# Maintain the current dividend imputation system



## willy1111 (5 October 2018)

I'm sure as an Aussie Stock Forum we are all aware of the Labour party's proposal to alter the current way franking credits may result in a tax refund for individuals and SMSF's.

Geoff Wilson from WAM Capital is taking the fight to them with a petition - has been getting a bit of media coverage, but only has 17,000 odd thousand signed the petition. 

With more than a million people impacted by it, surely he should be able to get a lot more signatures, just a matter of getting the word out there.

For those wanting to sign the petition http://wilsonassetmanagement.com.au/petition/


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## PZ99 (5 October 2018)

I would've been happy to sign it had it been anonymous. No need for name and email.


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## Toyota Lexcen (5 October 2018)

done


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## Smurf1976 (5 October 2018)

Can anyone point me to something which explains exactly what is proposed?

By that I mean the details of exactly what’s proposes and how it works not “you’ll be $x worse off” examples and without political bias.


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## SirRumpole (5 October 2018)

Smurf1976 said:


> Can anyone point me to something which explains exactly what is proposed?
> 
> By that I mean the details of exactly what’s proposes and how it works not “you’ll be $x worse off” examples and without political bias.




Googling "Labor dividend imputation policy" sent me here.

https://www.chrisbowen.net/issues/labors-dividend-imputation-policy/

So there may be some bias there, but you will at least find out what their reasoning is.


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## Toyota Lexcen (5 October 2018)

"Self-managed super funds are a major beneficiary of this practice, with 50 per cent of the benefit to SMSFs accruing to the top 10 per cent of SMSF balances – with some funds receiving cash refunds of more than $2.5 million a year."

maybe some could explain the above better

the main people who will get hit by it are those who have shares in a non-working partners name.

if your partner has no job, but has say a 200k share portfolio then they would get a cash refund of franking credits. If there dividends get over the yearly tax free threshold they start to have a tax liability which the franking credits offset against.


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## boofhead (5 October 2018)

If the Coalition eventually get their company tax cuts then it will also mean a change resulting in people getting less franking credits.


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## willy1111 (5 October 2018)

Perhaps a few examples of a cash refund may help to explain Labours proposed policy.

A fully franked dividend means that the Company paying the dividend has paid Company tax of 30%.  Or depending on turnover and the new small business company tax rates it may be slightly lower, but lets stick with the 30% for this example.

Franking credits are applied against the tax bill of the person/entity receiving the dividend - if the franking credits are more than the tax bill - the excess is refunded to the taxpayer - labour wish to stop the excess being refunded.

Example 1: Mary receives fully franked dividends of $35,000 (this is paid into her nominated bank account) and because it is fully franked she also receives $15,000 in franking credits.  When Mary comes to do her tax, the dividends and franking credits are added together to 'gross them up' to become $50,000.  Assuming Mary has no other income from a job, interest, no deductions - this will mean her taxable income will be $50,000 and at Marginal Rates that will mean her tax bill will be roughly$9K.  Currently she gets to apply her $15K franking credit against her tax bill - and because it is $6K more than her tax bill - she receives the $6K as a tax refund.  Under Labours proposal she will not receive the $6K refund - the government will keep it.

Example 2 : Mary's SMSF Superfund receives fully franked dividends of $35,000 (this is paid into SMSF nominated bank account) and because it is fully franked it comes with $15,000 in franking credits.  If the fund is in Pension Mode (0% Tax) when the SMSF's tax is done, the dividends and franking credits are added together to 'gross them up' to become $50,000.  Assuming the SMSF has no other income from interest, no deductions, no CGT - this will mean the SMSFs taxable income will be $50,000 and in Pension mode will mean a tax bill of $0.  Currently the SMSF gets to apply the $15K franking credit against its tax bill - and because it is $15K more than the SMSFs tax bill - the SMSF receives the $15K as a tax refund.  Under Labours proposal the SMSF will not receive the $15K refund - the government will keep it.  If the SMSF were in Accumulation mode where 15% tax is applied to income, the tax bill would be $7,500, in accumulation mode the fund is also likely to be receiving contributions, so with Contributions tax the tax bill is likely to be higher - so SMSF's in accumulation mode will be less impacted than SMSF's in Pension Mode.

Example 3 : Mary receives fully franked dividends of $35,000 (this is paid into her nominated bank account) and because it is fully franked she also receives $15,000 in franking credits.  When Mary comes to do her tax, the dividends and franking credits are added together to 'gross them up' to become $50,000.  This time lets assume Mary has other income of $40,000 gross per year ($5,400 withheld as tax before she is paid) from a job with  no other income from interest, or no deductions - this will mean her taxable income will be $90,000 ($40,000 from her job plus the grossed up dividends) and at Marginal Rates that will mean her tax bill will be roughly$22,600.  Currently she gets to apply her $15K franking credit against her tax bill, and her employer has withheld $5,400 from her job income and sent to the ato - this totals $20,400 and is $2,200 short of her tax bill.  This will mean she has to pay $2,200 to meet her tax bill meaning she has fully utilised her franking credits thus there will be no refund due.  So in this scenario the Labour proposal will not impact her at all.

So who does it impact:

1.  Those receiving fully franked dividends of less than $98K who have less than $37K from other income sources.

2.  SMSF's in pension mode, to a lesser extent SMSF's in accumulation mode.


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## willy1111 (5 October 2018)

Toyota Lexcen said:


> "Self-managed super funds are a major beneficiary of this practice, with 50 per cent of the benefit to SMSFs accruing to the top 10 per cent of SMSF balances – with some funds receiving cash refunds of more than $2.5 million a year."
> 
> maybe some could explain the above better




Assuming an SMSF is in accumulation mode where 15% tax on income is applied.  If it received a $12M fully franked dividend with franking credit of $5.142M - gross up income would be $17.142M.  15% tax on $17.142M would mean a $2,571M tax bill - applying the franking credit of $5,142M would result in a tax refund of $2.571M.

To receive a fully franked dividend of $12M at 5% yield would mean the fund would have to be worth around $240M.

Not to many funds would be in that bracket.


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## galumay (5 October 2018)

I support the proposed changes, is there a petition for that?! (other than the next election.)


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## Smurf1976 (5 October 2018)

Thanks everyone.

Now I understand what’s being proposed.


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## HelloU (5 October 2018)

SAPTO peeps also lose here if they have franked shares ....


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## Kcng3150 (7 October 2018)

willy1111 said:


> Perhaps a few examples of a cash refund may help to explain Labours proposed policy.
> 
> A fully franked dividend means that the Company paying the dividend has paid Company tax of 30%.  Or depending on turnover and the new small business company tax rates it may be slightly lower, but lets stick with the 30% for this example.
> 
> ...



How about if Mary is an age pensioner?


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## Bill M (7 October 2018)

willy1111 said:


> So who does it impact:
> 
> 1. Those receiving fully franked dividends of less than $98K who have less than $37K from other income sources.



Thanks for that clear explanation willy. So it seams to me that those people who earn $37K or less are most affected. In other words those who earn the least are most affected, so the Labor party therefore doesn't give a stuff about people who have a low income. I won't be voting for this.


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## SirRumpole (7 October 2018)

Bill M said:


> Thanks for that clear explanation willy. So it seams to me that those people who earn $37K or less are most affected. In other words those who earn the least are most affected, so the Labor party therefore doesn't give a stuff about people who have a low income. I won't be voting for this.




"More than 300,000 low-income retirees will be spared from Labor's plan to scrap cash payments for excess franking credits after the opposition amended the policy to exempt full and part-time pensioners, as well as every pensioner who is currently a recipient from a self-managed superannuation fund."

https://www.afr.com/news/labor-spares-300000-pensioners-in-33b-policy-backdown-20180325-h0xy8t


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## Bill M (7 October 2018)

Kcng3150 said:


> How about if Mary is an age pensioner?



I don't know the exact figures but here is ball park and why most pensioners don't like it.

Mary gets 24K a year on a full government pension. She owns a 100K share portfolio that pays her a 6K a year in fully franked dividends. The imputations credits that come with that portfolio is around 2K a year. Currently she earns the 24K pension + 6K dividends + a refund of 2K of imputation credits and she earns 32K total.

Under the new scheme she loses the 2K imputation refund and only earns 30k a year. Mary loses 2K and is worse off. Not good for pensioners.


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## Bill M (7 October 2018)

SirRumpole said:


> "More than 300,000 low-income retirees will be spared from Labor's plan to scrap cash payments for excess franking credits after the opposition amended the policy to exempt full and part-time pensioners, as well as every pensioner who is currently a recipient from a self-managed superannuation fund."
> 
> https://www.afr.com/news/labor-spares-300000-pensioners-in-33b-policy-backdown-20180325-h0xy8t



Thank you, willy did not mention this in any of the posts.


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## Toyota Lexcen (7 October 2018)

example 1 & 2 clearly not the wealthy


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## willy1111 (7 October 2018)

Kcng3150 said:


> How about if Mary is an age pensioner?






Bill M said:


> Thanks for that clear explanation willy. So it seams to me that those people who earn $37K or less are most affected. In other words those who earn the least are most affected, so the Labor party therefore doesn't give a stuff about people who have a low income. I won't be voting for this.




If not in receipt of Commonwealth pension or smsf pension prior to 19 March 2018.

It is also those in the middle who have saved hard to build a modest portfolio,  choose not to receive a Commonwealth  pension and would rather be self funded.

The smsf example of Mary if she were to retire today and start a pension would mean her income would be cut from $50k to $35k per year. Depending on the dividend yield, she would likely have a share portfolio between $500k-$1m...hardly rich Mr Shorten!


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## willy1111 (7 October 2018)

Bill M said:


> I don't know the exact figures but here is ball park and why most pensioners don't like it.
> 
> Mary gets 24K a year on a full government pension. She owns a 100K share portfolio that pays her a 6K a year in fully franked dividends. The imputations credits that come with that portfolio is around 2K a year. Currently she earns the 24K pension + 6K dividends + a refund of 2K of imputation credits and she earns 32K total.
> 
> Under the new scheme she loses the 2K imputation refund and only earns 30k a year. Mary loses 2K and is worse off. Not good for pensioners.




The original announcement didn't include pensioners...but after a massive backlash, Bill made a further announcement that pensioners and those in receipt of a smsf pension prior to 19 March 2018 would still be entitled to the refund.

Also I think maybe union/industry funds are unaffected?

If labour were to get in, it is likely there may be further changes to their proposal, and they still have to get it through.


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## HelloAgain (7 October 2018)

What do people think will happen in response to the proposal? My first thought is that companies holding excess franking credits will return them to shareholders via buybacks or bumper dividends. Companies and individuals will be more likely to invest off shore possibly leading to a shortage of capital for investment in Australia, higher interest rates, increased unemployment and recession. Residential property will also become a more attractive investment even with the proposed CGT discount increase.


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## willy1111 (7 October 2018)

Bill M said:


> Thanks for that clear explanation willy. So it seams to me that those people who earn $37K or less are most affected. In other words those who earn the least are most affected, so the Labor party therefore doesn't give a stuff about people who have a low income. I won't be voting for this.




As I understand it, Yes if not in receipt of a Commonwealth pension or smsf pension prior to 19 March 2018.

Also smsfs are impacted in a big way, particularly those in pension mode.

If smsfs were there target, which they mention in their spiel about a smsf receiving a $2.5m tax refund, why not change the way super is taxed?

Maybe there have been too many changes to super over the years they thought they'd try to sell it as a rich vs working class thing.

What he fails to realise is that it is the working class that have worked hard to build a modest portfolio of shares to be self funded that will be most impacted.

I mean who do you think will feel it more, Mary who's income goes from $50k to $35k or Mr Rich whos smsf receives $12M instead of $14.5M?


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## willy1111 (7 October 2018)

HelloAgain said:


> What do people think will happen in response to the proposal? My first thought is that companies holding excess franking credits will return them to shareholders via buybacks or bumper dividends. Companies and individuals will be more likely to invest off shore possibly leading to a shortage of capital for investment in Australia, higher interest rates, increased unemployment and recession. Residential property will also become a more attractive investment even with the proposed CGT discount increase.




It won't change the way I invest.

However I suspect a lot that are on the cusp of receiving an age pension will spend up on holidays (so travel stocks might do well) maintenance/upgrades around the home to become eligible for a pension so they can get the franking credits.

Otherwise over time people may just sell down capital to replace the income missed by franking credit refunds if they need it. This will result in eating their assets which is likely to mean their assets will decrease over time and eventually they will become eligible for the pension.


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## ijrob6 (7 October 2018)

willy1111 said:


> The original announcement didn't include pensioners...but after a massive backlash, Bill made a further announcement that pensioners and those in receipt of a smsf pension prior to 19 March 2018 would still be entitled to the refund.
> 
> Also I think maybe union/industry funds are unaffected?
> 
> If labour were to get in, it is likely there may be further changes to their proposal, and they still have to get it through.




I am still uncertain whether SMSF pensioners (NOT age pensioners who receive another pension from a SMSF) will be exempted if already in pension mode by 19 March. It appears not if the following is a correct interpretation of Labor policy.

_From a March 27 2018 article by Luke, SMSF Media Pty Ltd 2018._

“*SMSF Association says Labor’s policy “still falling short*”

The SMSF Association says the changed policy is a step in the right direction but still unfairly disadvantages over one million people, including many SMSF members.

SMSF Association CEO John Maroney said that while it was right that Age Pensioners be exempted, the Association still has “serious reservations” about the effectiveness and fairness of Labor’s policy.

“The amended policy excludes similar protection to self-funded retirees, many of whom draw their retirement income from retirement savings built over the lifetime in an SMSF to avoid relying on government support,” Maroney said.

“The refunding of excess company tax paid via refundable franking credits has been a long-standing feature of superannuation that SMSF members have built their retirement strategies around.”

“Under Labor’s proposal, the only SMSFs exempt are those that currently have at least one member receiving the Age Pension. And in the future, there will be no protection for SMSF retirees who may need part government support to supplement their superannuation income, creating an unfair, two-tiered and complex treatment of SMSF members who access the Age Pension in retirement.”

Maroney said the Pensioner Guarantee exacerbates the effect of Labor’s policy on SMSF members, potentially leaving them worse off under the changes than people who have less savings, but receive refundable franking credits and a part pension.

The SMSF Association is urging the ALP to reconsider the entire policy, because of its “deleterious effects” on future retirement incomes.


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## willy1111 (7 October 2018)

ijrob6 said:


> I am still uncertain whether SMSF pensioners (NOT age pensioners who receive another pension from a SMSF) will be exempted if already in pension mode by 19 March. It appears not if the following is a correct interpretation of Labor policy.
> 
> _From a March 27 2018 article by Luke, SMSF Media Pty Ltd 2018._
> 
> ...




Yes I think you are right - it has to be a pension from the government, and it is 28 March 2018 (my mistake) to be still eligible for franking credits.


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## sptrawler (8 October 2018)

willy1111 said:


> Assuming an SMSF is in accumulation mode where 15% tax on income is applied.  If it received a $12M fully franked dividend with franking credit of $5.142M - gross up income would be $17.142M.  15% tax on $17.142M would mean a $2,571M tax bill - applying the franking credit of $5,142M would result in a tax refund of $2.571M.
> 
> To receive a fully franked dividend of $12M at 5% yield would mean the fund would have to be worth around $240M.
> 
> Not to many funds would be in that bracket.




BS there must be thousands of funds in that scenario.


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## sptrawler (8 October 2018)

willy1111 said:


> Yes I think you are right - it has to be a pension from the government, and it is 28 March 2018 (my mistake) to be still eligible for franking credits.



So does that mean a pensioner couple, with a SMSF of $900,000, worth of shares, get the franking credit?


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## sptrawler (8 October 2018)

willy1111 said:


> I mean who do you think will feel it more, Mary who's income goes from $50k to $35k or Mr Rich whos smsf receives $12M instead of $14.5M?



The first thing you should check, is how many people have a SMSF anywhere near $12m.
If I was that rich the last thing I would be doing, is putting it away where the Government can tell me how to spend it.
FFS how stupid do you think people with $12m are?
The only people that Labor are going to hit, are hard working Australian's, who have either worked hard to save or worked hard to build a small business.
As usual the plebs with the pitchforks, follow the rant, and want to hunt down the non conforming. lol
Nothing much changes through the centuries.


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## Bill M (8 October 2018)

willy1111 said:


> Yes I think you are right - it has to be a pension from the government, and it is 28 March 2018 (my mistake) to be still eligible for franking credits.



I am not at pension age yet and I do not receive any pension. Does that mean that when I do get on the pension (after 28 March 2018) I will not receive refunds of imputation credits? So are you saying some Aussies will get it and some won't jut because of a cut off date? If that is the case then it is one big %$#& up and it isn't fair.


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## Junior (8 October 2018)

sptrawler said:


> The first thing you should check, is how many people have a SMSF anywhere near $12m.




Not many, and with the $1.6mill cap the number of big SMSF balances will only diminish over time.

Furthermore, these funds have already had their big tax refunds slashed with introduction of the $1.6mill cap.


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## sptrawler (8 October 2018)

Bill M said:


> I am not at pension age yet and I do not receive any pension. Does that mean that when I do get on the pension (after 28 March 2018) I will not receive refunds of imputation credits? So are you saying some Aussies will get it and some won't jut because of a cut off date? If that is the case then it is one big %$#& up and it isn't fair.



I'm in the same situation as you, not at age pension age, but paying your way.

From my understanding Bill, if you have a pension from a SMSF, you don't get the franking credits. People on a Government age pension, who have shares, will still recieve the franking credits, cheap prescriptions,rates, licenses,utilities etc.
Union run Industry Funds, will still get the franking credits, as they are supposedly a not for profit organisation.
It is all about trying to force people out of SMSF's into Industry funds, brought about by the unions putting pressure on silly Billy. like I've said on numerous occassions, the only losers with Labor, are hard working people, trying to get ahead.
It will be interesting to see the figures on super, for the 2018/19 year, they will have crashed.
Also the saving from the franking credit, that silly Billy was saying is BS also, they were worked out pre the $1.6M cap. The savings will minimal, wait untill  the real figures come.


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## SirRumpole (8 October 2018)

sptrawler said:


> the only losers with Labor, are hard working people, trying to get ahead.




