letting fee, it = $19,400
Calculate
total net earnings for the year, is $26000 income-19400 expenses=$6600
The
Smiths have made $6600 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 $17,600.00 from their rental property.
This
is a lot less than if they were on the government pension, which would have
been nearly $41,700.00 for both.
But
now they only get 23,000.00 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. This is the reason why today there are not enough rental properties for rent. And if they want the private investor to help them, they must remove the assets test from affordable rental properties.
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.
To see more click on this link,
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