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Maintain the current dividend imputation system

Discussion in 'Business, Investment and Economics' started by willy1111, Oct 5, 2018.

  1. sptrawler

    sptrawler

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    Indian Springfield coming up.:D
     
  2. Humid

    Humid

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    Dusty would be cheaper.....
     
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  3. HelloU

    HelloU

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    nah, was talking about non-paye peeps that have a go using their own skills and graft to find work - so do not have paye tax credits (before thay get good at it i mean and then hide behind a company structure for protection) ....... anyway



    on that line of logic, it falls apart for me at at the other end,

    example

    a coy puts 70c in my bank account

    the coy gives 30c to the tax office

    ato says this has not finished yet so it makes me include both values as my income, so i write down $1 assessable
    income

    and cos i pay tax at 50% i need to top up the tax by 20c ....... making tax paid 50c
    on the $1

    so ato gets 50c of tax money


    for this 50c of tax paid

    did the coy pay 30c and me 20c .....?,

    or did i pay the full 50c of the $1 assessable income at 50% tax rate?


    the mathematical financial answer can only be that the individual has paid 50c of tax .......... so that means the company has paid zero tax.
     
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  4. HelloU

    HelloU

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    soz boys for that formatting horror above

    did that company pay zero tax above?
     
  5. Smurf1976

    Smurf1976

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    If someone only manages to earn $30K or so in dividends on a $500K investment over however many years after they finish working then either they are a truly terrible investor or they've taken advantage of one of the ways to avoid paying this tax thus illustrating the silliness of it all.

    One loophole that ought to be closed, if they are serious about cracking down on tax evasion, relates to superannuation.

    You can make "voluntary" contributions to super in addition to the compulsory amount. OK so far.

    Now where the tax evasion comes in is that you avoid tax by doing so!

    And assuming you put the money into an industry fund, you'll also avoid the new tax on franked dividends in practice.

    Now there's something they could crack down on if they were serious. Why not just force all additional investment to be outside of superannuation, thus collecting more tax and keeping people off welfare as well thus reducing expenditure?

    And why punish those who have done that of their own accord anyway?

    I wonder how many of those (in general, not specifically referring to ASF) who support this policy have themselves taken advantage of tax loopholes such as the one I describe? At a guess, probably quite a lot. :cautious:

    Salary "packaging" is another one that could be clamped down on and which exists primarily to avoid tax. No reason why people can't just buy their own car and pay tax on it and their income.

    Overall there's a lot of loopholes in tax laws so suffice to say I smell a rat with the crackdown on one that was at least consistent with the principle of progressive taxation whereas most of the others are just outright tax avoidance as such. :2twocents
     
  6. Humid

    Humid

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    the coy gives 30c to the tax office
    There’s your answer
     
  7. HelloU

    HelloU

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    here is the bit that troubles me .......... the company had $1 in the bank which is end of year profit
    u say it gave 30c of that $1 to the tax office
    it also gave me 70c of that $1
    (the coy has no more money in the bank)

    tax office says i got $1.
    (so does that 30c belong to me or not?)
     
  8. Smurf1976

    Smurf1976

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    You are a part owner of the company.

    Your company made $1.

    The debate is whether you should be paying tax as per the normal income tax scales, which include rates of 19% and 0% for lower income earners, or whether there should be a minimum 30% rate of tax applied?
     
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  9. Toyota Lexcen

    Toyota Lexcen

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    the 30% is the Governments first,



     
  10. HelloU

    HelloU

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    again,
    a coy ended the year with $1 profit in the bank

    they put 30c into the ATO bank
    they put 70C into my bank
    the ATO pre-fill tells me that i had "earned" $1 from this company

    Is that 30c part of my taxable income or is it not?
     
  11. sptrawler

    sptrawler

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    Or the tax scales need changing, not just saying this is tax free, untill we say it isn't.
    No one can plan with that $hit policy making criteria, what a bunch of wallies.
    Super the lucky dip, put your money in here and wait and see what suprise you will get, when you can access it. Lol
     
  12. Knobby22

    Knobby22 Mmmmmm 2nd breakfast

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    Exactly right. With this modification, tax scales, pension, limits etc. should change and fairly markedly. I'm waiting to see the total policy before I decide. Hopefully Labor get the balance right.
     