I'll remind you again of the party that introduced dividend imputation in the first place.

https://en.wikipedia.org/wiki/Dividend_imputation


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## sptrawler (8 October 2018)

SirRumpole said:


> I'll remind you again of the party that introduced dividend imputation in the first place.
> 
> https://en.wikipedia.org/wiki/Dividend_imputation



What has that got to do with it?
Remove them from everyone including the Industry funds, or else it is just a witch hunt.


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## SirRumpole (8 October 2018)

sptrawler said:


> What has that got to do with it?
> Remove them from everyone including the Industry funds, or else it is just a witch hunt.




Those refunds are basically middle class welfare granted by the great god Howard.

Super payments currently are not taxed at all and contributions only taxed at 15% so don't tell me super recipients (of whom I am one), are hard done by.


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## sptrawler (8 October 2018)

SirRumpole said:


> Those refunds are basically middle class welfare granted by the great god Howard.
> 
> Super payments currently are not taxed at all and contributions only taxed at 15% so don't tell me super recipients (of whom I am one), are hard done by.



What has that got to do with anything?
I said make it universal, so no superfunds get the franking.


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## SirRumpole (8 October 2018)

sptrawler said:


> What has that got to do with anything?
> I said make it universal, so no superfunds get the franking.





I'll pass on that thought to Bill.


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## ijrob6 (8 October 2018)

Perhaps some clarity of terms might help. "Pensioner" can be an aged pensioner (government), a superannuation pensioner from a managed fund or a SMSF pensioner. No doubt there are other types but for this discussion I think these will do.

As I understand the current proposed Labor policy it will only affect the SMF pensioner who is not in receipt of a full or part government pension.

_Sprawler_ - no SMSF couple with a $900,000 share portfolio can receive any government pension, full or part - the cut off for assets is $816,000 as of 1/1/17. If their SMSF currently pays them a pension then yes, at present, their fund receives the dividend imputations. If the Labor policy is introduced then no - no imputation. Hence a reduction of 30% of the fund income (assuming the majority of income is from dividends).

_Bill M _- that is exactly what the situation will be.


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## sptrawler (8 October 2018)

SirRumpole said:


> I'll pass on that thought to Bill.



Good to see you up to speed. 

All it is going to do is give middle class welfare to those in Industry funds, but I guess that's o.k, if Bill's on the board.


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## sptrawler (8 October 2018)

ijrob6 said:


> Perhaps some clarity of terms might help. "Pensioner" can be an aged pensioner (government), a superannuation pensioner from a managed fund or a SMSF pensioner. No doubt there are other types but for this discussion I think these will do.
> 
> As I understand the current proposed Labor policy it will only affect the SMF pensioner who is not in receipt of a full or part government pension.
> 
> ...




Sorry, isn't that what I said?


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## SirRumpole (8 October 2018)

sptrawler said:


> Good to see you up to speed.
> 
> All it is going to do is give middle class welfare to those in Industry funds, but I guess that's o.k, if Bill's on the board.




Are you up to speed on the Royal Commission ?

Industry funds sailed through the examination by the RC unlike the ratail (sorry retail)  funds.

http://www.abc.net.au/news/2018-08-...ission-roasts-nab-retail-super-funds/10107012

So maybe it's a good thing if people are encourage to switch to industry funds.


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## sptrawler (8 October 2018)

SirRumpole said:


> Are you up to speed on the Royal Commission ?
> 
> Industry funds sailed through the examination by the RC unlike the ratail (sorry retail)  funds.
> 
> ...




You may like other people looking after your money, I'm not a big fan of it.


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## ijrob6 (8 October 2018)

sptrawler said:


> Sorry, isn't that what I said?



Yes, whilst I was typing. I will need to learn speed typing if I am to keep up - there were 6 posts between my decision to respond and when I actually hit "post".


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## HelloAgain (8 October 2018)

sptrawler said:


> What has that got to do with it?
> Remove them from everyone including the Industry funds, or else it is just a witch hunt.




The proposal isn’t to abolish imputation credits but to roll back the cash refunds introduced by the Howard liberal government.


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## willy1111 (8 October 2018)

sptrawler said:


> The first thing you should check, is how many people have a SMSF anywhere near $12m.
> If I was that rich the last thing I would be doing, is putting it away where the Government can tell me how to spend it.
> FFS how stupid do you think people with $12m are?
> The only people that Labor are going to hit, are hard working Australian's, who have either worked hard to save or worked hard to build a small business.
> ...




To be receiving a $12M fully franked dividend, they would have a shite load more than that in smsf.

I would also imagine they would have considerable wealth outside Super. But as far as a tax advantaged structure goes, Super is pretty hard to beat so certainly worthwhile for the Rich to have some percentage of their net worth there.


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## sptrawler (8 October 2018)

HelloAgain said:


> The proposal isn’t to abolish imputation credits but to roll back the cash refunds introduced by the Howard liberal government.



It is selective on who it rolls it back on, which is discriminatory, it should be rolled back fairly. Not just roll it back on a select few, that Labor wants to pick on.
But honesty and fairness, seems to be a lost characteristic these days.
Why should Industry super funds still be able to claim them, when SMSF's can't?
Why should some pensioners, get them, while others can't?


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## HelloU (8 October 2018)

willy1111 said:


> To be receiving a $12M fully franked dividend, they would have a shite load more than that in smsf.
> 
> I would also imagine they would have considerable wealth outside Super. But as far as a tax advantaged structure goes, Super is pretty hard to beat so certainly worthwhile for the Rich to have some percentage of their net worth there.



just making the point ..........that is a sorta "grandfathered" situation though ....it cannot sorta occur in the future for "new" accounts with the introduction of the caps - both concessional and non concessional.


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## HelloU (8 October 2018)

sptrawler said:


> Why should Industry super funds still be able to claim them, when SMSF's can't?
> Why should some pensioners, get them, while others can't?



1.  only cos they still accept concessional contributions (lots of them) that is my understanding there ..
2. that will need some looking at ...and brings in sapto and stuff ...but I agree it is not a consistent application of the argument. But then a lot of the tax laws are not consistent.


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## sptrawler (8 October 2018)

HelloU said:


> 1.  only cos they still accept concessional contributions (lots of them) that is my understanding there ..



A SMSF can still accept concessional contributions, so that doesn't hold water.



HelloU said:


> 2. that will need some looking at ...and brings in sapto and stuff ...but I agree it is not a consistent application of the argument. But then a lot of the tax laws are not consistent.



Because it affects so few people, it won't be looked at. 
If it affected those in Industry funds, it would be looked at, but in reality it is those who are pushing it. Typical Labor in bed with the Unions. IMO


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## HelloU (8 October 2018)

sptrawler said:


> A SMSF can still accept concessional contributions, so that doesn't hold water.
> 
> 
> Because it affects so few people, it won't be looked at.
> If it affected those in Industry funds, it would be looked at, but in reality it is those who are pushing it. Typical Labor in bed with the Unions. IMO



on the 2nd, i agree, the white knight can only be liberals there ....or peeps have to start massaging assets again (just when they did not prolly want that headache at stages of life). 
on the 1st, i have not done sums, nor read a totally clear policy on this, but it is the ratio of accumulation accounts as compared to pension accounts that is the thing there in my head ...unless I am off-track on the proposal (which may be true). That is what the SMSF cannot compete with in this proposal. SMSF are usually one or the other (either accum or pension and limited in total funds under management). 
I expect that when more than 33% of the industry fund totals are held as pension accounts then it may not work for them either ......but again, have not done the sums.


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## sptrawler (8 October 2018)

HelloU said:


> on the 2nd, i agree, the white knight can only be liberals there ....or peeps have to start massaging assets again (just when they did not prolly want that headache at stages of life).
> on the 1st, i have not done sums, nor read a totally clear policy on this, but it is the ratio of accumulation accounts as compared to pension accounts that is the thing there in my head ...unless I am off-track on the proposal (which may be true). That is what the SMSF cannot compete with in this proposal. SMSF are usually one or the other (either accum or pension and limited in total funds under management).
> I expect that when more than 33% of the industry fund totals are held as pension accounts then it may not work for them either ......but again, have not done the sums.



Well 50% of the members of my SMSF are on pension, the other in accumulation.


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## HelloU (8 October 2018)

sptrawler said:


> Well 50% of the members of my SMSF are on pension, the other in accumulation.



are you able to do the projected sums ....i would think the $25K concessional limit is the glass ceiling to your available claw back for u anyway (so I mean that the unpaid contribution tax is only 15% of $25K to help with the franking problem u may face).
It has taken 20 years for the current SMSF thinking to be "developed". This is gunna take a while to unwind (if it comes). I actually feel bad for those affected for that reason ....they were sorta "sold" a future that is now in doubt ..... I do not envy your position at all - but only wish you well.


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## HelloU (8 October 2018)

what I mean there is accum members can only add $25K of "new" untaxed capital into the fund that will be *taxed at entry* at 15%. (so not a big offset available) All of your other tax owing will be coming from accum investment performance (and that will prolly include the 30% franking amounts that will be your "problem")


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## Smurf1976 (8 October 2018)

SirRumpole said:


> "More than 300,000 low-income retirees will be spared from Labor's plan to scrap cash payments for excess franking credits after the opposition amended the policy to exempt full and part-time pensioners, as well as every pensioner who is currently a recipient from a self-managed superannuation fund."



That’s all well and good but what about those who are lower income but not receiving a pension?

Eg a semi-retired person who works two days a week and has investments outside of superannuation?

Or someone in their late 50’s who is made redundant, employer goes bust or whatever ans who plans to live funded by their investments until they reach the age when super or pension becomes an option.

The sort of person who has done the right thing to look after themselves but who’d have close to zero chance of getting full time work due to age, health or whatever. I see no valid reason to be punishing such people.


----------



## sptrawler (8 October 2018)

HelloU said:


> are you able to do the projected sums ....i would think the $25K concessional limit is the glass ceiling to your available claw back for u anyway (so I mean that the unpaid contribution tax is only 15% of $25K to help with the franking problem u may face).
> It has taken 20 years for the current SMSF thinking to be "developed". This is gunna take a while to unwind (if it comes). I actually feel bad for those affected for that reason ....they were sorta "sold" a future that is now in doubt ..... I do not envy your position at all - but only wish you well.



It will only mean, that I will be on a part age pension at some time, which I wouldn't have been on if they left it alone.
So it is a bit of the roundabout and swings scenario, I lose income, but will gain a handout.


----------



## SirRumpole (8 October 2018)

Smurf1976 said:


> The sort of person who has done the right thing to look after themselves but who’d have close to zero chance of getting full time work due to age, health or whatever. I see no valid reason to be punishing such people.




Neither do I , but at the moment we have no idea how many such people there are and what sort of refund they usually get as to whether it would be a great loss to them.

Maybe Labor have done their sums on it I don't know. As we get closer to the election maybe people adversely affected by it will speak up.


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## HelloU (8 October 2018)

sptrawler said:


> It will only mean, that I will be on a part age pension at some time, which I wouldn't have been on if they left it alone.
> So it is a bit of the roundabout and swings scenario, I lose income, but will gain a handout.



and the extension of that analysis is ........ (and only you can do yours) 
if that is the end point with the highest probability for you then what are the advantages/disadvantages of getting to that place faster/slower.


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## sptrawler (8 October 2018)

HelloU said:


> and the extension of that analysis is ........ (and only you can do yours)
> if that is the end point with the highest probability for you then what are the advantages/disadvantages of getting to that place faster/slower.



That will be factored in, I have a few years to wait to qualify, so if it comes in my lifestyle will change somewhat.


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## HelloAgain (8 October 2018)

sptrawler said:


> It is selective on who it rolls it back on, which is discriminatory, it should be rolled back fairly. Not just roll it back on a select few, that Labor wants to pick on.
> But honesty and fairness, seems to be a lost characteristic these days.
> Why should Industry super funds still be able to claim them, when SMSF's can't?
> Why should some pensioners, get them, while others can't?




I totally agree. All imputation credits are for tax already paid to the ATO. The imputation refunds were introduced to eliminate the double taxation on people with low taxable incomes who didn’t have enough other income to offset the company tax paid on their behalf. Why shouldn’t it be refunded to them?


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## HelloU (8 October 2018)

I just wanted to post here ...


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## SirRumpole (8 October 2018)

HelloAgain said:


> I totally agree. All imputation credits are for tax already paid to the ATO. The imputation refunds were introduced to eliminate the double taxation on people with low taxable incomes who didn’t have enough other income to offset the company tax paid on their behalf. Why shouldn’t it be refunded to them?




Low *taxable *incomes doesn't always mean low real income though does it ?

Those who derive a large non taxable income from super are doing very nicely without getting another refund on top of that.


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## HelloAgain (8 October 2018)

SirRumpole said:


> Low *taxable *incomes doesn't always mean low real income though does it ?
> 
> Those who derive a large non taxable income from super are doing very nicely without getting another refund on top of that.




Through their own efforts and no burden on taxpayers unlike others who haven’t made the same effort and receive an aged pension with considerable associated benefits - courtesy of taxpayers.


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## HelloU (8 October 2018)

strangely that, to me, is the biggest problem of all in the tax system.
when a change is being discussed you have to carefully clarify which of the half dozen sub-groups of individual taxpayers you are discussing ....instead of being able to just simply say how this change will effect australian taxpayers ....
'if, then, but' type tax changes of any sort are divisive as they discriminate.

and that does not even include the various COY tax rates now, and super tax rates, and trust tax rates etc


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## SirRumpole (8 October 2018)

HelloAgain said:


> Through their own efforts and no burden on taxpayers unlike others who haven’t made the same effort and receive an aged pension with considerable associated benefits - courtesy of taxpayers.




"no burden on taxpayers" ?

A retiree receiving $100k pa super pays no tax while someone earning that amount through personal exertion pays about $30k a year.


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## HelloU (8 October 2018)

same proof again .....it is divisive to have lots of sub-groups of taxpayers. (cos it is discriminatory)


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## SirRumpole (8 October 2018)

HelloU said:


> same proof again .....it is divisive to have lots of sub-groups of taxpayers. (cos it is discriminatory)




Well, that's multi taxpayeralism for you.


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## HelloAgain (8 October 2018)

SirRumpole said:


> "no burden on taxpayers" ?
> 
> A retiree receiving $100k pa super pays no tax while someone earning that amount through personal exertion pays about $30k a year.




Amazing isn’t it? One person can save enough through personal exertion to earn $100,000 pa in retirement while another can receive $25,000 plus in retirement as a government pension and pay no tax.

That irrelevant to the refund imputation credits as the tax has already been paid by the company. Perhaps the it would be fairer if companies paid no tax then all taxpayers could include their dividends in their tax returns.


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## HelloU (8 October 2018)

I just wanted to post here ...again.


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## HelloU (8 October 2018)

HelloAgain said:


> Perhaps the it would be fairer if companies paid no tax then all taxpayers could include their dividends in their tax returns.



quietly ...it IS the grossed up figure that is already used in ur tax return ........

(that strengthens ur argument btw)


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## SirRumpole (8 October 2018)

HelloAgain said:


> Amazing isn’t it? One person can save enough through personal exertion to earn $100,000 pa in retirement while another can receive $25,000 plus in retirement as a government pension and pay no tax.
> 
> That irrelevant to the refund imputation credits as the tax has already been paid by the company. Perhaps the it would be fairer if companies paid no tax then all taxpayers could include their dividends in their tax returns.




Or we could do what every other country (nearly) does and tax both profits and dividends.


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## HelloU (8 October 2018)

should have asked the tampon committee, they were recently making the big tax calls.


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## SirRumpole (8 October 2018)

Let us know what they say.


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## HelloU (8 October 2018)

just quietly ....we already tax both profits and dividends (2 different tax entities involved there of course)
It is the grossed up figure that is included in the tax returns for individuals ......that is the issue for many ....that one person can get to 'keep' all of the imp credits whilst another person may not get to 'keep' any of it.

On a broader level this is not the same as having 'too many' deductions compared with tax liabilities .....so deductions are lost. This is actually taxation payments made to the ATO that exceed liabilities accrued by the taxpayer based on taxable income (under current tax laws). If the ATO does not wish to hand back excess tax payments then DO NOT use a grossed up figure in returns to calculate taxable income. 

I have never said if I agree with any of this or not, I just want equity in the taxation system.


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## sptrawler (8 October 2018)

HelloAgain said:


> Amazing isn’t it? One person can save enough through personal exertion to earn $100,000 pa in retirement while another can receive $25,000 plus in retirement as a government pension and pay no tax.
> 
> That irrelevant to the refund imputation credits as the tax has already been paid by the company. Perhaps the it would be fairer if companies paid no tax then all taxpayers could include their dividends in their tax returns.



I agree, it is funny how those who have paid very little tax, object to those who have paid a lot of tax getting anything.


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## SirRumpole (8 October 2018)

HelloAgain said:


> Amazing isn’t it? One person can save enough through personal exertion to earn $100,000 pa in retirement *while another can receive $25,000 plus in retirement as a government pension* *and pay no tax.*






Is the age pension exempt from tax ?


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## Smurf1976 (8 October 2018)

SirRumpole said:


> Low *taxable *incomes doesn't always mean low real income though does it ?
> 
> Those who derive a large non taxable income from super are doing very nicely without getting another refund on top of that.



Agreed but surely in this era of massive data about everyone and everything it should be straightforward to sort out who is and who is not earning less than $x from all sources. Arguments based around administrative complexity don’t really cut it in 2018.

It’s not something that would directly affect me at the present time but I do take issue with yet another change to the rules regarding investing and in particular that it sends a message that an individual is either wealthy or on welfare with most being the latter.


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## HelloU (8 October 2018)

just for those who may not have been involved in the "normal" tax system lately (PAYG and the like) there is now 2 different figures used when you do a tax return (and welfare applications). 
One is the 'taxable income' that is used to calculate payable income tax, and 
second is ATI - Adjusted taxable Income. 

ATI is the figure that prevents peeps earning a high income, then burning a lot of it in negative gearing and stuff, and then try to put their hand out for welfare.

Those days are now pretty much gone.


