@formerguest They may not hit small sites too much but I have worked large commercial construction for that same period of time working with them from an apprentice through to head project manager and have no qualms stating that they are extortionist bullies whose rank and file consist of close to the scum of the earth.
Politics Super Thread - keep it all in here
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weststigers
Well-known member
@formerguest
"Meanwhile until the legislation was to be passed and until the set date, she has the ability to sell those shares to invest in other areas, even overseas"
This would crash the stock market...
"closing the rort"
It's not a rort....a share, by definition is a share of the company profit. A company is not required to pay tax before issuing dividends as the dividends are not owned by the company. Only funds not distributed as dividends and used as operating capital are taxed. It is up to the receiver of the dividend to pay tax at their income tax rate. This is basic taxation law.
If you start a PTY LTD and distribute $18,000 to yourself, it is taxed the same way as a Sole Trader earning $18,000 profit - 0% tax, The same way as someone earning $18,000 from wages is taxed.
If you're going to tax the shareholder at 30% - who is by definition an owner of a business, you would need to tax the sole trader as well as it is business income.
Take a retiree earning $300,000 a year from dividends....they would in fact pay $90,000 in tax (30%) plus top up the tax to their marginal $45,000 (15%) - total tax paid = $135,000.
Why should the retiree earning more have the 30% tax go towards their overall tax bill, but the retiree earning substantially less have different rules applied?
I can only imagine you are under the impression that even high income earners get the tax back on these earnings which is NOT the case.
In my example, the retiree only earned $18,000 gross...the tax on $18,000 in Australia is 0%....why should they have to pay 30% when everyone else pays 0%???
"Nobody was going to have money taken from them, they were simply no longer going to have it handed to them"
Yes they were. It would be the same as taxing a wage earner 30% tax on their $18,000 income. It was sold by Labor as a tax rort and it was no such thing. You seem to be indoctrinated by the Labor campaign...have you done the numbers yourself? It was the most unfair assessment of income applied to the lowest earners in the country.Totally unfair.
Under the franking credit system, no one was paying more or less than what they would have paid if they were to earn the same amount from wages...it was a completely level playing field. Labor have stirred this up as if this was some loophole, but anyone who reads the laws will realise they are no better off earning $50,000 in shares with franked dividends than you are earning $50,000 in wages. tax paid will be exactly the same.
"Meanwhile until the legislation was to be passed and until the set date, she has the ability to sell those shares to invest in other areas, even overseas"
This would crash the stock market...
"closing the rort"
It's not a rort....a share, by definition is a share of the company profit. A company is not required to pay tax before issuing dividends as the dividends are not owned by the company. Only funds not distributed as dividends and used as operating capital are taxed. It is up to the receiver of the dividend to pay tax at their income tax rate. This is basic taxation law.
If you start a PTY LTD and distribute $18,000 to yourself, it is taxed the same way as a Sole Trader earning $18,000 profit - 0% tax, The same way as someone earning $18,000 from wages is taxed.
If you're going to tax the shareholder at 30% - who is by definition an owner of a business, you would need to tax the sole trader as well as it is business income.
Take a retiree earning $300,000 a year from dividends....they would in fact pay $90,000 in tax (30%) plus top up the tax to their marginal $45,000 (15%) - total tax paid = $135,000.
Why should the retiree earning more have the 30% tax go towards their overall tax bill, but the retiree earning substantially less have different rules applied?
I can only imagine you are under the impression that even high income earners get the tax back on these earnings which is NOT the case.
In my example, the retiree only earned $18,000 gross...the tax on $18,000 in Australia is 0%....why should they have to pay 30% when everyone else pays 0%???
"Nobody was going to have money taken from them, they were simply no longer going to have it handed to them"
Yes they were. It would be the same as taxing a wage earner 30% tax on their $18,000 income. It was sold by Labor as a tax rort and it was no such thing. You seem to be indoctrinated by the Labor campaign...have you done the numbers yourself? It was the most unfair assessment of income applied to the lowest earners in the country.Totally unfair.