  13. sptrawler

    sptrawler

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    Best of luck with that knobby, it is usually back of the napkin stuff, that grabs votes, and causes mayhem.
    The outcome from this will be, a run on super and no more personal contributions. IMO
    Can't wait to read about it. Lol
     
  14. Smurf1976

    Smurf1976

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    Yes it's the changing of rules, more than any specific rule in itself, which makes this all so problematic.

    Whilst I don't understand why Labor wants to discourage investment in Australian shares, in favour of practically anything else, at least if it was consistent then everyone would know where they stood and we wouldn't have this situation now.

    Thankfully at a personal level there's no immediate impact but that doesn't make it right.
     
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  15. SirRumpole

    SirRumpole

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    Funny how no one complained about changing the rules when the rebates were bought in by Costello, even though they took away $5 billion a year from the budget bottom line.

    Sometimes things like this are just un- affordable in changing times.
     
  16. HelloU

    HelloU

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    annual franking refunds $5B
    annual interest payment on govt borrowings $17B
    annual welfare $175B
     
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  17. Smurf1976

    Smurf1976

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    I think it's fair to say nobody's ever going to complain about something from which they incur no loss. That goes for pretty much anything.

    That may be a valid point but if so, why target only one small group?

    Why not instead just reduce the value of franking credits for all investors? Instead of targeting lower income earning investors with a substantial cut to their income, why not implement a more modest tax increase across the board on all income earners regardless of source?

    Or close some of the loopholes like voluntary super contributions which again benefit primarily those on higher incomes.

    Alternatively, if there's a desire to target one particular group then why target those on a low income? Instead why not something like means testing of franking credits? Either limit the quantity anyone can claim or make it only up to a certain level of income.

    Or why not look at tax deductions and limit things like work-related expenses to only those expenses actually required in order to do the job and not those which simply have some vague association with it?

    It's the reverse socialism, punishing those in the lower half with modest investments to improve their circumstances whilst leaving the wealthy untouched, that has people like me unhappy about it. There's plenty of other ways to fill a budget black hole without resorting to things like that.:2twocents
     
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  18. Kremmen

    Kremmen

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    Of course nobody complained when the system was made fair. There's no logic to people with one particular type of income being taxed at the corporate rate while those with every other kind of income are taxed at their personal income rate.

    The ALP says they can save $5 billion a year by making a massive tax hit on certain investors. They are such liars, pretending that everyone will just sit there and pay the extra tax and do nothing about it! (There are no doubt some, especially the old and senile, who will be caught in the trap, but that's nothing for the politicians to crow about.)

    The franking cash rebate $5 billion a year will never be coming back as tax. If this min 30% tax rate for franked shares comes in, those affected will just move a proportion of their investments into other assets. (Do some more trading and book some capital gains, switch to companies that don't pay tax, overseas stocks, property trusts, overseas bonds, etc, etc.) Sure, in the short term, the selling and buying of assets will book some CGT payments to the government, but that's it. It'll be a giant waste of time and effort by those affected from which the government will gain very little.
     
  19. SirRumpole

    SirRumpole

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    When you say "low income", are you talking taxable income or real income ?

    This is a detailed rebuttal of the proposal that the franking credit changes are targetting low income people.

    https://www.abc.net.au/news/2019-01-30/fact-check-labors-dividend-imputation-policy/10626204
     
  20. Knobby22

    Knobby22 Mmmmmm 2nd breakfast

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    BHP pay 30% tax.
    Keating set it up so the taxpayers don't pay 40% tax and top of the 30% tax (double taxation).
    In 2000 Howard changed it so if you pay no tax you get the money from BHP and the government gets no money. This has of course been abused by some extremely wealthy people and resulted in billions of dollars being removed from the tax take. Obviously long term untenable.

    No one can tell me its fair that company tax should not go to the government but instead to the individual. Of course it hurts but so for instance will the new laws coming in for Mortgage Brokers. Such is life.

    It is well known psychologically that people feel more pain when a privilege is removed than happiness from getting that privilege.

    The right controlled by the shouty elements of the press got rid of Malcolm and so have enabled Labor to win this election by heaps. You can vote against Labor to try to protect your privilege but don't think it is your right and you have the high moral ground, because obviously this is not true. Anyone bleating this is just pushing their own self interest.
     
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