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## HelloU (8 October 2018)

SirRumpole said:


> Is the age pension exempt from tax ?



essentially correct. 

more complicated but if no tax has been taken from the pension payments, and that is your total 'income'  then a tax return is not required.


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## Knobby22 (8 October 2018)

I think they should just set a cap on imputation limits rather than ban them for ordinary households, say $10,000.
It is crazy that a few wealthy people have managed through good advice (and loopholes that have since been closed) to park hundreds of millions of dollars in Super and then received massive imputation credits worth hundreds of thousands of dollars and yet pay no tax whatsoever.


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## SirRumpole (8 October 2018)

sptrawler said:


> I agree, it is funny how those who have paid very little tax, object to those who have paid a lot of tax getting anything.




Contributions to a super fund only taxed at 15% and no tax on the payments is a lot more than "anything".

Anyway I'd be happy with super pensions over $100K being taxable, I don't want to hurt the little guy.


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## willy1111 (8 October 2018)

SirRumpole said:


> Neither do I , but at the moment we have no idea how many such people there are and what sort of refund they usually get as to whether it would be a great loss to them.
> 
> Maybe Labor have done their sums on it I don't know. As we get closer to the election maybe people adversely affected by it will speak up.




Geoff Wilson is also polling people for this to help his ammunition against the proposal https://wilsonassetmanagement.com.a...-wrong-side-of-history-with-franking-changes/


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## willy1111 (8 October 2018)

SirRumpole said:


> Low *taxable *incomes doesn't always mean low real income though does it ?
> 
> Those who derive a large non taxable income from super are doing very nicely without getting another refund on top of that.




The income being drawn from Super could be capital - from non-concessional contributions paid in that have already been taxed at marginal rates - from concessional contributions which have been taxed at 15% on the way in (a discount to incentivise saving for retirement via this structure, although they don't let one put much in these days) and the earnings on these funds have already been taxed at 15%.

If one has saved $10M into a bank account and decides to draw out $200K a year from their own capital - should that be taxed?  No, only the earnings on the $10M are taxed as it should be.

I agree that the 0% tax on income of the fund in pension phase is very generous - but maybe that it is the reward for putting funds away to fund your own retirement rather than spending it on the high life whilst young and going on the aged pension.


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## willy1111 (8 October 2018)

SirRumpole said:


> Anyway I'd be happy with super pensions over $100K being taxable, I don't want to hurt the little guy.




I think it is absolute robbery to tax super pensions considering tax has already been paid and a lot of it is return of capital - only the earnings of the fund should be taxed.

Maybe the earnings of the fund over $100K - which is pretty much the case with the $1.6M cap on Pension accounts - $1.6M in shares paying 5% dividend yield is about $80K per year, 6% yield is $96K - anything over $1.6M has to be in accumulation where the earnings are taxed at a flat 15%.


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## willy1111 (8 October 2018)

SirRumpole said:


> Or we could do what every other country (nearly) does and tax both profits and dividends.




With that argument, is it considered what every other Country's Company tax rate is and what tax is applied to dividends paid to the shareholder?


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## SirRumpole (8 October 2018)

willy1111 said:


> only the earnings of the fund should be taxed.




Yes, I agree with that. How are earning and capital returns distinguished in the hands of the payee ?


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## SirRumpole (8 October 2018)

willy1111 said:


> With that argument, is it considered what every other Country's Company tax rate is and what tax is applied to dividends paid to the shareholder?




Some would pay more than us and others less. There are a lot of countries out there.


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## willy1111 (8 October 2018)

SirRumpole said:


> Yes, I agree with that. How are earning and capital returns distinguished in the hands of the payee ?




It is the Super funds and SMSFs that pay the tax on the earnings/capital gains of the fund for each tax year.  So it doesn't need to be distinguished in the hands of the payee as it has already been distinguished and taxed at the fund level.

If ones fund has $1M invested in cash earning 2% a year - the funds taxable income would be say $20K - it is taxed at fund level - either 0% if in pension phase or $3K if in accumulation phase.  If the member wished to draw a pension of $200K a year they could - but they would probably run out of money in a bit over 5yrs - if they wanted to draw out $100K they could but would run out of money in a bit over 10 years - if they wanted to draw out $50K a year - it would last them more like 20 years.  

As such it doesn't need to be distinguished in the hands of the payee/member - just at fund level as is done now.


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## Toyota Lexcen (8 October 2018)

Smurf1976 said:


> That’s all well and good but what about those who are lower income but not receiving a pension?
> 
> Eg a semi-retired person who works two days a week and has investments outside of superannuation?
> 
> ...




the work income will all get added up with the dividend income, if any tax owed it can be offset

so once income (work, dividend etc) exceeds 20k the franking credits will have an impact

my family member now a lib voter, whether Lib win who knows.


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## sptrawler (8 October 2018)

SirRumpole said:


> Contributions to a super fund only taxed at 15% and no tax on the payments is a lot more than "anything".
> 
> Anyway I'd be happy with super pensions over $100K being taxable, I don't want to hurt the little guy.




Contributions are taxed at 15 % and earnings are taxed at 15 %, that is all the earnings there is no $18k tax free threshold.

I agree 100% on taxing super pensions above $100k, that is what the public servants get taxed on their unfunded, indexed, tax payer supported pensions, also that is what Labor took to the last election.
What pisses me is they are screwing over the little man, or they would have stayed with the $100k plan, but they have changed because of the $1.6m cap.
They said the franking credit plan would save $52billion dollars over 4 years, how the hell can that be true, when they say there are only a low number people that it will effect.
No wonder our school children are struggling, when silly Billy comes up with stupid figures like that, bloody goose.


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## Garpal Gumnut (8 October 2018)

IMO one needs 6-8% to fund a decent living. 

Interest rates are so low it is better to stay in cash and pop in and out of the market on corrections or with a dividend tactical position.


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## Smurf1976 (8 October 2018)

My concern isn’t so much about super but those who invest outside super with the intention of retiring sometime prior to being able to access their super and with no intention of ever claiming any form of welfare.

The message from Labor seems to be that one should structure their finances such that retiring and claiming the pension, with perhaps a few years on the dole (with zero intention of finding employment) prior to that for those not wishing to work until they’re stuffed, is the way to go.

That’s the exact opposite of the “provide for yourself, don’t rely on the pension” message I’ve been hearing for the past 25+ years.

The whole issue of investing and retirement in Australia needs the politics removed in my view. I can’t imagine there are too many blue collar workers with any intention of working until they’re 70 and a lot of white collar workers won’t be doing so either.

The way it’s going, we’re going to end up with an awful lot of 60-somethings on the dole.


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## SirRumpole (8 October 2018)

Smurf1976 said:


> My concern isn’t so much about super but those who invest outside super with the intention of retiring sometime prior to being able to access their super and with no intention of ever claiming any form of welfare.
> 
> The message from Labor seems to be that one should structure their finances such that retiring and claiming the pension, with perhaps a few years on the dole (with zero intention of finding employment) prior to that for those not wishing to work until they’re stuffed, is the way to go.
> 
> ...




Idea good, but practically speaking, with wages stagnant, cost of living rising, housing still expensive and more people being confined to the "gig economy", how many people have the extra cash to invest, especially if they are trying to raise a family of future taxpayers ?

And if the economy turns downward and they lose their money on the share market, who is going to pick up the tab ?


----------



## sptrawler (8 October 2018)

Smurf1976 said:


> My concern isn’t so much about super but those who invest outside super with the intention of retiring sometime prior to being able to access their super and with no intention of ever claiming any form of welfare.
> 
> The message from Labor seems to be that one should structure their finances such that retiring and claiming the pension, with perhaps a few years on the dole (with zero intention of finding employment) prior to that for those not wishing to work until they’re stuffed, is the way to go.
> 
> ...




They really shouldn't be allowed to change the rules the way they do, it makes it impossible to plan for your retirement through super, yet that is what it was supposed to do.
All it is doing is stressing the hell out of older workers.
It is actually a national disgrace, someone should take Billy to task and get him to substantiate his savings claim.


----------



## sptrawler (8 October 2018)

SirRumpole said:


> And if the economy turns downward and they lose their money on the share market, who is going to pick up the tab ?




The same people who pick up the tab, for those who have never worked or never saved.


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## Smurf1976 (8 October 2018)

SirRumpole said:


> Idea good, but practically speaking, with wages stagnant, cost of living rising, housing still expensive and more people being confined to the "gig economy", how many people have the extra cash to invest




My assumption is that members of this forum would, considering the forum’s primary focus, either have funds to invest now or expect to do so in the foreseeable future.

If someone has no money to invest then I doubt they’d be attracted to spend time on a share market forum. That’s my assumption anyway.


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## SirRumpole (8 October 2018)

Smurf1976 said:


> My assumption is that members of this forum would, considering the forum’s primary focus, either have funds to invest now or expect to do so in the foreseeable future.




I'm sure you are correct, I'm not sure that this forum represents a cross section of society and that's what political decisions are made on.


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## Smurf1976 (8 October 2018)

sptrawler said:


> They really shouldn't be allowed to change the rules the way they do, it makes it impossible to plan for your retirement through super




I don’t see myself as anything special but I’ve never been afraid of working.

12 hour days, pretty much every day - yep, been there and done that one. Did it for a few years actually.

Weekends, public holidays, middle of the night etc - yep, done that too.

I’ve always chosen to live below my means whether my income was half the average or double the average (and I’ve been in both situations).

Now we have proposals to punish those who have sought to avoid relying on welfare and that’s just wrong in my view.

I’m strongly in favour of there being a welfare safety net for those who, for whatever reason, find themselves needing it but I sure don’t like Labor’s message that everyone is either working, on welfare or is rich. 

What about those with modest investments who need neither employment nor welfare but whom couldn’t be described as rich using any sensible definition?


----------



## HelloAgain (8 October 2018)

Smurf1976 said:


> I don’t see myself as anything special but I’ve never been afraid of working.
> 
> 12 hour days, pretty much every day - yep, been there and done that one. Did it for a few years actually.
> 
> ...




Labor doesn’t believe in self sufficiency and needs people to rely on welfare.


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## SirRumpole (8 October 2018)

> What about those with modest investments who need neither employment nor welfare but whom couldn’t be described as rich using any sensible definition?




It's all a matter of numbers. If the people you describe are small in number then they are likely to be ignored by both parties.

Personally I think the way to go is widen the tax net and reduce the rates. The top rate should be no more than 40% imo but to do that you would need to cut down on some of the other perks people in that range use to reduce tax. Those who don't use those perks will be much better off, those who flog the system for all its worth will be worse off and those with a modest involvement may come out better off or about the same. 

That gives the incentive to work and do what you want with your money.


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## Toyota Lexcen (8 October 2018)

Try getting welfare (dole) when you have any sort of cash, shares, dividends, income etc.

They have tables for how many weeks you will have to sit out. Yet the person next to you will get it straight up.


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## willy1111 (8 October 2018)

sptrawler said:


> They really shouldn't be allowed to change the rules the way they do, it makes it impossible to plan for your retirement through super, yet that is what it was supposed to do.
> All it is doing is stressing the hell out of older workers.
> It is actually a national disgrace, someone should take Billy to task and get him to substantiate his savings claim.




I agree, but when pushed on it I think there response was that it was treasury or a parliamentary committee that did costings not Labour...still didn't provide the maths just try to justify it by saying some independent group did the costings.

I think it was $50 odd billion over 10 yrs it is supposed to save.

I'm all for maintaining the current system, I think companies are just ownership structures and the profits should ultimately be taxed in the hands of the owners at their marginal rate when the dividend is paid to them.

The only reason company tax exists is so that the government get a clip in the year the profit is made, it is almost like a prepayment in the same way wages tax is witheld from employees and the ledger balanced when the individual tax return is lodged.


----------



## Smurf1976 (8 October 2018)

SirRumpole said:


> Personally I think the way to go is widen the tax net and reduce the rates.



As a broad concept that makes a lot of sense.

It also reduces the incentive to find ways around it if the tax rates are modest.


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## HelloAgain (8 October 2018)

Lower taxes with a broader base makes more sense except to politicians who need taxes to manipulate votes. The “tampon tax” exemption argument should have demonstrated why it isn’t fair to have any exemptions but nine of them were brave enough to say that!


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## basilio (30 January 2019)

Detailed analysis in ABC on the  issue of Labour  reducing dividend imputation . The Coalition is saying that 84% of people affected by the proposal have a taxable income less than $37k.  But what does that actually mean ? 

For example consider this scenario which is probably close to those who have done well in their working life.
_In a recent submission to a House of Representatives Inquiry, the Grattan Institute gave the following example.
_
*"Take the example of a self-funded retiree couple with a $3.2 million super balance, plus their own home, and $200,000 in Australian shares held outside super. Even drawing $130,000 a year in superannuation income, and $15,000 a year in dividend income, they would report a combined taxable income of just $15,000 and pay no income tax whatsoever."
*
*Will Labor's dividend imputation policy overwhelmingly affect the low paid?*
https://www.abc.net.au/news/2019-01-30/fact-check-labors-dividend-imputation-policy/10626204


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## sptrawler (30 January 2019)

basilio said:


> Detailed analysis in ABC on the  issue of Labour  reducing dividend imputation . The Coalition is saying that 84% of people affected by the proposal have a taxable income less than $37k.  But what does that actually mean ?
> 
> For example consider this scenario which is probably close to those who have done well in their working life.
> _In a recent submission to a House of Representatives Inquiry, the Grattan Institute gave the following example.
> ...



It will certainly be interesting, I wont get into a debate about it or the NG or the CGT any more, because it has all become too emotional IMO.
I will say, I think the outcome wont be what people think, and we will be discussing it a lot more in three years time.IMO
The Grattan institute, is like asking for an unbiased opinion, from Getup.IMO


----------



## Toyota Lexcen (30 January 2019)

i feel super is complicating this debate.

what about the individuals in that report that are outside of the super structure, it is significant

they get the refund because they are low income earners

why should they not get the refund, its double dipping, taking from one member of the community and handing it to the scabs who live on welfare, community housing, DSP fraudsters etc


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## sptrawler (30 January 2019)

Toyota Lexcen said:


> i feel super is complicating this debate.
> 
> what about the individuals in that report that are outside of the super structure, it is significant
> 
> ...



My personal belief is the suggested changes won't affect the 'rich' at all, they hold their assetts in trusts and other vehicles and structures.

The only people who will be caught with all this, is the working lower middle and middle class, that make up the majority.

The rich will get richer, the poor will stay as they are, and the middle class will slide. IMO

Like I said about 4 years ago, this is all about bringing a level playing field, with our contemporaries(U.K, U.S, Canada, NZ, Western Europe). Our lower middle and middle class, has been getting far too affluent, too much inter generational wealth transfer, too many wanting to do less and less, too many plebs living the life of the rich and famous.

In these tough times, how many 'normal' people do you see on cruises out of Sydney?
No I think it is all going to be reigned in, and I know just the man to do it.
Just my opinion, time will tell, really do hope I'm proved wrong.
If I'm not, well it's been a great ride.


----------



## kahuna1 (30 January 2019)

hi,

I think the idea is stupid. Why not stop Microsoft booking 100% of sales into Singapore then into Bermuda and paying instead of 30% tax on the 600 million NET profit it pays UNDER 20% of it. Same for Goldman Sachs same for Goggle same for Apple and they are worst of all so too *a long list of others.
*
If i went to centrlink in 200 places under 10 names and got the dole ... stealing 25 million I would expect 10 years in jail. These FLuxerers ... steal around 15 billion each year. Again this is changing as the Tax office has had enough .... of the evasion and avoidance and it got a big chunk then they just altered the structures and went off on their merry way. 

Its going to happen either way, collecting this tax, rather than taking it from LOW income ... MEANS test the frigging thing .... Under 50k net income you get the credits. Now that may be smart, but ... well it is what it is. Of course ways around it and just change the asset mix and a few other teaks will minimize the impact ... but with a lot of work.

Just my opinion of course, for what its worth ... nothing.

Cheers


----------



## basilio (8 February 2019)

Another view on how the current dividend imputation rebate scheme is working

*Taxpayers should not be subsidising lifestyle of wealthy retirees*


.....The various tax concessions in the superannuation system allow high-income earners to build up very large super balances. Those with the means can sacrifice part of their income to put extra money into superannuation, tax free. Many high-income earners operate their superannuation funds as vehicles to minimise tax and build up large capital savings.

As a result of such incentives, the aim of wealthy retirees is to live off the earnings of the dividends from their self-managed super funds, but not to draw down on the capital by selling any shares.

Because your superannuation sits outside your will when you die, superannuation is used as a key part of estate planning by the wealthy – that is, saving a lot of money to pass on to your children as an inheritance. As Australia does not have death duties, this wealth is passed down tax free.

This leads to significant intergenerational wealth transfer and, ultimately, reduces social mobility and exacerbates economic inequality.

The current imputation cash refund system is, essentially, a reverse death duty: low and middle-income earners are subsidising the estates of the very wealthy by giving them cash payments from general revenue – that is, from all taxpayers’ contributions to the federal budget – so they don’t have to draw down on their own savings but can hoard that money for their own kids.

It’s both unfair and, at an annual cost of more than $5billion in forgone revenue annually, unsustainable.

https://www.canberratimes.com.au/bu...tyle-of-wealthy-retirees-20190206-p50w1u.html


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## sptrawler (8 February 2019)

basilio said:


> Because your superannuation sits outside your will when you die, superannuation is used as a key part of estate planning by the wealthy – that is, saving a lot of money to pass on to your children as an inheritance._ *As Australia does not have death duties, this wealth is passed down tax free.*_
> 
> *This leads to significant intergenerational wealth transfer and, ultimately, reduces social mobility and exacerbates economic inequality*.



Just another load of BS, that gets pedelled to the ill informed, which they regurgitate with gay abandon.

*FACT*: Only superannuation which has been put in after tax, is passed on tax free.

*The taxable component, which in the majority of cases is the major amount in super, is taxed at 15% + medicare levy before it is given as an inheritance*.

These morons shouldn't be allowed to print $hit, they obviously know nothing about, it is as bad as the people blindly believing it and regurgitating it.

The only good thing to come out of this will be, those who believe the labor crap will end up with nothing, which they will deserve. IMO
How people can make an informed decision, when they don't even inform themselves, is beyond me.