Under the franking credit system, no one was paying more or less than what they would have paid if they were to earn the same amount from wages...it was a completely level playing field. Labor have stirred this up as if this was some loophole, but anyone who reads the laws will realise they are no better off earning $50,000 in shares with franked dividends than you are earning $50,000 in wages. tax paid will be exactly the same.
weststigers
Well-known member
@DieHarder I beg your pardon?
I was using the example to illustrate a point.
What's skin colour got to do with anything?
This discussion is simply a matter of mathematics. Rather than attack people based on their race, why not disprove the point with maths?
I was using the example to illustrate a point.
What's skin colour got to do with anything?
This discussion is simply a matter of mathematics. Rather than attack people based on their race, why not disprove the point with maths?
Tim Sheens
Well-known member
@weststigers of course franking credits are applied as part of one's taxable income, just like everything else is and taking it down to zero is okay. Going past zero and writing a cheque to the well healed at the expense of cleaners and aged/child care workers is not.
Also, I have consistently stated that the Labor policy was flawed and that there should have been a temporary threshold applied to protect the more vulnerable, along with a short sunset clause.
Super was set up as a retirement savings plan, funded in part as sacrifice of wages in enterprise bargaining. That it morphed into the tax advantageous ability to amass a large cake for the better off under Costello's raft of changes was simply wrong, just as allowing more cream on that cake that was meant to be eaten down in retirement is now.
Also, I have consistently stated that the Labor policy was flawed and that there should have been a temporary threshold applied to protect the more vulnerable, along with a short sunset clause.
Super was set up as a retirement savings plan, funded in part as sacrifice of wages in enterprise bargaining. That it morphed into the tax advantageous ability to amass a large cake for the better off under Costello's raft of changes was simply wrong, just as allowing more cream on that cake that was meant to be eaten down in retirement is now.
weststigers
Well-known member
@formerguest the franking credit is not part of taxable income. It is "pre-paid" tax.
UNFRANKED EXAMPLE
Unfranked Dividend: $18,000 (taxable income)
Company decides not to pay tax before issuing dividends (no franking credit)
Shareholder receives $18,000 in their bank account (unfranked dividend)
Shareholder cannot claim franking credits as no tax was paid by the company on their behalf
Tax on $18,000 is $0.
Tax claimed by shareholder is $0
TOTAL RECEIVED BY SHAREHOLDER = $18,000
FRANKED EXAMPLE
Unfranked Dividend: $18,000 This is taxable income
Company tax paid @ 30% = $5,400 (franking credit)
Shareholder receives $12,600 (franked dividend)
The shareholder should have been taxed 0% on the $18,000 dividend
Was actually taxed 30% ($5,400), so only recieved $12,600.
Shareholder can claim back the $5,400 in overpaid taxes
$12,600 received already + $5,400 tax return = $18,000
TOTAL RECEIVED BY SHAREHOLDER = $18,000
You might be under the impression that the shareholder somehow receives more than their dividend at the expense of the taxpayer or "free money". This is NOT how franking credits work, nor have they ever worked like that. The Labor party was incredibly misleading in their narrative on frankng credits.
UNFRANKED EXAMPLE
Unfranked Dividend: $18,000 (taxable income)
Company decides not to pay tax before issuing dividends (no franking credit)
Shareholder receives $18,000 in their bank account (unfranked dividend)
Shareholder cannot claim franking credits as no tax was paid by the company on their behalf
Tax on $18,000 is $0.
Tax claimed by shareholder is $0
TOTAL RECEIVED BY SHAREHOLDER = $18,000
FRANKED EXAMPLE
Unfranked Dividend: $18,000 This is taxable income
Company tax paid @ 30% = $5,400 (franking credit)
Shareholder receives $12,600 (franked dividend)
The shareholder should have been taxed 0% on the $18,000 dividend
Was actually taxed 30% ($5,400), so only recieved $12,600.
