Budget 2013

[qldfrog]

It would be absolutely impractical.

that is a "must have"to be a labor policy, and you forgot costly..So must be true

disclaimer: I did not check the subject just having some smile...

 

[sptrawler]

I've done some digging to find details about this, not having heard SMSFs mentioned at all during the Treasurer's speech.

This is the relevant extract:


This says "will be extended to include all large entities in the PAYG system.......".
My SMSF has never been attached to the PAYG system and as far as I'm aware, SMSFs are simply required to prepare and submit an annual tax return and audit. I have never heard of any which submit an annual tax return. It would be absolutely impractical.

That's only if your SMSF isn't required to pay tax.
If your fund is in the accumulation phase and doesn't have tax offsets e.g franking credits, to cover tax payable, then it is subject to PAYG.
Also if you are under 60 and on an account based pension, one would think it will effect you.

 

[Julia]

that is a "must have"to be a labor policy, and you forgot costly..So must be true

disclaimer: I did not check the subject just having some smile...

Yep, understood qldfrog.

I've just been reading Judith Sloan's comment and she says on this:

But the Treasurer pushed on with a series of badly thought out, and economically harmful, measures to underpin his delusion. Chief among these measures was the decision to change the periodicity of company tax payments from quarterly to monthly.

I'd be surprised if she failed to comment if SMSFs were now to be required to submit monthly tax returns.

Meanwhile, on The Drum, Barrie Cassidy once again shows his true colours:

Budget 2013: Keep calm and carry on

By ABC's Barrie Cassidy

Well, at least they didn't panic.

Despite facing an uphill battle all the way to the election in September, the government resisted the temptation to try and buy its way back into office.

There were no handouts, just a reliance on a steady and unglamorous pursuit of continuing economic strength and a modest investment in the future.

In short, the government has made the best of a bad situation.

 

[Ves]

ISMSFs are simply required to prepare and submit an annual tax return and audit.

Not if they have notional tax of more than $8,000 and have a tax liability

 

[Julia]

I have never heard of any which submit an annual tax return. It would be absolutely impractical.

Obviously, I should have said 'a monthly tax return'.
Let's see what the detail is in tomorrow's papers.

 

[sptrawler]

Not if they have notional tax of more than $8,000 and have a tax liability

Thanks Vespuria, I didn't know what the threshold was.
Just shows how the stroke of a pen can change everything.
If then they remove the tax exemption from pensions after 60, it would really throw a cat among the pigeons.

 

[craft]

My SMSF has never been attached to the PAYG system and as far as I'm aware, SMSFs are simply required to prepare and submit an annual tax return and audit. I have never heard of any which submit an annual tax return. It would be absolutely impractical.

All SMSF's are already subject to PAYG, if you pay enough tax - many don't because of franking credits or zero tax rates. Unless your taxable income already has you making quarterly payments, you won't have to worry about it moving to monthly. In reality, very little extra work going from quarterly to monthly payments - you still only need an annual return. Just change the periodic payment amount and frequency, unless you want to vary your instalment amount.

 

[Ves]

Thanks Vespuria, I didn't know what the threshold was.

I think we send them out to between 30-40% of our SMSF client base each quarter. It's pretty painful as you can imagine.

As you said anyone who has their fund in full pension mode would never know that these things exist.

 

[sptrawler]

It certainly highlights how fragile the super system is.

 

[Ves]

In reality, very little extra work going from quarterly to monthly payments - you still only need an annual return.

Yup, it will just be more pieces of paper and letters that need to be generated by the firms (most of this process is automated - except for the signing and printing and a few minor details). Some clients receive them direct and just go to the post office and pay them or via BPAY. I guess it adds up to about an hour a year if you have a fund that pays monthly instalments. I don't think it's a really big deal either - the accounting firms will just have to absorb the extra time, as it's not really something you would charge, unless you have to do some calculations to vary it or something.

 

[McLovin]

On the surface, it seems like a fairly benign budget (certainly not the type we've become accustomed to in the lead up to an election) but it does seem to mark a point of inflexion in the government's finances. The reality that the boom was/is not the new normal seems to have taken hold in Canberra, finally.

I can't imagine the PAYG changes will be overly onerous on business owners. Even the most basic accounting software will spit out the numbers for you in a couple of seconds.

Business groups will complain about it because they complain about any red tape. Regardless of the actual burden it places on business.

More cuts, higher taxes. I continue to believe that will be the long term trend.

 

[Knobby22]

More cuts, higher taxes. I continue to believe that will be the long term trend.

It should be as we are one of the lowest taxing countries in the world.
There are so many loopholes that need to be tightened such as negative gearing , family trusts and Superannuation. Labor wimped on them all. Unfortunately, we will probably get a GST rise under the Libs instead of getting those rich man perks affected. I hope I am proven wrong.