----------



## HelloU (8 February 2019)

annual spend:
welfare    $175B
Defence   $32
whatever above was $5B


what else
there is tax on super when u r dead .............. 
there is a cap of super balance
there is a limit on money going in
there is a mandated annual drawdown

if peeps do not understand what happens in 2019 in Australia then the value of what they contribute to any discussion about changes to the current law is essentially worthless.


----------



## Junior (8 February 2019)

basilio said:


> Another view on how the current dividend imputation rebate scheme is working
> 
> *Taxpayers should not be subsidising lifestyle of wealthy retirees*
> 
> ...




Perhaps we should introduce Death Taxes too?  Shorten really has managed to brainwash many people into thinking that paying MORE tax is a good thing.  Although I suspect that supporters of tax hikes, are not those who would personally have to pay those taxes.  

Just remember, you will retire one day too, and after 40 odd years of giving away 30% - 40% of your salary to the Government every year you will now have no salary, and may not be excited by the prospect of continuing to pay high rates of tax.  Furthermore, you might not want the Government to receive a windfall of your hard-earned savings when you die.


----------



## sptrawler (8 February 2019)

Junior said:


> Perhaps we should introduce Death Taxes too?  Shorten really has managed to brainwash many people into thinking that paying MORE tax is a good thing.  Although I suspect that supporters of tax hikes, are not those who would personally have to pay those taxes.
> 
> Just remember, you will retire one day too, and after 40 odd years of giving away 30% - 40% of your salary to the Government every year you will now have no salary, and may not be excited by the prospect of continuing to pay high rates of tax.  Furthermore, you might not want the Government to receive a windfall of your hard-earned savings when you die.



No franking credit, for the lower income spouse.
Increase in capital gain tax.
No negative gearing a low cost rental.

Junior your a finacial advisor, you tell me which working group, this is going to hit most?


----------



## SirRumpole (8 February 2019)

15% tax on super contributions, *tax free* in pension stage, the hoohah over franking rebates really smacks of children having a lolly taken away from them before they get fed their dinner.


----------



## sptrawler (8 February 2019)

SirRumpole said:


> 15% tax on super contributions, *tax free* in pension stage, the hoohah over franking rebates really smacks of children having a lolly taken away from them before they get fed their dinner.



I would rather they taxed the pension, than change the franking credit system, it doesn't just effect pensioners. like I said earlier, there isn't many ways for a blue collar worker to get ahead, these changes are closing all the avenues. It will end up a drop in living standards, for the working class. IMO
Your no fool Rumpy, think about the longer term ramifications.
Just introduce a progressive tax on super pensions, or if they are worried about intergenerational wealth transfer, bring in death duties.
Just my opinion and I'm not being selfish, regardless of what people believe.


----------



## HelloU (8 February 2019)

a low income worker (like someone that scrubs toilets 3 days a week) and has some CBA shares might get a refund from the ATO of $600.

that person will NOT get that $600 under labor. they will lose $600 'income' from their pocket when old mate up the road on $400K pa does NOT LOSE ONE CENT. 

if peeps do not understand what happens in 2019 in Australia then the value of what they contribute to any discussion about changes to the current law is essentially worthless.


----------



## basilio (8 February 2019)

HelloU said:


> a low income worker (like someone that scrubs toilets 3 days a week) and has some CBA shares might get a refund from the ATO of $600.
> 
> that person will NOT get that $600 under labor. they will lose $600 'income' from their pocket when old mate up the road on $400K pa does NOT LOSE ONE CENT.




Can you please expand and explain how that works?
Thx


----------



## SirRumpole (8 February 2019)

sptrawler said:


> Just introduce a progressive tax on super pensions,




Yes, I agree with that, but overall superannuants (including me) are on a good deal tax wise.

Beats me why they decided to go after franking rebates instead of progressive taxes, maybe because it's something that very few people understand and they thought it would slip under the radar.


----------



## HelloU (8 February 2019)

basilio said:


> Can you please expand and explain how that works?
> Thx



sure, happy to help the discussion with actuals ....
you decide what sort of 'income person' you are interested in (need both paye income figure and a dividend figure) and i will calculate what happens for them .....

pick up to 3 examples if u like.


----------



## basilio (8 February 2019)

HelloU your example is the one I am interested in understanding. Specifically the statement that a low income worker  with some CBA shares yielding $600 a year rebate would not get a rebate under Labour. 

Lets say for argument sake he/she is making $50k a year.


----------



## HelloU (8 February 2019)

again, what peeps should know is that low income peeps with franked dividends will have money taken out of their pockets whilst old mate up the road on $400K pa does NOT LOSE ONE CENT.

i do think that low income peeps deserve to lose one cent from their pockets.

a policy that takes money from the pockets of low income peeps, and does not touch high income workers, is BAD POLICY for australia.

(for basilio, a person on $50K paye pays approx $8800 in tax (ignore offsets) .......... not sure if that helps anyone ....people that got a credit refund of $600 will lose that $600 refund under labor, if you got a credit refund of $100, you will lose that $100 refund, if you got a credit refund of $900, you will lose that $900 refund - the pattern remains the same, if you used to get a franking credit refund then labor will keep that money and NOT REFUND it - whatever amount it is. that is what the policy is designed to do. If you cannot work out the figure for a particular person then give me the numbers for that person and i can calculate the figures for you)


----------



## Toyota Lexcen (8 February 2019)

On 50K you have taxable income so it will be reduced by any franking credits

someone earning 10k cleaning a house, and gets 8k in dividends will loose the franking credits

oops, they rich cause they get 8k in dividends




basilio said:


> HelloU your example is the one I am interested in understanding. Specifically the statement that a low income worker  with some CBA shares yielding $600 a year rebate would not get a rebate under Labour.
> 
> Lets say for argument sake he/she is making $50k a year.


----------



## sptrawler (8 February 2019)

SirRumpole said:


> Yes, I agree with that, but overall superannuants (including me) are on a good deal tax wise.
> 
> Beats me why they decided to go after franking rebates instead of progressive taxes, maybe because it's something that very few people understand and they thought it would slip under the radar.



No they are taking them off SMSF, so the fund returns about 4-5%, they are still giving Industry funds *all* the franking credits, so they will be able to offer 7%.
The SMSF will have no option but to change over.
The problem with that is, I pay $850/pa, in accountant and auditing fees, the industry fund will charge somewhere between $5k -$10K.
The taxpayer is footing that bill, so in reality it is just about the Industry Funds getting further in the trough.
I would rather spend it, than get blackmailed by the Government, f&%$K em.
Appologies for the language.


----------



## basilio (8 February 2019)

HelloU said:


> again, what peeps should know is that low income peeps with franked dividends will have money taken out of their pockets whilst old mate up the road on $400K pa does NOT LOSE ONE CENT.
> 
> i do think that low income peeps deserve to lose one cent from their pockets.
> 
> ...




*This doesn't make sense... Full stop.. And it is not true.*
A PAYE worker on $50k with  some dividends from shares will have no change whatsover with Labours proposed policy.

At this point he/she is not getting any direct refund of  tax credits because they are are used against his PAYE earnings. If Labour passes this policy he/she will still use the tax credits against his income.
*That is it.
_________________________________
*
The argument about the loss of the refund of tax credits applies to people who have arranged their affairs so they have little taxable income against which to use the tax credits .  This is usually very wealthy people (or their partners or children)  who have managed to construct a tax return with enough deductions so their nominal taxable income is low but they get $20,30,100K in fully franked dividends from investment portfolios worth about 20 times these dividends.

These are not low income toilet cleaners working three days a week.


----------



## HelloU (8 February 2019)

yep, aussie tax office says low income is up to $66K taxable - not sure if that helps this though .....

it is correct that low income earner that previously got a credit refund at tax time will lose that refund under the labor party. 

low income peeps that got a $200 credit refund will get zero under labor
low income peeps that got a $600 credit refund will get zero under labor
low income peeps that got a $900 credit refund will get zero under labor

whilst high income workers get ALL of their credits ............seems labor does not care about low income workers in australia.


----------



## PZ99 (8 February 2019)

@basilio  it's not about the low income toilet cleaners, or those who pretend to be - it's about the low income self funded retirees whose only source of income is from the dividends.  

If their total yearly income is under the tax free threshold they potentially lose around $4000 a year from lost franking credits.

They then have to decide whether they go back to work (not likely given the employers' grudge against older people)  or go onto welfare - which partially mitigates the budget savings.

This is the part of the policy opposed by most of the parliament - including the Greens, which is why I maintain the view that it won't succeed..


----------



## Toyota Lexcen (8 February 2019)

basilio said:


> *This doesn't make sense... Full stop.. And it is not true.*
> A PAYE worker on $50k with  some dividends from shares will have no change whatsover with Labours proposed policy.
> 
> At this point he/she is not getting any direct refund of  tax credits because they are are used against his PAYE earnings. If Labour passes this policy he/she will still use the tax credits against his income.
> ...





once you get over 18K in dividends you are taxed, its income


----------



## sptrawler (8 February 2019)

PZ99 said:


> @basilio  it's not about the low income toilet cleaners, or those who pretend to be - it's about the low income self funded retirees whose only source of income is from the dividends.
> 
> If their total yearly income is under the tax free threshold they potentially lose around $4000 a year from lost franking credits.
> 
> ...



Like I said to Rumpy, it is a ham fisted way, to get SMSF's into Union Industry Funds.
I hope your right PZ99, because I hate spending money, just for the sake of it. 
I sold a really nice house, in a really nice position on the river, to become self funded.
Now I wish I hadn't bothered, and just stayed in the house,with a Government pension.
If I had known that super, was going to be screwed around with so much, I would have organised my affairs differently.
God knows how bad it will be in 20 years time.


----------



## basilio (8 February 2019)

Toyota Lexcen said:


> once you get over 18K in dividends you are taxed, its income




The important point TL was that *taxable income* is kept low. The strategy currently used by  some retirees is receiving  dividend income through super funds which is not included as part of their taxable income.  So they pay no taxes on $50,60,100k of dividend income.

Then because they they have such a low nominal income they have been getting the imputation credits as well. This will be usually worth an extra  30%.

I can see the point about a small group of retirees living off relatively modest investments being unfairly hurt. However the overwhelming fact is these people represent only a small part of the affected group. I'll repost an analysis soon. 

As you point out the argument that hardworking toilet cleaners on $50k with investments in the Comm Bank  will lose tax credits isn't accurate.


----------



## HelloU (8 February 2019)

PZ99 said:


> @basilio  it's not about the low income toilet cleaners, or those who pretend to be - it's about the low income self funded retirees whose only source of income is from the dividends.
> 
> If their total yearly income is under the tax free threshold they potentially lose around $4000 a year from lost franking credits.
> 
> ...



just so i can follow ...can i assume when talking tax thresholds u r talking about income outside the super system? ( by someone over 60)


----------



## basilio (8 February 2019)

*Will Labor's dividend imputation policy overwhelmingly affect the low paid?*

....
*What the experts say*
Melbourne University tax law expert Professor Miranda Stewart said the use of taxable income to assess the impact of Labor's dividend imputation policy "does not tell us very much".

"In fact it is precisely because taxable income is low that a refund is achieved," Professor Stewart said.

"Payouts from superannuation whether pensions or lump sums are exempt. Many senior Australians also benefit from the senior Australians and pensioners tax offset which effectively raises the tax free threshold to more than $50,000 for those who have relatively low taxable earnings. Again this creates the conditions for the tax refund from the franking credit."

Ms Wood, from the Grattan Institute, said most of the people affected were self-funded retirees.

"And the reason they are affected is because they get refunds and the reason they get refunds is because they have low taxable incomes," Ms Wood said.

"The reason they have low taxable incomes is because the income generated by self-managed super funds up to balances of $1.6 million is tax free. So their taxable income could be low but their actual income is often reasonably healthy, but they are still getting access to imputation credits.

"Taxable income is a very poor estimate of means when you are talking about people in retirement."

Kathrin Bain, from the School of Taxation and Business Law at UNSW Sydney, said as a general rule most of those affected by Labor's policy had marginal tax rates less than the company tax rate.

"To be affected by this policy you have to have a marginal tax rate that is lower than the company tax rate," Ms Bain said.

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


----------



## HelloU (8 February 2019)

many issues getting confused here ........
is the argument here now that the annual mandated super drawdown should be included in the tax return of individuals? (so we can get a "clearer picture" of income)

or is the problem that $100K can be "earned" inside a super fund each year?


----------



## HelloU (8 February 2019)

*"Kathrin Bain, from the School of Taxation and Business Law at UNSW Sydney, said as a general rule most of those affected by Labor's policy had marginal tax rates less than the company tax rate".*

that is the truth ........... for whatever reason anyone with a tax rate below 30% (forget 28.5% etc) is going to have money taken out of their pocket.(except if you are on welfare u get to keep the money)

Labor is ONLY taking money away from peeps on tax rates lower than 30% .......... that is not a great policy for a country.


----------



## HelloU (8 February 2019)

HelloU said:


> *"Kathrin Bain, from the School of Taxation and Business Law at UNSW Sydney, said as a general rule most of those affected by Labor's policy had marginal tax rates less than the company tax rate".*
> 
> that is the truth ........... for whatever reason anyone with a tax rate below 30% (forget 28.5% etc) is going to have money taken out of their pocket.(except if you are on welfare u get to keep the money)
> 
> Labor is ONLY taking money away from peeps on tax rates lower than 30% .......... that is not a great policy for a country.



soz ...not quite true .... by "anyone" i mean "anyone that is not on welfare and is trying to get above the mire by investing in franked shares".


----------



## Toyota Lexcen (8 February 2019)

the discussion about super is also confusing the issue. They are rules of "superannuation", I believe that over 50% of people who get a cash refund are outside of superannuation. 




basilio said:


> The important point TL was that *taxable income* is kept low. The strategy currently used by  some retirees is receiving  dividend income through super funds which is not included as part of their taxable income.  So they pay no taxes on $50,60,100k of dividend income.
> 
> Then because they they have such a low nominal income they have been getting the imputation credits as well. This will be usually worth an extra  30%.
> 
> ...


----------



## willy1111 (8 February 2019)

sptrawler said:


> I sold a really nice house, in a really nice position on the river, to become self funded.
> Now I wish I hadn't bothered, and just stayed in the house,with a Government pension.
> If I had known that super, was going to be screwed around with so much, I would have organised my affairs differently.




Pull your money out of Super, buy the another nice house on the river and go on the pension 

And then they will bring the home into the asset test


----------



## SirRumpole (8 February 2019)

sptrawler said:


> Now I wish I hadn't bothered, and just stayed in the house,with a Government pension.




Not many government pensioners can afford to take overseas holidays.


----------



## PZ99 (8 February 2019)

HelloU said:


> just so i can follow ...can i assume when talking tax thresholds u r talking about income outside the super system? ( by someone over 60)



Yes, but not necessarily someone over 60. I'm looking at someone who may have been retrenched - saved a bit of money - but can only generate 18k p/a or less from it. And probably unfit for work.

When the 7:30 report did a thing on the Labor policy there was a protester in the above position.

Super is something I haven't really looked at yet.


----------



## HelloU (9 February 2019)

PZ99 said:


> Yes, but not necessarily someone over 60. I'm looking at someone who may have been retrenched - saved a bit of money - but can only generate 18k p/a or less from it. And probably unfit for work.
> 
> When the 7:30 report did a thing on the Labor policy there was a protester in the above position.
> 
> Super is something I haven't really looked at yet.



thx
many circumstances involved so a lot of terms get used loosely  (the word pensioner can mean different things to different peeps, or the word income etc ....)  a lot of confusion occurs.


----------



## HelloU (9 February 2019)

i care little one way or the other .... i just want a simple system ....here is the current one


most peeps who pay me put the money into my westpac  account ...........but some peeps that pay me put the money into another bank account (that i cannot access until the end of the tax year).

it does not matter though cos all of that money (both bank account credits) get combined together at tax time to form a thing called my gross income (the govt calls it my assessable income). 

i do some accounting stuff and subtract deductions and then it becomes what the government calls my net or taxable income.   

they then calculate the tax i owe them from this taxable income figure.  

the income $$ that went into my westpac account can be used by me as cash flow through the year to buy groceries and petrol and pay bills. the $$ income that went into that other bank account cannot be touched by me until after the tax year when i do my tax return - but it was still income paid to me and was included in my taxable income - i mean it was included in the money that i got "into my pocket" as income for the year even though i could not access it at the time. 

that is what currently happens ...............

if that second bank account runs a debit at the end of the year then i have to add money to square it up and zero the balance at tax time.

if it has excess money in it at the end of the year .....i get to take that money out and use it as cash flow.  

the current/future question is what should happen to any remaining credit bank balance that has already been "assessed" as having been put into my pocket as income earlier in the year?

should it be allowed to go into my pocket or be confiscated by the government?


----------



## Smurf1976 (9 February 2019)

SirRumpole said:


> 15% tax on super contributions, *tax free* in pension stage, the hoohah over franking rebates really smacks of children having a lolly taken away from them before they get fed their dinner.



Super isn't the biggest issue since there seem to be workarounds to that one via industry funds and super is, of course, a tax favoured environment as a concept in the first place.

It's investments outside of super which are more of a concern. Anyone who plans to retire prior to the age arbitrarily set by government or who simply saved and invested for the proverbial rainy day seems to be a target the moment their incomes drops - and protecting themselves in that scenario is the very reason they invested in the first place.

There's an awful lot of people out there who involuntarily retired in their 50's before they could access super or the pension. Plenty of blue collar workers end up in that situation but it affects white collar too to some extent. The smart ones thought they were doing the sensible thing by investing additional funds outside super to cover themselves if that day comes.

Given that the stereotypical person in that situation would be a tradie or manual worker, I'd have thought Labor would be on their side. Seems not.


----------



## SirRumpole (9 February 2019)

Smurf1976 said:


> There's an awful lot of people out there who involuntarily retired in their 50's before they could access super or the pension. Plenty of blue collar workers end up in that situation but it affects white collar too to some extent. The smart ones thought they were doing the sensible thing by investing additional funds outside super to cover themselves if that day comes.




Yes , that seems to be an issue. 