Shareholder can claim back the $5,400 in overpaid taxes
$12,600 received already + $5,400 tax return = $18,000
TOTAL RECEIVED BY SHAREHOLDER = $18,000
You might be under the impression that the shareholder somehow receives more than their dividend at the expense of the taxpayer or "free money". This is NOT how franking credits work, nor have they ever worked like that. The Labor party was incredibly misleading in their narrative on frankng credits.
hank37w
Well-known member
I still support your examples, even when some others don't.
Find it difficult to see their logic.
Find it difficult to see their logic.
@weststigers said in [Politics Super Thread \- keep it all in here](/post/1015802) said:
I don't know if I am reading it wrong, but it should be impossible to claim more credits than what you're entitled to in that scenario because you are in the tax free threshold, you should get everything back.
I am no accountant, so I ask the question: what about when you're above the tax free threshold? Change your example to say $25K where your dividends were worth $20K and you earned another $5K doing one day a week at Bunnings for something to do. You'd be taxed $6,000 as you said, through 30% company tax on your unfranked dividends. You should pay 19c per dollar over $18.2K, so your tax liability is $1,292. So as it stands:
$1,292 income tax payable on $25K earnings;
$6,000 company tax payable on $20K in dividends, leaving $14K in untouched earnings;
So you should be able to write down the income tax liability on your $25K and the difference in the tax free threshold ($4,200 + $1,292,) which means you should only receive a tax break of $5,492, out of $7,292 in combine corporate and income tax paid? Is that right?
gallagher
Well-known member
This is getting more confusing than GST on a birthday cake.
Tim Sheens
Well-known member
@weststigers Fully franked, unfranked, partially franked, call them what you like, how they all are treated relate to one's taxable income. No need to get into all the intricate details, as every case is unique.
@gallagher said in [Politics Super Thread \- keep it all in here](/post/1015872) said:
I prefer Pie...
weststigers
Well-known member
@Cultured_Bogan if someone earned $25,000 of which $6,000 tax was withheld (leaving them with $19,000)
They would get a refund for the overpaid tax.
I.e if they paid $6k, but they should have paid $1,292, they would get a refund of the difference ($4,708)
It's easier to do 2 calculations:
1. How much tax should have been paid on taxable income
2. How much tax was actually payed
3. Refund overpaid tax or bill underpaid tax
They would get a refund for the overpaid tax.
I.e if they paid $6k, but they should have paid $1,292, they would get a refund of the difference ($4,708)
It's easier to do 2 calculations:
1. How much tax should have been paid on taxable income
2. How much tax was actually payed
3. Refund overpaid tax or bill underpaid tax
You guys are forgetting the Medicare Levy..
weststigers
Well-known member
@formerguest
Yes every case is unique...I'm trying to show you that no one is able to claim more credits than their total income as you claim.
This type of misinformation is dangerous and many people not qualified to give that advice are spruiking it as gospel. Be careful on financial topics unless you're an expert.
Yes every case is unique...I'm trying to show you that no one is able to claim more credits than their total income as you claim.
This type of misinformation is dangerous and many people not qualified to give that advice are spruiking it as gospel. Be careful on financial topics unless you're an expert.
@weststigers said in [Politics Super Thread \- keep it all in here](/post/1015885) said:
On $25K, it should be $1,292. $18.2K tax free, with 19c for every dollar after that.
Tax paid in this scenario would be $1,292 in income tax plus $6,000 company tax on $20K worth of dividends.
What is said person actually entitled to, my understanding is that the original ALP policy allowed you to write down your company tax to offset your income tax. In this scenario you can write down the $1,292 you're entitled to, plus the additional $4,200 between the $14K in post tax dividend earnings and the tax free threshold. Am I wrong here? I'm not trying to argue or be a smartarse I am trying to understand how it is actually implemented.
weststigers
Well-known member
@Cultured_Bogan that's cool mate. definitely not taking it as you being smart.
