lol..surprised it took till Tuesday...
Politics Super Thread - keep it all in here
- Thread starter Kul
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@Geo said in [Politics Super Thread \- keep it all in here](/post/1014099) said:
Go on Geo, have a dip mate.
My guy won in my electorate ..going away..so all good..@Cultured_Bogan
@Cultured_Bogan Your going to have to explain what you mean by "negative value of tax" ?
The purpose of the Imputation System is to eliminate double taxation of income.
Say my company earns $100.00 and pays $30.00 tax, then pays me a dividend of the remaining $70.00.
Without the Franking credits, i would pay 47% tax on that $70.00, and be left with only $32.00 in my pocket, while the Government would have taken $68.00.
The Imputation Credits mean i get a credit for the $30.00 Tax my Company already paid, and i have to stump up the 17% difference between my Tax Rate and the Company's. If i am at a lower tax bracket than the Company, i get a refund of the difference.
That's the whole point of an incremental tax system .. you pay tax according to your income level.
How anyone can argue that's somehow unfair is a little bewildering.
The purpose of the Imputation System is to eliminate double taxation of income.
Say my company earns $100.00 and pays $30.00 tax, then pays me a dividend of the remaining $70.00.
Without the Franking credits, i would pay 47% tax on that $70.00, and be left with only $32.00 in my pocket, while the Government would have taken $68.00.
The Imputation Credits mean i get a credit for the $30.00 Tax my Company already paid, and i have to stump up the 17% difference between my Tax Rate and the Company's. If i am at a lower tax bracket than the Company, i get a refund of the difference.
That's the whole point of an incremental tax system .. you pay tax according to your income level.
How anyone can argue that's somehow unfair is a little bewildering.
@Abraham There's a reason why we're the only country who does it. The government effectively returns the tax it collected from the business so there's nothing left. If you're not paying tax why should you get a payout? It's clearly not to reduce their tax liability because they pay no tax.
@Abraham If you're paying tax you could still have claimed the credit to reduce your tax. The change was only proposed for people who were getting a cash refund.
@Abraham said in [Politics Super Thread \- keep it all in here](/post/1014104) said:
My understanding is that it was introduced to eliminate double taxation to the point where you had no tax liability, not claim subsidy. Howard and Costello changed it so that you could claim above and beyond the zero tax liability (what I was referring to by "negative tax value.") The ALP were returning it to it's original implementation, not reversing it altogether.
An interesting question I've just thought of (not really tethered to anything, just an idea I had,) if you were a director of a business where you had a shareholding, but also an employee, how does the dividend imputation work against your salary? The same way or is there a different application of the system?
@Cultured_Bogan The Imputation Credit is tied to the Dividend only.
So if you pay out all profits to yourself as a Wage (which is Tax Deductible to the Company), the Company would have no Tax to pay, and no Retained Profits by which to pay out a Dividend.
So the Employee/Shareholder would just pay Tax on his Wage like everyone else, and there would be no Dividend or Franking Credits to worry about.
As for the initial legislation back in 1987, i really don't know if you could claim the Imputation Credits back from the ATO at that time.
So if you pay out all profits to yourself as a Wage (which is Tax Deductible to the Company), the Company would have no Tax to pay, and no Retained Profits by which to pay out a Dividend.
So the Employee/Shareholder would just pay Tax on his Wage like everyone else, and there would be no Dividend or Franking Credits to worry about.
As for the initial legislation back in 1987, i really don't know if you could claim the Imputation Credits back from the ATO at that time.
@Yossarian Because we have an incremental Tax System where the Tax you pay is tied to your level of Income.
If your earning a high income then Labor's plan doesn't affect you. It was designed to only affect those on low incomes, and self funded retirees.
Punishing people for working hard, or moving the goal posts after they have spent a lifetime working towards a specific retirement plan, is really unethical.
I am not saying Franking Credits or Negative Gearing policies should be off limits when it comes to Tax Legislation, but changes always need to be done sensibly and reasonably, without quite literally ruining people's lives.
If he got this legislation through, there would have been a mad rush from the Super Industry to sell off shares on behalf of retired members. So the first affect would have been to take away their income, and the second would have seen the stock market plummet and reduce the value of their lifetime worth of work to nothing.
That's so unfair and unscrupulous, its bordering on being immoral.
Put yourself in those people's shoes for a moment. Ultimately Bill Shorten and his mates hot exactly what they deserved over the weekend.
If your earning a high income then Labor's plan doesn't affect you. It was designed to only affect those on low incomes, and self funded retirees.
Punishing people for working hard, or moving the goal posts after they have spent a lifetime working towards a specific retirement plan, is really unethical.
I am not saying Franking Credits or Negative Gearing policies should be off limits when it comes to Tax Legislation, but changes always need to be done sensibly and reasonably, without quite literally ruining people's lives.
If he got this legislation through, there would have been a mad rush from the Super Industry to sell off shares on behalf of retired members. So the first affect would have been to take away their income, and the second would have seen the stock market plummet and reduce the value of their lifetime worth of work to nothing.
That's so unfair and unscrupulous, its bordering on being immoral.
Put yourself in those people's shoes for a moment. Ultimately Bill Shorten and his mates hot exactly what they deserved over the weekend.
@Abraham Should never have been introduced in the first place. An unaffordable hand out at taxpayer expense. From what I understand super funds would not be affected. Maybe the implementation of the winding back could have been delayed. There are much better ways to spend government revenue. Having people live in poverty or dying from preventable diseases is immoral not giving handouts to people who own trenches of shares.