I wonder if anyone has pointed this out to the ALP, it would be interesting to get their response.


----------



## basilio (9 February 2019)

Smurf1976 said:


> Super isn't the biggest issue since there seem to be workarounds to that one via industry funds and super is, of course, a tax favoured environment as a concept in the first place.
> 
> *It's investments outside of super which are more of a concern. Anyone who plans to retire prior to the age arbitrarily set by government or who simply saved and invested for the proverbial rainy day seems to be a target the moment their incomes drops - and protecting themselves in that scenario is the very reason they invested in the first place.
> 
> ...




I think that is a possibly valid point Smurf.  Of all the scenarios being thrown around the issue of people who have relatively modest investments and find themselves out of work in their 50'/60/s and trying to rely on such dividends seems most plausible.

I think in the bigger picture the question is the issue of unemployment benefits that are real and accessible. I think it is pretty terrifying that a 55 year old factory/white collar worker who is retrenched and  unlikely to get a job has to practically be on the bread line to be eligible for benefits. *In effect they have to use all their savings and investments before being able to get income support. (there goes their shares)*

But lets take your case. As I see it this person needs to have at least $400k of shares earning 5% yields to have any chance of surviving. That's $20k divs plus say $6k franking credits. Honestly which person would have that type of portfolio outside his/her super fund ? I could see  $50/100/150k  but this figure seems unusual.

I suggest this is a different problem which is not helped by continuing a rort that takes $5b a year from tax payers and gives it overwhelmingly to the very well off.


----------



## HelloU (9 February 2019)

return of franking credits   $5B
welfare budget                 $175B

one of those is being described as a "rort".


----------



## sptrawler (9 February 2019)

SirRumpole said:


> Not many government pensioners can afford to take overseas holidays.



Don't kid yourself Rumpy, there are plenty of pension couples on cruises, $35kP/A  plus $300k in savings, I've been on cruises and there are plenty of pensioners on there.
$900k saved up, gives $27k in interest, don't tell me $35k + perks, for FA isn't good.


----------



## sptrawler (9 February 2019)

HelloU said:


> return of franking credits   $5B
> welfare budget                 $175B
> 
> one of those is being described as a "rort".



No one is listening, lol, eventually they will run out of other people's money to give away.


----------



## Humid (9 February 2019)

Just read this pretty much sums it up
encourages “lazy investing” in “dinosaur” companies whose only virtue is that they pay fat, full-franked dividends.


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## sptrawler (9 February 2019)

Humid said:


> Just read this pretty much sums it up
> encourages “lazy investing” in “dinosaur” companies whose only virtue is that they pay fat, full-franked dividends.



You should be reading up on RBL's and maximum, minimum drawdowns, pre the current account based pensions.
It will help you think about your future.


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## Humid (9 February 2019)

What like you did with due diligence only for them to change the rules meh
Anyway your mob have to lose an election yet


----------



## sptrawler (9 February 2019)

Humid said:


> Anyway your mob have to lose an election yet



I really think that is a foregone conclusion, it is just scary the changes labor are promising, on the back of an electoral mandate.
I really just hope, people think carefully on what they are proposing and the ramifications.
If they do that and Labor are voted in so be it, my motto, "allow for the worst, hope for the best", will see me through o.k. lol


----------



## Smurf1976 (10 February 2019)

basilio said:


> I think that is a possibly valid point Smurf.  Of all the scenarios being thrown around the issue of people who have relatively modest investments and find themselves out of work in their 50'/60/s and trying to rely on such dividends seems most plausible.



I've made a more detailed post in the other thread on this subject but ultimately that's my main concern yes.

Ordinary people who put some money aside for the proverbial rainy day ending up paying a 30% tax rate when they suffer the misfortune of forced early retirement.

I've seen rather a lot of people end up involuntarily retired prior to pension / superannuation age so it's the first and foremost point in my mind when it comes to investing. It could happen to anyone.....

I don't particularly mind how it's fixed but I do think it would be morally wrong and against whatever the underlying intent of Labor's policy is to not address this aspect of it.

From a voting perspective, well I'm no fan of the Liberals but likewise I see this policy of Labor's as morally very wrong.


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## Humid (10 February 2019)

If this policy was introduced by the Howard government I can assure you it wasn’t aimed at the people your concerned about.
What did people do prior to this?
It’s not like it’s been around forever.
Maybe invest in insurance.......not from the banks!


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## HelloU (10 February 2019)

as a taxpayer .......

i am happy to pay income tax on the income that goes into my pocket (tax on gross income minus deductions), but the the new policy means that some will pay income tax on income that NEVER gets into their pocket.

how can it be fair that income tax is paid on money that is NEVER paid to a person?


----------



## SirRumpole (10 February 2019)

HelloU said:


> but the the new policy means that some will pay income tax on income that NEVER gets into their pocket.




All people over 60 are paying absolutely no tax on superannuation income that could be $100k or more.

Try explaining that to people working for a living that they are subsidising people not contributing to the services that others have to pay for.


----------



## Toyota Lexcen (10 February 2019)

well lets take newstart allowance and public housing off people too then, 150Billion given to them

what are they contributing? anything at any stage of their life


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## Humid (10 February 2019)

Toyota Lexcen said:


> well lets take newstart allowance and public housing off people too then, 150Billion given to them
> 
> what are they contributing? anything at any stage of their life



Yeah let’s cut penalty rates too


----------



## Humid (10 February 2019)

HelloU said:


> as a taxpayer .......
> 
> i am happy to pay income tax on the income that goes into my pocket (tax on gross income minus deductions), but the the new policy means that some will pay income tax on income that NEVER gets into their pocket.
> 
> how can it be fair that income tax is paid on money that is NEVER paid to a person?




As a taxpayer couldn’t you use the credits?


----------



## Toyota Lexcen (10 February 2019)

Humid said:


> Yeah let’s cut penalty rates too




whats that got to do with people not contributing for services in the community?


----------



## sptrawler (10 February 2019)

Smurf1976 said:


> I've made a more detailed post in the other thread on this subject but ultimately that's my main concern yes.
> 
> Ordinary people who put some money aside for the proverbial rainy day ending up paying a 30% tax rate when they suffer the misfortune of forced early retirement.
> 
> ...



That certainly happened to me, when Kwinana shut down, seven years later I still have 3 1/2 years to pension age.


----------



## Humid (10 February 2019)

Toyota Lexcen said:


> whats that got to do with people not contributing for services in the community?




Lol
What are people paying no tax offering?
A lot of people in public housing pay tax you know


----------



## Toyota Lexcen (10 February 2019)

no they dont


----------



## Humid (10 February 2019)

sptrawler said:


> That certainly happened to me, when Kwinana shut down, seven years later I still have 3 1/2 years to pension age.




Plenty of blokes older than you doing construction 
Do some shuts in winter 
Money for jam!


----------



## sptrawler (10 February 2019)

Humid said:


> Plenty of blokes older than you doing construction
> Do some shuts in winter
> Money for jam!



Too many joint replacements to pass a medical, even Bunnings won't take me. Lol


----------



## HelloU (10 February 2019)

Humid said:


> As a taxpayer couldn’t you use the credits?



humid bloke is correct when they say that someone on welfare will get FULL use of those credits ....
and a high income worker will also get FULL use of the credits ......

for australian workers, this labor policy ONLY takes money away from those in the low and middle. 

it means that the poorer workers will pay tax on money that they NEVER RECEIVE.


----------



## basilio (10 February 2019)

Toyota Lexcen said:


> no they dont




So they don't pay GST ?  And by the way public housing isn't free.  All residents pay 25% of their household income as rent. That includes any family members who are working.


----------



## Humid (10 February 2019)

sptrawler said:


> Too many joint replacements to pass a medical, even Bunnings won't take me. Lol



Lol
Nah labour hire is tick and flick just get a letter from your own GP which lets the work quack off the hook
Escape the cold and the Mrs
Free food 
Cake.....lots of cake
Fish&chip Fridays
All these remote joints have gas turbines
Get on board Homer


----------



## Toyota Lexcen (10 February 2019)

really stretching it to include GST as some sort of contribution.

any studies on income generated by housing recipients?


----------



## HelloU (10 February 2019)

SirRumpole said:


> All people over 60 are paying absolutely no tax on superannuation income that could be $100k or more.
> 
> Try explaining that to people working for a living that they are subsidising people not contributing to the services that others have to pay for.



red herring
those zero tax peeps will still be zero tax peeps after this ........ if ur problem is with zero tax then address zero tax (not franking credits)


----------



## Humid (10 February 2019)

HelloU said:


> humid bloke is correct when they say that someone on welfare will get FULL use of those credits ....
> and a high income worker will also get FULL use of the credits ......
> 
> for australian workers, this labor policy ONLY takes money away from those in the low and middle.
> ...




What sort of income do you call low and middle?


----------



## Humid (10 February 2019)

Toyota Lexcen said:


> really stretching it to include GST as some sort of contribution.
> 
> any studies on income generated by housing recipients?




Lot of tax on beer and smokes mate


----------



## HelloU (10 February 2019)

credits form part of assessable income

do peeps really want a society where we pay tax on income that we can NEVER receive?

that is the result of this idea.

(humid - ato has definitions for low income peeps ...they have special money for low income peeps ....... they have special money till about $66K for low income peeps ...... it is all part of what happens when australians do a tax return each year ...... the thing where taxable is worked out .....to work out tax owing ....... by using the tax tables)


----------



## Toyota Lexcen (10 February 2019)

so they get 300$/week FREE, then give back say $10/week GST from 1 slab and 1 pack smokes

thats contributing to Australia


----------



## sptrawler (10 February 2019)

Humid said:


> Lol
> Nah labour hire is tick and flick just get a letter from your own GP which lets the work quack off the hook
> Escape the cold and the Mrs
> Free food
> ...



Do you have the name of a couple of the hire companies, that are ok?


----------



## Humid (10 February 2019)

sptrawler said:


> Do you have the name of a couple of the hire companies, that are ok?




HSS
Workpac


----------



## Humid (10 February 2019)

HelloU said:


> credits form part of assessable income
> 
> do peeps really want a society where we pay tax on income that we can NEVER receive?
> 
> ...




You mean without employment


----------



## sptrawler (10 February 2019)

Humid said:


> HSS
> Workpac



Cheers humid, if Bill gets in, I may see you on site. Thanks again for the info


----------



## HelloU (10 February 2019)

Humid said:


> You mean without employment



i mean what is currently included as assessable income in the annual tax return that most peeps fill out - it the first part of the tax forms that has numbers in it - the section where peeps put in the income figures from the various income sources. They all get added together at present - to produce a single income figure (that is used to calc taxable income)

maybe there is a lack of understanding of what numbers are included in the "Income Section" of tax returns.

(peeps do realise that both Kathy and Cathy had the exact same assessable income in that other thing of blokes)


----------



## HelloU (10 February 2019)

High income earner      -    no change in tax paid
welfare person             -     no change in tax paid

low income worker        -     may pay more tax
middle income worker    -   may pay more tax
self funded retiree         -   may pay more tax

which category of those does bowen and shorten fall into? ..........."let them eat cake"


----------



## willy1111 (10 February 2019)

SirRumpole said:


> All people over 60 are paying absolutely no tax on superannuation income that could be $100k or more.
> 
> Try explaining that to people working for a living that they are subsidising people not contributing to the services that others have to pay for.




Which in my opinion has nothing to do with franking credit refunds and everything to do with the tax rates applied to Superannuation.

Why not focus on the real issue at hand which is taxation of Super?


----------



## Humid (10 February 2019)

HelloU said:


> i mean what is currently included as assessable income in the annual tax return that most peeps fill out - it the first part of the tax forms that has numbers in it - the section where peeps put in the income figures from the various income sources. They all get added together at present - to produce a single income figure (that is used to calc taxable income)
> 
> maybe there is a lack of understanding of what numbers are included in the "Income Section" of tax returns.
> 
> (peeps do realise that both Kathy and Cathy had the exact same assessable income in that other thing of blokes)




And a little further down there’s a bit called total tax withheld from memory and if you have a job there’s a good chance it will contain some numbers


----------



## SirRumpole (10 February 2019)

willy1111 said:


> Why not focus on the real issue at hand which is taxation of Super?




So, tax pensions over $100k at 20% ?

Would you be ok with that ?


----------



## HelloU (10 February 2019)

nah Humid
plenty of people do not have any numbers in that box ...... and by people i mean peeps that do really hard jobs at their own risk .......... the sort that if they do not go out and look for their own work every day then they do not get paid type peeps. 

so will say again
i mean what is currently included as assessable income in the annual tax return that most peeps fill out -  the section where peeps put in the income figures from the various income sources. They all get added together at present - to produce a single income figure (that is used to calculate taxable income)

any discussion about NOT including franking credits as assessable income has not been had yet


----------



## brisman (10 February 2019)

I don't like losing a tax perk but the original objective of the *dividend imputation* system was to eliminate double taxation of company profits, once at the corporate level and again on distribution as *dividend* to shareholders.

If you're not paying tax then even without the refund (that was added after imputation was introduced) you're still not paying double taxes on dividends.  The company pays it once and you don't.

No one is forcing you to be overweight in tax and dividend paying Australian companies and have all your investments in super. You've done it for the tax perk?  There's a reason why this discussion is unique to Australia?


----------



## willy1111 (10 February 2019)

SirRumpole said:


> So, tax pensions over $100k at 20% ?
> 
> Would you be ok with that ?




No...because we don't know what portion of that pension is capital and what portion is earnings.

For example, lets say one has $1m accumulated in Super over a lifetime.

Lets say that for the entire financial year this $1m was held in a non interest bearing bank account within Super.

This person withdraws $100k as a pension, the remaining Super balance now $900k.

Is it fair that this person pays tax on withdrawing their own money from Super?

It is my opinion only EARNINGS of the fund should be eligible for taxation.

And to make things simple, perhaps just apply marginal tax rates to EARNINGS of the fund once preservation age is reached.


----------



## Humid (10 February 2019)

nah Humid
plenty of people do not have any numbers in that box ...... and by people i mean peeps that do really hard jobs at their own risk .......... the sort that if they do not go out and look for their own work every day then they do not get paid type peeps. 

That don’t pay tax?


----------



## Humid (10 February 2019)

Them peeps


----------



## Smurf1976 (10 February 2019)

Humid said:


> What did people do prior to this?
> It’s not like it’s been around forever.




A few things.

First, pretty much anyone could get a job without major difficulty. So someone in their 50’s who just got made redundant only needed to apply to a few factories or the public service and they’d be back in work in no time.

Second is the dole was dead easy for anyone not in emploment to get and with no making people jump through endless hoops applying for jobs they’ve no chance of getting.

Third is that banks paid decent interest rates on deposits not the joke they are today.

That latter point in particular forced a lot of people into shares as the only way they could get even a modest return on their funds.

In any event, why shouldn’t someone choose to invest outside of super (itself arguably a tax avoidance rort) in order to avoid reliance on welfare? This is a stock market forum after all so presumably those here have at least some interest in investing and making a profit.


----------



## sptrawler (10 February 2019)

Smurf1976 said:


> Third is that banks paid decent interest rates on deposits not the joke they are today.
> 
> That latter point in particular forced a lot of people into shares as the only way they could get even a modest return on their funds.
> .




That is the big one smurf, a mate of mine had a huge win on selling a block 12 years ago, made $1m retired and put it in a SMSF term deposit 10% P/A.
Now he get 2.5%, so bought a few shares, which have gone down.

Well things aren't so rosy now, he will qualify for the pension, real soon.


----------



## Smurf1976 (10 February 2019)

brisman said:


> No one is forcing you to be overweight in tax and dividend paying Australian companies and have all your investments in super.



The issue affects investments outside of super not just within it.

As for the choice of what to invest in, there’s a simple solution.

Put interest rates up to a decent level and that kills two birds with the one stone.

First it enables those seeking a decent return on low risk investments to achieve it. That would mostly be older people.

Second it should bring down house prices which benefits mostly younger people.

The property developers and banks would be outright fuming at the thought though.


----------



## Smurf1976 (10 February 2019)

sptrawler said:


> Well things aren't so rosy now, he will qualify for the pension, real soon.




The message I’m getting here is certainly that Labor is trying to steer people toward welfare.

I’m not opposed to the existence of the dole and the aged pension but both should be considered a last resort with the emphasis being on working, saving and investing to provide for yourself with everyone encouraged to do so.


----------



## sptrawler (10 February 2019)

Smurf1976 said:


> The message I’m getting here is certainly that Labor is trying to steer people toward welfare.
> 
> I’m not opposed to the existence of the dole and the aged pension but both should be considered a last resort with the emphasis being on working, saving and investing to provide for yourself with everyone encouraged to do so.




I think the idea behind the changes, is to push SMSF people into Industry Funds, the problem is as usual with Labor's brain farts, it will backfire in a huge way, watch this space. lol

I've already worked out plan B, stuff Bill and his cronies.lol


----------



## Smurf1976 (10 February 2019)

sptrawler said:


> I've already worked out plan B, stuff Bill and his cronies.lol



I think a lot of people will have worked out a way around it by the time it comes in and that’s the silliest aspect of the whole thing.


----------



## sptrawler (10 February 2019)

Smurf1976 said:


> I think a lot of people will have worked out a way around it by the time it comes in and that’s the silliest aspect of the whole thing.



IMO the ones who will suffer from this the most are the 40 year olds, the problem will be two fold.
One their parents will spend the inheritance, as they will be forced to.
Secondly, by the time they get to pension age, it will be an annuity and it won't be sunshine and lollypops.

IMO there is an underlying reason, why our education system, is dumbing down our kids.


----------



## Humid (10 February 2019)

Smurf1976 said:


> A few things.
> 
> First, pretty much anyone could get a job without major difficulty. So someone in their 50’s who just got made redundant only needed to apply to a few factories or the public service and they’d be back in work in no time.
> 
> ...




So the company pays the government tax and then the government gives that to you

Welfare ring a bell


----------



## sptrawler (10 February 2019)

Humid said:


> So the company pays the government tax and then the government gives that to you
> 
> Welfare ring a bell



Wouldn't it be easier, to just apply a progressive tax on super pensions, as they proposed last election?
Rather than a one size fits all dumb ar$e approach?