If the employer withheld $1,292 & the company withheld $6,000 = $7,292 is total tax paid (what has happened)
At the end of the year, tax is assessed on $25,000 as being $1,292 . (what should have happened)
ATO already holds $7,292 in your name, so they keep their $1,292 and refund you the rest being $6,000.
If the employer withheld $1,292 & the company withheld $6,000 = $7,292 is total tax paid (what has happened)
At the end of the year, tax is assessed on $25,000 as being $1,292 . (what should have happened)
ATO already holds $7,292 in your name, so they keep their $1,292 and refund you the rest being $6,000.
@weststigers I get it now. I thought they would write down the difference between the tax owed in that scenario versus the tax paid. That's why I was under the assumption that more money was being paid back than should have been.
Tim Sheens
Well-known member
@weststigers said in [Politics Super Thread \- keep it all in here](/post/1015887) said:
Obviously no expert, nor have ever claimed to be, just commenting on what I consider as fair. I looked at this issue sometime last year, now only vaguely recalling Parliamentary Budget Office figures showing who got what etc, though the benefits were much greater ratio as the relative nest egg increased. I do though, definitely remember the term "excess" credits, which related to those left over once the other dividends had been used to get to $0 taxable income, and the tax on these were/are paid out as a refund. Is that not the case?
If so, I compare it to me being a contractor, that when dragged down as a creditor and thus suffering a loss for that particular financial year, I certainly wasn't expecting a cheque written out by the ATO once the taxable income went past zero.
weststigers
Well-known member
@formerguest
"I certainly wasn’t expecting a cheque written out by the ATO once the taxable income went past zero."
And under the current system, this is not occuring, so you have nothing to worry about. No rorts, no loopholes, no "negative taxation".
It's hard to know where your coming from without you putting your understanding of how it works down on paper with the numbers to match.
I'd say there's a misunderstanding of how it works in practice.
"I certainly wasn’t expecting a cheque written out by the ATO once the taxable income went past zero."
And under the current system, this is not occuring, so you have nothing to worry about. No rorts, no loopholes, no "negative taxation".
It's hard to know where your coming from without you putting your understanding of how it works down on paper with the numbers to match.
I'd say there's a misunderstanding of how it works in practice.
Tim Sheens
Well-known member
@weststigers I found the Sydney Morning Herald article that I read last year which formed my opinion and quote the following;
"This system was introduced by Paul Keating when he was Treasurer in 1987, to ensure the same money is not taxed twice – once at company level and then again in the hands of the shareholder.
**But the Howard-Costello government went a step further and changed the system so the credits didn’t just extinguish your tax bill to zero, but any excess credits became a debt that the government needed to refund the taxpayer in cash.**
The only policy effect was to provide a fillip to well-heeled, greying voters - a **nice bit of pork for the base.**
With encouragement from financial planners and accountants, many people in this demographic then structured their investments around the tax break. Baby Boomers set up DIY funds in their droves so they could ensure the fund invested to the hilt in Australian equities and raked in the refundable franking credits."
**Is the SMH telling porkies?**
"This system was introduced by Paul Keating when he was Treasurer in 1987, to ensure the same money is not taxed twice – once at company level and then again in the hands of the shareholder.
**But the Howard-Costello government went a step further and changed the system so the credits didn’t just extinguish your tax bill to zero, but any excess credits became a debt that the government needed to refund the taxpayer in cash.**
The only policy effect was to provide a fillip to well-heeled, greying voters - a **nice bit of pork for the base.**
With encouragement from financial planners and accountants, many people in this demographic then structured their investments around the tax break. Baby Boomers set up DIY funds in their droves so they could ensure the fund invested to the hilt in Australian equities and raked in the refundable franking credits."
**Is the SMH telling porkies?**
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