@gallagher said in Politics Super Thread - keep it all in here:
@formerguest said in Politics Super Thread - keep it all in here:
@weststigers said in Politics Super Thread - keep it all in here:
Under the Labor plan, your retired mum would have earnings of $18,000
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, that would not have her exposed to the closing the rort that many others feather their nest with. Of course this is after those many have already benefited from the super loopholes already utilised prior to retirement in creating their nest egg.
Nobody was going to have money taken from them, they were simply no longer going to have it handed to them. The nation then gets the 30% company tax on their profits to allow programs such as the poorer retired to have their teeth repaired etc.
Still, I have always advocated for allowing a low threshold amount to be grandfathered for at least a few years, so that those at the lower end and likely with less diverse investments, were not impacted.
And the fact unions were to have an exemption?
They’re income tax exempt generally just like a whole host of other institutions so that is not really unexpected.
The unfortunate thing is that dividend imputations can be used as part of a tax minimisation strategy for high wealth individuals and now that’s going to persist. Nobody is going to make a move against them because they’ll be too scared of the public perception that an attack on dividend imputations is an attack on pensioners and self-funded retirees. Labor were right to target them as an unnecessary erosion of the tax base, they just went about things in a ham-fisted way…
Looking at when these cash refunds were introduced (in 2000) the tax free threshold was down around $5,400 and the first marginal tax rate was 20c in the dollar. So back then the first $5,400 would get a full refund of the 30% tax paid by the company and then 10% (the difference between the marginal tax rate and the company tax rate) between $5,401 and $20,000 (above $20,000 the marginal tax rate jumped to 34% which was greater than the company tax rate). The increase of the tax free threshold in 2012 to ~$18,000 made this a much bigger drain. Plus the first marginal tax bracket now goes up to $37,000 and is 19c in the dollar.
Max cash refund when policy was introduced: ~$6,850
Max cash refund in 2019: ~$20,000
The more wealth an individual has the more likely they’ll be maxing out their cash refund. I hope the issue is given some bipartisan attention because that looks like a structural problem to me.