----------



## Humid (10 February 2019)

sptrawler said:


> Wouldn't it be easier, to just apply a progressive tax on super pensions, as they proposed last election?
> Rather than a one size fits all dumb ar$e approach?




Then everyone would hate them
This is class warfare man started with a union RC and the cherry on top cut penalty rates....announced by a smiling filthy rich banker which rhymes with....


----------



## Zaxon (10 February 2019)

Smurf1976 said:


> Put interest rates up to a decent level and that kills two birds with the one stone.
> 
> First it enables those seeking a decent return on low risk investments to achieve it. That would mostly be older people.




I think interest rates have to be left to market forces, because regardless of the rate, 50% of people are losers.

High interest rates are great for those with term deposits in the bank.  But for shareholders, interest rates are like gravity on company profits.  That means lower dividends and lower share price growth.

In housing, high rates keep down house prices which, on the surface, may sound great for first time buyers.  But if you've got a mortgage and you're struggling to meet your repayments because the interest rates are so high, you're at risk of defaulting on your mortgage.


----------



## Smurf1976 (10 February 2019)

Humid said:


> Welfare ring a bell



I find it truly bizarre that government would want to encourage people onto welfare rather than have them provide for themselves.


----------



## Smurf1976 (10 February 2019)

Zaxon said:


> I think interest rates have to be left to market forces



In principle I see the point.

But then I also think we should tax all investments equally.....


----------



## sptrawler (10 February 2019)

Humid said:


> Then everyone would hate them
> This is class warfare man started with a union RC and the cherry on top cut penalty rates....announced by a smiling filthy rich banker which rhymes with....



Oh well everyone down to the lowest common denominator.


----------



## Humid (10 February 2019)

Smurf1976 said:


> I find it truly bizarre that government would want to encourage people onto welfare rather than have them provide for themselves.




I think you’d take a 10k hit on half a mill if that sort of money is going to hurt you I think you’ll end up on the pension anyway


----------



## sptrawler (10 February 2019)

Humid said:


> I think you’d take a 10k hit on half a mill if that sort of money is going to hurt you I think you’ll end up on the pension anyway



Indian Springfield coming up.


----------



## Humid (10 February 2019)

sptrawler said:


> Indian Springfield coming up.



Dusty would be cheaper.....


----------



## HelloU (10 February 2019)

Humid said:


> nah Humid
> 
> plenty of people do not have any numbers in that box ...... and by people i mean peeps that do really hard jobs at their own risk .......... the sort that if they do not go out and look for their own work every day then they do not get paid type peeps.
> 
> That don’t pay tax?




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




Humid said:


> So the company pays the government tax and then the government gives that to you
> 
> welfare ring a bell





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.


----------



## HelloU (10 February 2019)

soz boys for that formatting horror above

did that company pay zero tax above?


----------



## Smurf1976 (10 February 2019)

Humid said:


> I think you’d take a 10k hit on half a mill if that sort of money is going to hurt you I think you’ll end up on the pension anyway



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. 

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.


----------



## Humid (10 February 2019)

HelloU said:


> 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
> 
> 
> 
> ...




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


----------



## HelloU (10 February 2019)

Humid said:


> the coy gives 30c to the tax office
> There’s your answer



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?)


----------



## Smurf1976 (10 February 2019)

HelloU said:


> 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)
> ...



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?


----------



## Toyota Lexcen (10 February 2019)

the 30% is the Governments first, 





HelloU said:


> 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)
> ...


----------



## HelloU (10 February 2019)

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?


----------



## sptrawler (10 February 2019)

Smurf1976 said:


> 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?



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


----------



## Knobby22 (10 February 2019)

sptrawler said:


> 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



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.


----------



## sptrawler (10 February 2019)

Knobby22 said:


> 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.



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


----------



## Smurf1976 (10 February 2019)

sptrawler said:


> 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.



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.


----------



## SirRumpole (10 February 2019)

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.


----------



## HelloU (10 February 2019)

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


----------



## Smurf1976 (11 February 2019)

SirRumpole said:


> 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.




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.



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




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.


----------



## Kremmen (11 February 2019)

SirRumpole said:


> 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.




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.


----------



## SirRumpole (11 February 2019)

Smurf1976 said:


> 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?




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


----------



## Knobby22 (11 February 2019)

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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## basilio (11 February 2019)

Overall the abuse of the refund of excess imputation credits is a $5 Billion a year rort used by creative accountants to ensure their very wealthy clients can become even wealthier.

On the way there will be circumstances where a small number of people who don't fall into that category lose monies as well. I don't believe we should allow the loss of $5B a year to the tax revenues to be overridden by the far smaller amounts incurred elsewhere. And it think it is disingenuous of people to point at the real (or mythical) hard done "apple pie Mom"  as the sufferer of this change and refuse to recognise the obscenely rich clients who represent the overwhelming problem.

What can happen is
1) Developing particular exemptions
2) Looking for alternative treatments of  investments and income.

Knobby got it in one
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.


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## Toyota Lexcen (11 February 2019)

That article doesn't really prove/disprove anything. 

Just various opinions on the situation. 

Labor getting concerned though.



SirRumpole said:


> 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


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## sptrawler (11 February 2019)

basilio said:


> Overall the abuse of the refund of excess imputation credits is a $5 Billion a year rort used by creative accountants to ensure their very wealthy clients can become even wealthier.
> .




The wealthy will still be able to claim the franking credits, they don't have to be creative,.
https://theconversation.com/factche...ia-paid-by-10-of-the-working-population-45229

They wont have any trouble claiming an offset.lol


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## basilio (11 February 2019)

Toyota Lexcen said:


> That article doesn't really prove/disprove anything.
> 
> Just various opinions on the situation.
> 
> Labor getting concerned though.




Actually I suggest it did prove things.  It was a fact checking analysis undertaken to explore the concerns of people the the proposed abolition refunding imputation credit would hurt low income people.

So in a very detailed paper they examined how the people most affected  did in fact have low taxable incomes - but that was the whole point of the exercise. You had to restructure your income sources to ensure your final taxable income was low enough to enable all those refund credits to become activated.


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## Toyota Lexcen (11 February 2019)

How do you mean restructure?


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## Junior (11 February 2019)

As others have mentioned here, progressive tax rates on pensions, and/or lowering the Transfer Balance Cap would be more straightforward & fair, compared to fiddling with franking credits, which will only generate new loopholes.  That way modest super balances and lower income earners can still claim their refunds, and the Government can still re-claim a significant chunk of revenue by shutting down those who are claiming large refunds.

There are many retirees out there, with relatively modest savings who rely on FC tax refunds as part of their retirement income.  It's unfair hitting these retirees, who have already copped a pay-cut when the Asset Test was re-jigged a couple of years ago.

Once you are fully retired, your ability to change your strategy or find more income is very difficult or impossible.  Bringing in new rules without grandfathering existing arrangements is unfair on those already retired, who planned their affairs during pre-retirement.


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## HelloU (11 February 2019)

if the bhp profit is already "fully taxed" at 30%, and then distributed after that tax has been paid, why is there any more tax of any sort owing on that distribution?

when my grandma gives me after tax money from her purse i do not pay any tax on it


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## Knobby22 (11 February 2019)

HelloU said:


> if the bhp profit is already "fully taxed" at 30%, and then distributed after that tax has been paid, why is there any more tax of any sort owing on that distribution?
> 
> when my grandma gives me after tax money from her purse i do not pay any tax on it



 Do you ask the government to give you the tax she paid though?


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## HelloU (11 February 2019)

if bhp put 70c of their after tax profit into my pocket then fine, i get 70c.

but if the government then want to get involved and turn around and say that i "actually" got $1 in my pocket, then also fine, i will pay tax on the $1 at my tax rate (noting the government already has 30c of that money). 

but if my tax rate is zero, and the government says i got $1, then why should i not get the $1 in my pocket. (explain why if the government says i have $1 in my pocket - like ato and centrelink say that - why i only have 70c in my pocket)


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## HelloU (11 February 2019)

it fails the logic test if the government (both ATO and Centrelink) say someone has $1 in their pocket, if they only have 70c in their pocket.


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## sptrawler (11 February 2019)

Junior said:


> As others have mentioned here, progressive tax rates on pensions, and/or lowering the Transfer Balance Cap would be more straightforward & fair, compared to fiddling with franking credits, which will only generate new loopholes.  That way modest super balances and lower income earners can still claim their refunds, and the Government can still re-claim a significant chunk of revenue by shutting down those who are claiming large refunds.
> 
> There are many retirees out there, with relatively modest savings who rely on FC tax refunds as part of their retirement income.  It's unfair hitting these retirees, who have already copped a pay-cut when the Asset Test was re-jigged a couple of years ago.
> 
> Once you are fully retired, your ability to change your strategy or find more income is very difficult or impossible.  Bringing in new rules without grandfathering existing arrangements is unfair on those already retired, who planned their affairs during pre-retirement.



Well said Junior. 
The problem is you are dealing with a majority of people, who are working and thinking smugly about there 'safe' position.
The reality hits all sooner or later, that is why when Labor get in, it will be a short period. IMO
Time will tell.


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## SirRumpole (11 February 2019)

Junior said:


> As others have mentioned here, progressive tax rates on pensions, and/or lowering the Transfer Balance Cap would be more straightforward & fair, compared to fiddling with franking credits, which will only generate new loopholes. That way modest super balances and lower income earners can still claim their refunds, and the Government can still re-claim a significant chunk of revenue by shutting down those who are claiming large refunds.




What about a requirement to include all income in calculation of rebates rather than just taxable ?


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## Smurf1976 (11 February 2019)

basilio said:


> On the way there will be circumstances where a small number of people who don't fall into that category lose monies as well. I don't believe we should allow the loss of $5B a year to the tax revenues to be overridden by the far smaller amounts incurred elsewhere. And it think it is disingenuous of people to point at the real (or mythical) hard done "apple pie Mom"  as the sufferer of this change and refuse to recognise the obscenely rich clients who represent the overwhelming problem.




That logic sounds awfully similar to the one that says it doesn't matter if we kill a few thousand civilians so long as we get the one or two terrorists we're after.

Or that we should abolish Newstart and the Disability Support Pension altogether because it's no secret that quite a few people have rorted them. That some people genuinely need assistance doesn't justify having a system which can be rorted so it's easier to get rid of it altogether.

Or that no middle aged white man should be allowed to spend time alone with any young girl, including his own daughter, because a few have done really bad things. That some men might be good parents, or in some cases the mother isn't around or even alive, doesn't justify the risk that some will do bad things.

Or that no person of whatever race should be allowed in the CBD because there's been a few causing trouble lately so it's easiest to just keep them all out. We don't know which are which, so the only option is just keep them all out based on visual appearance. 

Or we should ban the sale or possession of matches and lighters because of arsonists. Never mind people who have BBQ's or who burn wood for heating, who use blowtorches etc for legitimate purposes, who like using candles at home or in churches or who legally smoke cigarettes or cigars. None of that justifies the risk of arson so we'll ban matches and lighters. 

We could reduce the road toll to zero simply by banning the use of any vehicle with wheels on public roads. It' only a minor restriction, any use not involving wheels will still be allowed, and it's wrong to use arguments about the utility of cars or the need to transport food to shops as justification for something that has killed many thousands of people in this country alone.

All are examples where some people do the wrong thing but where implementing a blanket ban would be considered totally unacceptable due to the inconvenience, discrimination and in some cases devastating consequences for the innocent persons who become collateral damage.

Likewise I see no justification for applying a 30% rate of tax to someone with a genuine, real, honest income of $25K a year just because doing so is the simplest an easiest way to stop others rorting the system. 

Yes there no doubt are people rorting the system and yes that should be stopped. But the end doesn't justify the means when innocent people become collateral damage. Rather, the rational solution is to use the same approach we use with everything else. Outlaw the practices being used to rort the system and enforce the law.

Likewise outlawing the many other tax avoidance schemes should also be dealt with if there's a desire to put a stop to tax avoidance and raise more revenue. 

My point is more about fairness of process than any specific $ amount.


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## Smurf1976 (11 February 2019)

As an expansion on the general topic, there's an entire industry of people I'll loosely refer to as "tax advisers" which exists for one purpose only and that is to assist clients to find loopholes in taxation laws. There's far more loopholes than just those which involve franked dividends.

Moving to a simple, streamlined tax system would get rid of all such loopholes. If you don't have complexity then you don't have cracks in the system to be exploited. That's much like saying the one sure way to not have termites is to not have any wood.

What do I mean by a streamlined system?

1. Income tax scales apply to all income less allowable deductions.

2. The only allowable deductions are costs _required_ in order to earn that income plus donations to legitimate and approved charities.

3. A flat rate of GST on all goods and services with no exceptions other than medical items.

4. Review welfare rates of payment in view of the above.

5. Retain excise on "harmful" products (tobacco and alcohol). It's a complexity and in that sense is undesirable but it's perhaps a justifiable one given the non-essential and clearly harmful nature of the products it applies to.

6. Abolish fuel excise in the interests of administrative simplicity and replace it with a broad based carbon tax at a flat rate per tonne of CO2 emitted from any fossil fuel not just petrol or diesel. This avoids the complexity of different rates of tax and various rebate schemes etc whilst implementing a uniform tax on emissions for environmental reasons (noting that Australia is obligated to reduce such emissions as per international agreements). At present about two thirds of emissions are untaxed.

That gets rid of everything about trusts, voluntary super contributions, salary packaging, capital gains discounts, arguments about imputation credits, fuel rebates and indeed the entire tax "industry" in one fell swoop.

This would also facilitate a considerable lowering of income tax rates due to the greater volume of income actually being taxed. Eliminate every single loophole, capture all the income and tax it, and then you don't need a particularly high rate.

The reason it won't happen is, of course, that it gets rid of the entire tax avoidance industry.


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## SirRumpole (11 February 2019)

I would add a reasonable resource rent tax on mining and gas production.

Refer to the story below, we are losing billions in gas royalties.

https://www.smh.com.au/politics/fed...on-lost-in-resources-tax-20180305-p4z2uv.html


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## Smurf1976 (11 February 2019)

SirRumpole said:


> I would add a reasonable resource rent tax on mining and gas production.



Sounds reasonable to me.


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## sptrawler (11 February 2019)

SirRumpole said:


> I would add a reasonable resource rent tax on mining and gas production.
> 
> Refer to the story below, we are losing billions in gas royalties.
> 
> https://www.smh.com.au/politics/fed...on-lost-in-resources-tax-20180305-p4z2uv.html



Absolutely, but tax by volume not by profits, it has been shown on many occassions to be easily by passed.


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## Smurf1976 (11 February 2019)

sptrawler said:


> Absolutely, but tax by volume not by profits, it has been shown on many occassions to be easily by passed.



Yes - the design of taxes needs to be such that there's no easy way around the intent of the law.

In the specific case of gas there would be some logic in an exemption for volumes sold to Australian consumers such that the resource tax would be one on extraction for export in practice. 

Rationale for that is that there's a broader benefit in supplying gas to Australian homes and industry whereas with exports the royalties basically are the only benefit of the exercise. 

Just a thought.


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## SirRumpole (11 February 2019)

Smurf1976 said:


> Yes - the design of taxes needs to be such that there's no easy way around the intent of the law.
> 
> In the specific case of gas there would be some logic in an exemption for volumes sold to Australian consumers such that the resource tax would be one on extraction for export in practice.
> 
> ...




Just apply an export tax on gas in that case.


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## sptrawler (11 February 2019)

The other benefit of taxing by volume is, if it isn't viable, don't dig it up.

 If all you are going to do is give it away, leave it in the ground, somewhat like nickel it went down to non viable prices, the mines closed.
Now the price is rising, the mines are looking at re opening.

To use the excuse that it will cost jobs, in order to keep mines open, is illogical.
Digging the resource up to give it away, will lead to job loses, when the resource is depleted and you have nothing to show for it.
It is as though we are the World's "loser", we have to rob each other, in order to allow overseas companies to clean us out.
Meanwhile the politicians, convince us that it is good for us, weird $hit. IMO

When we are one of the richest resource Countries in the World, with one of the smallest populations, and we can't afford welfare is crazy.
We are doing something very wrong. IMO


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## Kremmen (11 February 2019)

Knobby22 said:


> 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 is totally untrue. It should end "you get the money from BHP and the government gets to keep only the money that you owe according to your personal tax rate, just like with all other income."


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## HelloU (11 February 2019)

if someone gets 70c of dividend now (and another 30c goes to the ato as a credit) both ato and centrelink say that person earns $1. based upon how many of those $1's they get that person may or may not get welfare things ........

currently, if they are a zero tax (or similar) type person then they would end up with that $1 in their pocket - and again they may, or may not, end up with welfare top ups.

under the proposed system - for those that never got welfare before - that same person will only end up with 70c of that $1 in their pocket .......so the logical extension is that there will have be a fiddle to welfare eligibility requirements to take into account credits that may not get refunded into the pockets of people.

i wonder if these newly entitled welfare recipients (cos they no longer get refunds) will get 30c of new welfare as a top up for each 70c income they earn?

now that would be hilarious.


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## basilio (12 February 2019)

I have to say this outrage at the potential loss of  dividend imputation refunds (not the actual credits..) has reached peak madness..

Once upon a time Paul Keating decided that investors shouldn't pay doble taxation on dividends that companies had already paid tax on. 

So enters the dividend imputation. If you received  a fully franked dividend it came attached with a tax credit which said that 30% tax had been paid. You could add this dividend to your personal income and hopefully not  have to pay any/much more tax.

Later on 2001/2006 some very clever financial advisors work out a way of justifying to a Liberal government that it was a crying shame if people couldn't actually use that franking credit against their taxable income  because, horror of horrors, they didn't have a taxable income  They were just so, so poor..

So they convinced the Liberal Party Government to give back real cash to these poor people instead of them using the franking credits against their  real actual income. 

With this green light in place our very clever financial advisors  created structures that enabled their very wealthy clients to not only reduce their nominal income to three fifths of FA *BUT to then  also get $5 Billion dollars a year of hard earned taxpayers dollars as a very rich cream on the cake of  tax avoidance.
*
The madness now of course is this amazing series of faux justifications for what was always just a smart alec rort of a basically good idea.