@Yossarian It was definitely aimed at self funded retirees. There was a Parliamentary Inquiry into the effects on Pensioners, and the outcome was scary reading. Dont take my word for it, have a read for yourself.
I just can't believe people think its okay to strip people of a lifetime's worth of savings and hardwork at the drop of a hat? That's what places like China do, not supposedly advanced societies like Australia. We aren't talking about funding people's trips to Paris , we are talking about elderly Australian's who rely on this system to put food on the table each day.
Finally, two things can be true at once. You can use tax dollars to help the sick and the needy, while also not destroying people's lives with radical changes to tax laws.
I just can't believe people think its okay to strip people of a lifetime's worth of savings and hardwork at the drop of a hat? That's what places like China do, not supposedly advanced societies like Australia. We aren't talking about funding people's trips to Paris , we are talking about elderly Australian's who rely on this system to put food on the table each day.
Finally, two things can be true at once. You can use tax dollars to help the sick and the needy, while also not destroying people's lives with radical changes to tax laws.
Tim Sheens
Well-known member
@Abraham Simple, no tax is paid by self funded retirees in that situation. Still there should have been a 5k or so limit grandfathered.
Trouble is it formed part of the $30 billion dollar structural defecit left by the Howard and Costello benefits to the middle and upper class.
Trouble is it formed part of the $30 billion dollar structural defecit left by the Howard and Costello benefits to the middle and upper class.
@Abraham said in [Politics Super Thread \- keep it all in here](/post/1014119) said:
Ah OK, just a thought that popped into my head when I was thinking about other possible cases of double taxation might apply.
@formerguest
People who worked for 50 years have dumped all of their lifesavings into the Sharemarket because the Government said they can use this particular system to supplement their incomes. To tell them overnight that we are not only scrapping your main source of income, but will also cause a crash in the value of your underlying assets, is horrendous.
If you want to get rid of Franking Credit Refunds without destroying people, you would need to excempt all existing Pension Funds, as well as Small Business Shareholders. Labor did neither, and paid the correct price for their politics of envy.
People who worked for 50 years have dumped all of their lifesavings into the Sharemarket because the Government said they can use this particular system to supplement their incomes. To tell them overnight that we are not only scrapping your main source of income, but will also cause a crash in the value of your underlying assets, is horrendous.
If you want to get rid of Franking Credit Refunds without destroying people, you would need to excempt all existing Pension Funds, as well as Small Business Shareholders. Labor did neither, and paid the correct price for their politics of envy.
@Abraham said in [Politics Super Thread \- keep it all in here](/post/1014123) said:
Maybe franking credits could have been retained for those at the lower income levels then. I mean I don't support complete reversal of negative gearing either, certainly the grandfathering of it for any properties currently owned. You reverse negative gearing overnight, mum and dad investors will be exposed which could cause a fire sale on the property market and anyone who owns a property will suffer (except those buying in.)
Tim Sheens
Well-known member
@Mac said in [Politics Super Thread \- keep it all in here](/post/1014202) said:
I'm pleased as well, though disappointed that Phelps was ousted and there is talk of repealing her legislation. Community representation by a local can only be a good thing.
watersider
Well-known member
@Abraham said in [Politics Super Thread \- keep it all in here](/post/1014121) said:
Excellent analysis Abraham. I didn't understand the impact of it (or what the whole thing meant). Is there a complicating factor that meant this tax reform couldn't be grandfathered in the same way the negative gearing was to be? I assume you would have found this undesirable still, but would it have been acceptable?
Finally, you've talked about honest toilers with modest retirement plans working a plan around this tax concession, is there a way that very wealthy people could also take advantage of franking credits and use it in a way that it wasn't intended? How would that work? And how prevalent do you think that might be? Do you think it's a problem that could have been addressed better than labor's approach?
@watersider The complicating factor in grandfathering this policy would be that Shorten wouldn't have received the immediate tax grab he was after ... he would have had to wait until all these retirees died off and their Super distributed to Beneficiaries.
My main issues with the policy is moving the goal posts after people have played by the rules their whole lives, and punishing them in retirement when they don't have another 30 or 40 years to re-establish themselves financially.
And yes, wealthy retirees can also utilise these same franking credits refunds. The rules are the same for all taxpayers, regardless of underlying wealth. I don't have statistics as to average wealth of retirees across the country, but that's a whole other debate as to whether we punish people for being successful.
As i said in an earlier post, if the policy exempted existing Super Funds and Small Businesses, it could work and ultimately save the government alot of money going forward. Labor didn't do it properly though, they just wanted an immediate tax grab and weren't concerned about the lives ruined along the way.
My main issues with the policy is moving the goal posts after people have played by the rules their whole lives, and punishing them in retirement when they don't have another 30 or 40 years to re-establish themselves financially.
And yes, wealthy retirees can also utilise these same franking credits refunds. The rules are the same for all taxpayers, regardless of underlying wealth. I don't have statistics as to average wealth of retirees across the country, but that's a whole other debate as to whether we punish people for being successful.
As i said in an earlier post, if the policy exempted existing Super Funds and Small Businesses, it could work and ultimately save the government alot of money going forward. Labor didn't do it properly though, they just wanted an immediate tax grab and weren't concerned about the lives ruined along the way.
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