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## Smurf1976 (12 February 2019)

basilio said:


> *BUT to then  also get $5 Billion dollars a year of hard earned taxpayers dollars as a very rich cream on the cake of  tax avoidance.*




How does paying the same rate of tax that would be paid on any other source of income constitute tax avoidance?

It’s like arguing that I’m receiving taxpayer funds because I’ve hung the washing out on the line thus avoiding payment of GST on electricity that could otherwise have been used to dry the washing.

Not paying a tax and receiving taxpayer funds are very different things. Likewise I’m not receiving money from McDonald’s simply by failing to purchase their products.

As I’ve said before, why not start by cracking down on actual tax avoidance rather than those who are simply paying the same rate as everyone else?

So called salary “packaging” would be a good place to start. A lurk that’s primarily available to current high income earners and which exists for the sole purpose of avoiding tax. It’s not the only such example and would be easily removed.


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## Junior (12 February 2019)

basilio said:


> With this green light in place our very clever financial advisors  created structures that enabled their very wealthy clients to not only reduce their nominal income to three fifths of FA *BUT to then  also get $5 Billion dollars a year of hard earned taxpayers dollars as a very rich cream on the cake of  tax avoidance.*




1. It is not only the wealthy who benefit from this system.

2. The refunds are not "hard-earned taxpayers dollars", this is company tax, already paid to the ATO, being refunded to that same company's shareholders.

3. High income earners cannot reduce their taxable income by owning FF shares, if you are on a high MTR you still pay additional tax on your dividends, in addition to the 30% tax already paid by the company.

4. Introduction of the Transfer Balance Cap has served to limit the size of tax refunds able to be claimed by an SMSF.  As a few here have stated, simply lowering this cap, or introducing a higher earnings tax rate on super balances above the cap, would be simpler, fairer and more effective than killing refundable FCs all together.

5. Very careful consideration needs to be given to small business owners who utilise a company structure and pay themselves dividends....many of these businesses rely on the franking credit system as it currently exists.


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## basilio (12 February 2019)

Smurf I have little argument against cracking down on other tax avoidance activities. But this particular rort is not just a series of creative accountancy designed to reduce taxable income to a minimum. It goes a step further and takes $5B a year from the overall tax take..

Someone else on ASF (can't quite remember) made an elegant analysis of the this rort. A company pays it company tax at $30% and then passes on its fully franked divided to you as a shareholder. You as a shareholder receive the dividend and a separate franking credit representing the tax the company has paid.

*If you end up getting this franking credit back as cash you are in effect getting back the company tax that as paid on the original enterprise. *Voila ! The original enterprise in effect has paid no tax to the Tax Office because it's original tax payment has, in a direct line, been returned to it's shareholder.

I wonder if there arn't a number of companies which have created a structure where the company has nominally paid it's company tax but the shareholders have all managed to create financial structures with zero taxable income  and therefore on  receiving  the dividends can just pull back the company tax in full.

Wouldn't that be clever ?

____________________________________

Perhaps my last observation is what Junior is referring to with  businesses where the owners see up a company structure, pay themselves dividends and then, perhaps, get back the franking credits as a cash refund (ie their original company tax)  because they end up with a minimum taxable income.


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## Junior (12 February 2019)

basilio said:


> Someone else on ASF (can't quite remember) made an elegant analysis of the this rort. A company pays it company tax at $30% and then passes on its fully franked divided to you as a shareholder. You as a shareholder receive the dividend and a separate franking credit representing the tax the company has paid.
> 
> *If you end up getting this franking credit back as cash you are in effect getting back the company tax that as paid on the original enterprise. *Voila ! The original enterprise in effect has paid no tax to the Tax Office because it's original tax payment has, in a direct line, been returned to it's shareholder.




One of the reasons these strategies have become so popular, is that we now have one of the highest company tax rates in the world.  And thanks to unwillingness of Government to address bracket creep, very high rates of income tax too.

For small to medium size businesses in particular.....paying 30% of all profits to the government, and then further tax if you wish to pay yourself a salary, plus payroll tax etc.  Australia is becoming increasingly out of touch with tax rates globally, and we keep giving more free kicks to big business & big government.

On your last point, yes, that's the type of strategy/business I'm referring to.


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## PZ99 (12 February 2019)

This article covers the whole deal if you have a spare 5 minutes 

*Taxable profits*
If a company's income exceeds its expenses, it has made a profit, which in ordinary circumstances is taxed at the legislated rate, which for big companies such as Telstra and the big banks is 30 cents in the dollar.

*Dividends*
After the tax is taken out, companies can pay some of what's left to shareholders as a dividend, one for each share.

Last September Telstra paid shareholders a dividend of 15.5 cents per share. The previous March it was 11 cents.

*Income tax*
Australians pay tax on what they earn, unless the income is classified as not taxable or is below the $18,200 tax-free threshold.

The marginal rate (the rate on extra income) climbs with income, so that anyone earning more than $180,000 (the top threshold) pays 45 cents on each extra dollar earned.

Dividends are taxable and so are taxed along with other income.

*Dividend imputation*
In 1987 in what he hailed as a world first, Labor treasurer Paul Keating introduced a rebate for each tax-paying dividend recipient.

Taken off their tax would be the company tax the company had paid on the part of the profit that had been handed to them as a dividend.

It would greatly reduce the existing bias in the tax system which taxed interest income once, but dividend income twice.

Here's how it would work at today's tax rates.


Jill owns 1,000 Telstra shares
Over the period of a year she gets dividends of $265
To provide them, Telstra made a profit of $379 on which it paid $114 tax
Jill pays tax on the full $379 but gets a credit of $114 that can be taken off any other tax she owes that year
As with other tax credits, it can be used to cut Jill's tax bill as far as zero, but not to turn it negative. It can't be handed to her in cash.
As Mr Keating put it, the tax paid at the company level would be imputed, or allocated to shareholders by means of imputation credits.

But not to all of them. Non-resident (overseas) shareholders couldn't get them, and nor could shareholders whose dividends hadn't been franked.

*Franking credits*
As Mr Keating explained, the tax credit only applied to the extent to which full Australian company tax had been paid; to the extent to which the dividends had been franked (stamped) to indicate that tax had been paid.

Not every company pays the full 30 cents in the dollar in every year. Often it is carrying forward previous losses.

Only dividends from profits on which full tax had actually been paid were to be marked "fully franked". Dividends on which tax had been partly paid were to be marked "partly franked".

Fully franked dividends became sought after, because they brought with them the biggest franking credits.

In a useful side effect, dividend imputation encouraged companies that wanted to look after their shareholders to pay full tax.

*Refunds to non-taxpayers*
Although the particular Australian design arguably was a world first, dividend imputation or something similar is not unusual.

Many countries have systems in place that to a greater or lesser degree ensure company profits are taxed only once — among them Canada, New Zealand, Chile, Mexico, Malaysia and Singapore, whose system is called "one-tier" tax.

Many that did adopt it later moved away from it, using the money saved to cut headline tax rates; among them Britain, Ireland, Germany and France.

What is unusual is what Australia did next. In 2001 after more than a decade of dividend imputation, the Howard government supercharged it, paying out franking credits in cash to shareholders who didn't have any or enough tax to offset.

From the point of the view of these non-taxpayers, dividend imputation became a negative income tax: instead of them paying the government money, the government paid them money.

As far as is known, it is an enhancement that has not been copied anywhere.

On one hand, it makes sense because it treats non-taxpayers the same as taxpayers by refunding them the same amount of company tax.

On the other hand, it does not make sense because it means that instead of being taxed once (at either the company or the personal level) as was the original intention, company profits can escape tax altogether.

*Untaxed super*
From 2007 the change mattered to many more retirees.

The Howard government's "Simplified Superannuation" package made super benefits paid from a taxed source (that's most super benefits outside of the public service) tax free when paid to people aged 60 and over.

A quirk in the wording of the Act went further. Not only did super withdrawals become tax free, they also became no longer included in "taxable income" and so didn't need to be declared on tax forms.

This meant that many retirees on reasonable super incomes were no longer taxed at reasonable rates on their other income, including income from shares which could be untaxed if it fell below the tax free threshold.

And because of the 2001 decision to send dividend imputation cheques to shareholders who were untaxed, these retirees who suddenly found themselves untaxed also got imputation cheques mailed to them from the government.

Self-managed super funds, whose income is tax exempt in the retirement phase, also got imputation cheques.

In July 2017 the Turnbull government wound back tax-free super by limiting it to accounts with less than $1.6 million. The restriction was to hit 1 per cent of super-fund members.

*Labor's proposal*
Treasury's 2015 tax discussion paper prepared for the Abbott government referred to "revenue concerns" about dividend imputation cheques.

They cost the budget just $550 million in the year the Howard government introduced them, but $5 billion per year by 2018 and were on track to cost $8 billion.

Labor's proposal, announced in mid-March 2018, was to return the divided imputation system to where it had been before Howard changed it in 2001, and to where it still is elsewhere. Tax credits could be used to eliminate a tax payment but not to turn it negative.

Labor allowed exceptions for tax-exempt bodies such as charities and universities who would continue to receive imputation cheques alongside dividends.

*Pensioner guarantee*
Two weeks later, in late March, Labor amended its policy by adding a "pensioner guarantee". Pension and allowance recipients, even part-pensioners, would be exempt from the changes and would continue to receive cash payments.

Also exempt would be self-managed super funds with at least one member who was receiving a pension or part-pension at the date of Labor's announcement, March 28, 2018.

The change cost relatively little (the budget saving over the next four years fell to $10.7 billion from $11.4 billion) because most of the imputation cheques go to Australians with too much wealth to get even a part pension.

*Self-managed super funds*
Retail and industry super funds pool their members' contributions, and so almost always have tax to reduce, meaning most would be unaffected by the withdrawal of cash credits.

Self Managed funds usually represent just one person, or a couple; their funds aren't pooled with anyone else's.

This means that in the retirement phase, where fund earnings are untaxed, most do not have enough tax to reduce. So they get imputation cheques, which they would no longer get when Labor's policy was implemented.

The Parliamentary Budget Office expects some self-managed funds to change their investment mix and some owners of self-managed funds to transfer their investments to retail or industry funds.

*Retirement tax*
There is no such thing. The phrase is shorthand for Labor's proposal to withdraw dividend imputation cheques from dividend recipients who are outside the tax system.

https://www.abc.net.au/news/2019-02...-imputation-retirement-tax-explained/10799230


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## Smurf1976 (12 February 2019)

basilio said:


> *If you end up getting this franking credit back as cash you are in effect getting back the company tax that as paid on the original enterprise. *



Correct.

If I own shares in xyz then I am a part owner of the company. "Company" paying tax = I am paying tax since I am part owner of the company.

The tax free threshold is 18,200 so for simplicity let's say that's my actual income, $18,200.

If I earn that income working as an employee for any business or government then how much tax do I pay on that income? Zero.

If I earn that income as an independent contractor or sole trader then what tax do I pay? Zero.

If I earn that income from bank interest, bonds or speculating on currencies then what tax do I pay? Zero.

If I earn that income from capital gains trading shares what tax do I pay? Zero.

If I earn that income from franked dividends paid by an Australian company then what tax do I pay? $5460 under Labor's proposal.

Now if we were going to charge everyone a minimum 30% rate of tax on their income then that would at least be consistent. That the intent is to charge this tax only on franked dividends seems an anomaly to me and a pointless one at that - who in their right mind is going to choose the only form of investment which attracts the tax? Not many.

End result is money gets pushed into other investments, thus helping keep the ASX indices down, and very little tax is collected. 

The winners from this are? Well that would be some super funds who can in practice avoid the tax and those pushing alternative forms of investment which avoids the tax. Not taxpayers, they won't get the money, and not individuals who are just being pushed into other investments.


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## qldfrog (12 February 2019)

Smurf1976 said:


> I find it truly bizarre that government would want to encourage people onto welfare rather than have them provide for themselves.



Smurf, i already mentioned it but do not be surprised, the globalists know that once 50pc or more of the population is on welfare, they maintain power forever.at each election, your platform is take more from the rich, give it to the majority
Lead to unskilled immigration..importing voters...and policies like this one.
I encourage you to follow the socialist experience in France..that i know well but also Spain etc
Shavez style countries in a generation....but very wealthy elites...


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## HelloU (12 February 2019)

basilio said:


> I have to say this outrage at the potential loss of  dividend imputation refunds (not the actual credits..) has reached peak madness..
> 
> Once upon a time Paul Keating decided that investors shouldn't pay doble taxation on dividends that companies had already paid tax on.
> 
> ...



to add to the history .......
Bas, In 1998 kim beazley and labor ran an election campaign on "fairer tax systems" for australia.

A benchmark policy was:  “Labor will provide a cash refund for those shareholders who can't make use of their imputation credits because they do not pay income tax. This will be a significant benefit for all Australians.”

the liberals won and here we are today cos it was bipartisan.


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## sptrawler (12 February 2019)

brisman said:


> No one is forcing you to be overweight in tax and dividend paying Australian companies and have all your investments in super. You've done it for the tax perk?  There's a reason why this discussion is unique to Australia?



If you retired in the last 20 years, you are overweight in Australian shares with dividends, it is the only thing that gives any return at all, don't forget you have minimum drawdowns.
So if you are 65 you are treading water, if your 70 you are going backwards, with Bill's idea you will be going backwards from day 1.
Don't forget, you have to pay the pension or be fined, that will mean either bank interest or selling the income producing shares.
It will just turn people off super, as there are no minimums when the money is held outside super, so you can tailor the drawdown to suit your purse.
It will be interesting to see what happens, I know I will be withdrawing 50% of mine, if it comes in.


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## HelloU (12 February 2019)

OT but following others
(i have not seen too many pension phase smsf's that have reduced capital over the last 20 years after minimum withdrawals) ...... my observation, and maybe why things had to change.

with the new super cap rules, if you start with $1M6 and produce *zero annual income* u r near 100 when things get tricky ....even allowing a little bit for inflation.

what else:  under the new non-concessional rules it is very difficult (for young peeps in the future) to build balances greater than $1M6 cap ........ possible but not really a thing anymore.

When peeps are talking about rich people today that may have $1M6 tax free and another $3M in accumulation as a tax dodge...... well they are gunna die eventually and solve that one-off issue if too tricky to fix with pen strokes right now.


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## sptrawler (12 February 2019)

HelloU said:


> OT but following others
> (i have not seen too many pension phase smsf's that have reduced capital over the last 20 years after minimum withdrawals) ...... my observation.
> 
> with the new super cap rules, if you start with $1M6 and produce *zero annual income* u r near 100 when things get tricky ....even allowing a little bit for inflation.



There will be very few, who have the $1.6m after the latest share market rout. IMO.
The options will be go to Industry Funds which aren't affected, or spend it. IMO


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## HelloU (12 February 2019)

yeah spt, but that us why the drawdown is % based and not a fixed $ figure.The less balance, then the less u have to drawdown.

i think there would be many smsf pension peeps that have not seen a reducing balance .....and all this may be a new experience for them. if the fund balance gets low then the old age pension is there so annual income for all old peeps has a floor......... that is how the system is designed to work.

Everyone in old age has a known minimum income level .....and some are above this cos they have tucked away money over the years (to be spent in their old age, not to be kept forever as a tax dodge).

i actually think that if the super balance is not reducing in pension phase then it really is a waste of time for broader australia - and if true we may as well get rid of super and just give all old peeps the old age pension and tax every other cent of their other income at marginal rates.


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## Humid (12 February 2019)

Smurf1976 said:


> Correct.
> 
> If I own shares in xyz then I am a part owner of the company. "Company" paying tax = I am paying tax since I am part owner of the company.
> 
> ...




They would if they were “taxpayers”


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## HelloU (12 February 2019)

Humid said:


> They would if they were “taxpayers”



it is the logic i struggle with ......

some are adamant that the correct tax to be paid on company profits is 30c in the dollar and this must stay with the tax office. 

so what is the reason for then asking some dividend receivers to then pay more tax than the 30c already paid?


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## sptrawler (12 February 2019)

HelloU said:


> i actually think that if the super balance is not reducing in pension phase then it really is a waste of time for broader australia - and if true we may as well get rid of super and just give all old peeps the old age pension and tax every other cent of their other income at marginal rates.



Which from my understanding, is exactly what the U.K, Canada and NZ do. 
Our system is just punishing those who saved, to self fund, while rewarding those who spend everything they earn.


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## sptrawler (12 February 2019)

HelloU said:


> it is the logic i struggle with ......
> 
> some are adamant that the correct tax to be paid on company profits is 30c in the dollar and this must stay with the tax office.
> 
> so what is the reason for then asking some dividend receivers to then pay more tax than the 30c already paid?



It is ideologically driven, anyone who has money shouldn't have, those who haven't should have.
It's Australia's new vision, the criminals are just a result of the system, the poor are poor because of things outside their control, those with money found it under a tree so really it isn't theirs.


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## Toyota Lexcen (12 February 2019)

Spot on



sptrawler said:


> It is ideologically driven, anyone who has money shouldn't have, those who haven't should have.
> It's Australia's new vision, the criminals are just a result of the system, the poor are poor because of things outside their control, those with money found it under a tree so really it isn't theirs.


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## Humid (12 February 2019)

HelloU said:


> it is the logic i struggle with ......
> 
> some are adamant that the correct tax to be paid on company profits is 30c in the dollar and this must stay with the tax office.
> 
> so what is the reason for then asking some dividend receivers to then pay more tax than the 30c already paid?



Because it’s income when you get it


sptrawler said:


> It is ideologically driven, anyone who has money shouldn't have, those who haven't should have.
> It's Australia's new vision, the criminals are just a result of the system, the poor are poor because of things outside their control, those with money found it under a tree so really it isn't theirs.




Let’s put you theory to test
Penalty rates
Funny how loud you scream when something effects you 
These refunds are contrived


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## sptrawler (12 February 2019)

Humid said:


> Because it’s income when you get it
> 
> 
> Let’s put you theory to test
> ...



The same could be said for penalty rates.


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## HelloU (12 February 2019)

Humid said:


> Because it’s income when you get it
> 
> 
> Let’s put you theory to test
> ...



humid said   *"Because it’s income when you get it" *

but the whole point of the labor policy is that people WILL NOT get it ........  does franking credit $$ still count as income when you DO NOT get it?


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## sptrawler (12 February 2019)

HelloU said:


> humid said   *"Because it’s income when you get it" *
> 
> but the whole point of the labor policy is that people WILL NOT get it ........  does franking credit $$ still count as income when you DO NOT get it?



That is the whole problem, those on welfare get it, those in Industry Funds get it, the rich get it, the only ones who don't get it are those who bought shares to get income when they aren't working.
This is why 'normal' Australians struggle to get ahead, it is the "I'm all right Jack stuff you" mentality.
What epitomises it, is Humid's constant referral to penalty rates, it obviously effects him so his annoyance is understandable.
But if you apply the same logics to weekend penalty rates, as is being applied to the franking credits, it is just the same.
Why should someone who works on a Saturday and Sunday, get the same amount of money, as someone who does a lot more hours Mon to Fri doing the same job?
It could be argued the person who works Sat/Sun, is doing so because their partner works Mon-Fri. Whereas a single mum with children can only work Mon-Fri, because they don't have a partner to look after the kids on the weekend.
So in reality it is a perk for the wealthy two income family.
Wouldn't it be much fairer, to have an Industry annualised salary, where the weekend penalty rates are factored in to the hourly pay rate, and all the employees get it?
The same with the franking credits, those on welfare get the credits, those who don't qualify for welfare lose it.
Wouldn't it be "fairer" to say, well those couples on welfare get a tax payer pension of $35,500+ perks+franking credits, which would add up to $50,000 equivalent.
So those who are on a self funded pension, get the franking credits up to $50k and those on $50k- $100K pay 15% on the franking credits, those above $100k pay 30% on the franking credits. Or some other formula, but the ridiculous situation labor are proposing, is ludicrous. Every working person will aim for a part pension, it is a no brainer.
But who said anything is about fairness, if it was about fairness, the politicians would pull their noses out of the trough.
The only up side I can see with all Labors proposals, is they will only get one term. IMO


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## Smurf1976 (12 February 2019)

sptrawler said:


> That is the whole problem, those on welfare get it, those in Industry Funds get it, the rich get it, the only ones who don't get it are those who bought shares to get income when they aren't working.
> This is why 'normal' Australians struggle to get ahead, it is the "I'm all right Jack stuff you" mentality.



It certainly does seem to be one hell of a kick to those in the middle who have chosen to not be on welfare by means of self-funding their own protection against unemployment etc and their eventual retirement.

The trouble is we have devolved into a very divided society with various groups picked off one at a time to avoid any serious resistance. That's the oldest trick in the book, somewhat perversely given this is a Labor proposal it's the tactic the unions fear most, and the outcome is always bad for the workers.

The grey hair brigade ought to have stood firmly behind the hospitality workers and others affected by the penalty rates issue. Likewise the overwhelmingly young people working in hospitality would, if they saw the bigger picture, be standing firmly behind the mostly older people concerned about imputation credits. United we stand, divided we fall. Touch one touch all.

Not too long ago there was far less division in Australian society than we have today. The CEO of the company you worked for was paid ~ 3 times what you were paid, bank managers were held in high regard and nobody looked down on anyone doing legitimate work (roadworks crews etc cop heaps of abuse these days for those not aware).

The way we're going is not good.


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## PZ99 (12 February 2019)

Smurf1976 said:


> The grey hair brigade ought to have stood firmly behind the hospitality workers and others affected by the penalty rates issue.



To be fair, they probably did and still do. Most people don't agree with penalty rate cuts because it affects a hell of a lot of low paid workers. The only people who agree with cutting them are people who don't get them or don't need them.

However it's good to see the empathy for vulnerable people affected by the loss of franking credits. If the same empathy could be demonstrated for weekend workers that would be even better. It might even convince the ScoMo Govt to reinstate the penalty rates. I'd vote for them if they did.

As it stands now weekend workers will lose money if the Libs win.
And self funded retirees will lose money if Labor win.

I'm not affected by either but I still take the view the franking credits will remain because most of the parliament will support them after the election. Penalty rates however are still being cut.


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## Humid (12 February 2019)

People on here bleating about Labor’s policy driving more onto the pension if we keep going withe the current mobs casualization and flat rates of pay along with automation the future is grim


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## Humid (12 February 2019)

HelloU said:


> humid said   *"Because it’s income when you get it" *
> 
> but the whole point of the labor policy is that people WILL NOT get it ........  does franking credit $$ still count as income when you DO NOT get it?




Why can’t foreign investors get a cash refund do you think?


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## Smurf1976 (12 February 2019)

Humid said:


> if we keep going withe the current mobs casualization and flat rates of pay along with automation the future is grim



No disagreement from me there.

That I see unfair aspects in one of Labor’s key policies shouldn’t be taken as meaning I agree with the Coalition’s various ideas.

That both major parties are attacking at least one group in society is a huge part of the problem.


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## sptrawler (12 February 2019)

The ridiculous outcome is, you will be able to earn more on welfare, than you can ever generate by saving while working, which is ok by me.
But you want to talk about unsustainable?


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## HelloU (12 February 2019)

so are peeps uncertain if franking credit $$ should count as income when you DO NOT get it? 


speaking of foreigners, (which i wasn't) 
sounds like commy russia

"OK everyone, line up to get your pay envelope. Each envelope has your weekly 10 rubles pay in it"

Worker takes envelope from government official, and worker says "something is wrong, this envelope is empty" 

Government peep says "Once you have taken the envelope then the government is no longer responsible for it. Back to work now, and come back next week to get your next pay". 

best country in the world cos at years end each worker got paid 520 rubles .....or did they?


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## sptrawler (12 February 2019)

Just did a back of the napkin, if you have assets less than $850k not including your own home, and earn less than $79k you get part pension. 
Well it is a no brainer really.
30,000 NAB + franking credit = bingo. lol


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## Humid (12 February 2019)

HelloU said:


> so are peeps uncertain if franking credit $$ should count as income when you DO NOT get it?
> 
> 
> speaking of foreigners, (which i wasn't)
> ...




Yeah foreigners......they don’t pay income tax either


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## Humid (12 February 2019)

sptrawler said:


> Just did a back of the napkin, if you have assets less than $850k not including your own home, and earn less than $79k you get part pension.
> Well it is a no brainer really.
> 30,000 NAB + franking credit = bingo. lol





Napkin 
At least you can afford to eat out.......paper or linen?


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## Kremmen (13 February 2019)

basilio said:


> *If you end up getting this franking credit back as cash you are in effect getting back the company tax that as paid on the original enterprise.*



And this is exactly the same whether you get it as cash or as a credit against other tax!


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## HelloU (13 February 2019)

Kremmen said:


> And this is exactly the same whether you get it as cash or as a credit against other tax!




correct, 
that is the thing that the peeps who support the labor idea cannot explain with finance logic ..........
how come the government wants more than 30c tax if they are not prepared to refund some of that 30c............

i mean the 30c either falls under the company tax system, or it falls under the individual tax system.


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## willy1111 (13 February 2019)

sptrawler said:


> Just did a back of the napkin, if you have assets less than $850k not including your own home, and earn less than $79k you get part pension.
> Well it is a no brainer really.
> 30,000 NAB + franking credit = bingo. lol




Is the franking credit included as income though?

30,000 NAB Shares - NAB last year paid $1.98 per share fully franked, therefore 30,000 * 1.98 = $59,400, this represents 70% and is paid into your bank account - the franking credit is $25,457 (59,400 / 7 *3) thus total taxable income is $84,857 = over the $79K income and no pension = lose the franking credit refund.

About 27,500 NAB shares should get it under the $79K - but then what if NAB increases their Dividend?

One would have to carefully monitor it, selling down shares and going on overseas trips to stay under


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## rogue1 (16 February 2019)

willy1111 said:


> Is the franking credit included as income though?
> 
> 30,000 NAB Shares - NAB last year paid $1.98 per share fully franked, therefore 30,000 * 1.98 = $59,400, this represents 70% and is paid into your bank account - the franking credit is $25,457 (59,400 / 7 *3) thus total taxable income is $84,857 = over the $79K income and no pension = lose the franking credit refund.
> 
> ...




Decrease is more likely, I hear...


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## kahuna1 (16 February 2019)

NAB dividend likely to go to $1.88 if not 1.85 then possibly $1.70 in a year or two.
Hence the discount of yield on paper at least v share price.


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## sptrawler (16 February 2019)

The Banks, will go down and will go up, the population won't get smaller. IMO


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## qldfrog (16 February 2019)

Banks overall are required everywhere to lower their leverage, basel,etc etc  their roi will decrease
They also risk serious headache in both oversea borrowing in the next crisis and a real estate crash decimating their assets, on the other hand, banks will always be there in a form or another..and activity in australia will increase on the long term.just need to invest in the sweet spot time wise


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## basilio (9 May 2019)

The Liberal government is rolling out it's scare campaign to convince retirees that the proposed change to dividend imputation rebates will send Nanna into the streets. (Only a slight exaggeration here .)
The Conversation website did an investigation to see who would be targeted by the proposals.

Check it out.

*  It’s hard to find out who Labor’s dividend imputation policy will hit, but it is possible, and it isn’t the poor  *
May 8, 2019 11.37am AEST
Labor’s proposal to end cash refunds of unused dividend imputation credits is highly targeted.

It certainly doesn’t apply to age pensioners, even part pensioners, courtesy of Labor’s Pensioner Guarantee.

Self managed super funds set up by pensioners before the announcement are also exempt. Nonetheless it is likely that some pensioners will set up self-managed accounts in full knowledge of Labor’s proposal (the Treasury is reported expect 3,000 to 5,000 per year) which is where the Coalition’s claim that 50,000 pensioners will be affected come’s from.* It’s 50,000 over a decade.*

*Australia has 2.5 million age pensioners.*
Charities and not-for-profit organisations would also be exempt and would continue to receive cash refunds of tax paid by companies that paid them dividends.

Labor says the remaining cash refunds come at a significant cost (about A$5 billion per year), that they benefit wealthier people and that the money could be better spent on those less well off.

How did it come to this?

https://theconversation.com/its-har...ut-it-is-possible-and-it-isnt-the-poor-116370


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## HelloU (9 May 2019)

this year
total franking credits refunded ........$5B

welfare spend ....$175B
this year


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## Bill M (10 May 2019)

basilio said:


> The Liberal government is rolling out it's scare campaign to convince retirees that the proposed change to dividend imputation rebates will send Nanna into the streets. (Only a slight exaggeration here .)
> The Conversation website did an investigation to see who would be targeted by the proposals.




I went to read the Conversation website and it says this at the end it's article.
---
"The results tell a clear story.

The largest average benefits are paid to the wealthiest group."
---

What it does not tell you is what happens to the low income self funded retirees who are NOT on any government benefits. If someone is earning around 25K a year and is receiving 3k a year of franking credit rebates it brings that income up to 28K a year. We are the ones who can least afford this. To this day NO ONE can tell me why someone who receives a $10 a week government pension is allowed to keep his franking credits where as the person who gets zero can not. What an absolutely dumb thought out hit on the elderly. I just hope there is enough clued up seniors out there who will vote against this policy.

Here's and old video which explains how those who will be hit feel.


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## PZ99 (10 May 2019)

You notice at 1:15 the woman says most people don't know or care because the moment you state you own shares you must be a rich retiree - the Liberals need to focus on that in their pitch, and so far... they haven't. Maybe they could run that very video over the next week.


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## Junior (10 May 2019)

basilio said:


> It certainly doesn’t apply to age pensioners, even part pensioners, courtesy of Labor’s Pensioner Guarantee.
> 
> Self managed super funds set up by pensioners before the announcement are also exempt. Nonetheless it is likely that some pensioners will set up self-managed accounts in full knowledge of Labor’s proposal (the Treasury is reported expect 3,000 to 5,000 per year) which is where the Coalition’s claim that 50,000 pensioners will be affected come’s from.* It’s 50,000 over a decade.*




The Pensioner Guarantee is very poor policy.  It is hit and miss.



> Two weeks later, in late March, Labor amended its policy by adding a “pensioner guarantee”. Pension and allowance recipients, even part pensioners, would be exempt from the changesand would continue to receive cash payments.
> 
> Also exempt would be self-managed super funds with at least one member who was receiving a government pension or part-pension at the date of Labor’s announcement, 28 March 2018.




So....an SMSF with ONE MEMBER on a part-pension, on a random arbritrary date, will be completely exempt from the policy.....many SMSFs have 4 members.  So you could have a fund with 3 wealthy members, and one member on a part pension in 2018, and they will get the full benefit of franking credits.  

But you could have another SMSF run by a couple of limited means, who retire in 2019 and start claiming age pension, and their SMSF will be ineligible?  So they simply move their super into a retail or industry fund, OR buy shares outside of super, and they can now claim franking credit refunds?

Terrible policy.  It's complex and easy to get around, in its current form.  

Why not simply cap the size of refunds per individual?


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## Bill M (10 May 2019)

Junior said:


> Why not simply cap the size of refunds per individual?



This would be the most logical solution, thanks for mentioning that. I wonder why they didn't take that road? I mean, aren't they suppose to be looking at helping those on low incomes? Seems not.


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## Junior (10 May 2019)

Bill M said:


> This would be the most logical solution, thanks for mentioning that. I wonder why they didn't take that road? I mean, aren't they suppose to be looking at helping those on low incomes? Seems not.




I can't understand why this wasn't the proposal from day one.  Say franking credit refunds currently 'cost' $5billion per year.  Look at a cap which brings the cost down to $1 billion (say $5,000 per individual per annum, or a cap for an individual and a separate cap per SMSF).  Then the Government can do what they always do, never index the cap, so the cost of the policy naturally diminishes over time.


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## Knobby22 (10 May 2019)

Junior said:


> The Pensioner Guarantee is very poor policy.  It is hit and miss.
> , OR buy shares outside of super, and they can now claim franking credit refunds?
> ?



I don't think that is true, Junior. I think there will be no franking credit refunds whatsoever. (unless you are a pensioner).


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## basilio (10 May 2019)

Junior said:


> I can't understand why this wasn't the proposal from day one.  Say franking credit refunds currently 'cost' $5billion per year.  Look at a cap which brings the cost down to $1 billion (say $5,000 per individual per annum, or a cap for an individual and a separate cap per SMSF).  Then the Government can do what they always do, never index the cap, so the cost of the policy naturally diminishes over time.




If Labour wins the election  they will need to deal with a  Senate . At that stage there will be horse trading to get their policies passed.
I reckon the franking credits tax will end up being diluted probably along the lines your proposing to ensure it's passage. The intention of the legislation is to target the creative use of refunds to reward high wealth individuals or companies.


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## Junior (10 May 2019)

Knobby22 said:


> I don't think that is true, Junior. I think there will be no franking credit refunds whatsoever. (unless you are a pensioner).



My point is, the Pensioner Guarantee protects those on a pension at May 2018 who has a SMSF.....so presumably if you start claiming age pension in 2019, you are not protected.  However, you are now a pensioner, so you can claim refunds personally, but not through an SMSF?


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## Knobby22 (10 May 2019)

Junior said:


> My point is, the Pensioner Guarantee protects those on a pension at May 2018 who has a SMSF.....so presumably if you start claiming age pension in 2019, you are not protected.  However, you are now a pensioner, so you can claim refunds personally, but not through an SMSF?




 The legislation isn't written so there is speculation.
You may be correct on that point. I was thinking you would be able to claim as long as you are below the asset limits but it would be easier to implement what you state.

I originally meant to elude to people that have little income due to the fact they are non working spouses or on social security that they would not receive the franking credits.


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## Toyota Lexcen (10 May 2019)

Xenophon was proposing the refund is grandfathered like NG


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## Humid (10 May 2019)

https://www.betootaadvocate.com/unc...cial-future-like-they-ruined-the-environment/


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## Smurf1976 (11 May 2019)

basilio said:


> It certainly doesn’t apply to age pensioners, even part pensioners, courtesy of Labor’s Pensioner Guarantee.




What about those who don't qualify for the pension?

They're the ones most needing to fund themselves in the first place after all and the ones who would seem to be worst hit by all of this.


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## Smurf1976 (11 May 2019)

Bill M said:


> What it does not tell you is what happens to the low income self funded retirees who are NOT on any government benefits. If someone is earning around 25K a year and is receiving 3k a year of franking credit rebates it brings that income up to 28K a year. We are the ones who can least afford this. To this day NO ONE can tell me why someone who receives a $10 a week government pension is allowed to keep his franking credits where as the person who gets zero can not. What an absolutely dumb thought out hit on the elderly.



It's not just those who are elderly but anyone who is no longer working and not claiming welfare.

The classic example would be someone who worked in an occupation where working into their 60's isn't a practical option.

Their options are thus self funded using investments outside superannuation or go on the dole and jump through all the silly hoops of applying for jobs they've got zero chance of getting and doing pointless "training" courses that might be interesting but which they'll never apply in the context of employment.

Suffice to say that if such people are self funding their retirement, using money they've already paid tax on when they earned it, at no cost to taxpayers then I'm more than happy with that and there's no need to be slapping a special high rate of tax on their income.


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## sptrawler (12 May 2019)

basilio said:


> The Liberal government is rolling out it's scare campaign to convince retirees that the proposed change to dividend imputation rebates will send Nanna into the streets. (Only a slight exaggeration here .)
> The Conversation website did an investigation to see who would be targeted by the proposals.
> 
> Check it out.
> ...



SMSF set up before the announcement are exempt !!!!
I don't think so.


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## sptrawler (12 May 2019)

The whole point of the stopping smsf from getting the franking credits, is to make SMSF less attractive and force the members over to industry funds, as simple as that.


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## Knobby22 (12 May 2019)

Nah, the point is to provide billions of dollars to the coffers to spend on other things and win the election.


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## Humid (13 May 2019)

The whole point of the starting smsf getting the franking credits, is to make SMSF more attractive and to get the members out of industry funds, as simple as that.


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## Junior (13 May 2019)

Humid said:


> The whole point of the starting smsf getting the franking credits, is to make SMSF more attractive and to get the members out of industry funds, as simple as that.




Members of industry and retail funds also benefit from franking credits.


----------