 

[sptrawler]

On the surface, it seems like a fairly benign budget (certainly not the type we've become accustomed to in the lead up to an election) but it does seem to mark a point of inflexion in the government's finances. The reality that the boom was/is not the new normal seems to have taken hold in Canberra, finally.

I can't imagine the PAYG changes will be overly onerous on business owners. Even the most basic accounting software will spit out the numbers for you in a couple of seconds.

Business groups will complain about it because they complain about any red tape. Regardless of the actual burden it places on business.

More cuts, higher taxes. I continue to believe that will be the long term trend.

I think small business has hit the wall, unless it is in some way attached to mining.
Without introducing tax reform, that actually targets the concessions on exponential wealth creation, the situation is only going to be compounded.IMO

 

[McLovin]

It should be as we are one of the lowest taxing countries in the world.
There are so many loopholes that need to be tightened such as negative gearing , family trusts and Superannuation. Labor wimped on them all. Unfortunately, we will probably get a GST rise under the Libs instead of getting those rich man perks affected. I hope I am proven wrong.

They're not loopholes, they're legitimate deductions and structures. How much does imputation cost the federal budget? Should that be binned too?

Tax for the sake of not being one of the lowest taxing countries in the world seems a fairly pointless goal. A government will always find ways to spend money. The last decade has shown neither side is immune from profligate waste and pork barreling. The hard part will be rolling back things like the baby bonus, and the various family tax benefits. Taking from the rich is always easier, because they only get one vote.

 

[Knobby22]

They're not loopholes, they're legitimate deductions and structures. How much does imputation cost the federal budget? Should that be binned too?

Tax for the sake of not being one of the lowest taxing countries in the world seems a fairly pointless goal. A government will always find ways to spend money. The last decade has shown neither side is immune from profligate waste and pork barreling. The hard part will be rolling back things like the baby bonus, and the various family tax benefits. Taking from the rich is always easier, because they only get one vote.

When you have a guy with $200,000,000 in his Super account then there is a point when he doesn't need any more tax breaks. There should be a limit.

Negative gearing to keep taxes low while forcing house prices up is not a worthwhile pursuit, they could say it only applies to new houses and on existing houses you can only negative gear on income, not on wages as takes place in other countries. I have a brother in law who is "forced" to buy a house every two years because of his income.

Finally, why should family trusts be so powerful, they have lost their purpose and become ways of avoiding tax. OK if you have the money, bad otherwise. They should be limited.

If they did this then we could build infrastructure which we badly need, and keep up the other great things we have in society such as healthcare.

I am not against imputation, getting rid of that would mean paying tax twice + it is great for retirees of normal means.

I want to see the deficit ended but if it is ended by a GST that hurts the middle class more than the upper class, then I will be unhappy. Fix what should be fixed.

 

[bellenuit]

They may not be treasury's independent forecasts. I heard Hockey saying in an interview a few weeks ago, that most treasury forecasts are not made independently, but are calculated by them based on input parameters by the government that treasury may not agree with. These inputs are never published, so no one can cross check their veracity. I would certainly think that using $12/tonne as the carbon price in Europe in a few years would be something they would not have arrived at themselves.

According to Andrew Robb on Lateline tonight, Treasury provides the government with a range of forecasts for their budget - each based on different assumptions (growth, dollar etc.). The government chooses which one to use. So we never really know (at least on budget night) which particular forecast Treasury regards as the most likely. According to Robb, Labor is probably working on the most optimistic forecast as it allows them to appear to be returning to surplus over time, but will simply lump the Coalition with a time bomb when reality hits fantasy.

 

[sptrawler]

When you have a guy with $200,000,000 in his Super account then there is a point when he doesn't need any more tax breaks. There should be a limit.

Negative gearing to keep taxes low while forcing house prices up is not a worthwhile pursuit, they could say it only applies to new houses and on existing houses you can only negative gear on income, not on wages as takes place in other countries. I have a brother in law who is "forced" to buy a house every two years because of his income.

Finally, why should family trusts be so powerful, they have lost their purpose and become ways of avoiding tax. OK if you have the money, bad otherwise. They should be limited.

If they did this then we could build infrastructure which we badly need, and keep up the other great things we have in society such as healthcare.

I am not against imputation, getting rid of that would mean paying tax twice + it is great for retirees of normal means.

I want to see the deficit ended but if it is ended by a GST that hurts the middle class more than the upper class, then I will be unhappy. Fix what should be fixed.

Can you explain how someone could get $200,000,000 into super, you're being a dick.
There has allways been limits on how much you can put into super.
Coming up with stupid sums isn't helpfull for your arguement. Just comes up as a Wayne Swan statement.lol

 

[Knobby22]

Can you explain how someone could get $200,000,000 into super, you're being a dick.

There is a guy with $200,000,000 in Super. I heard some economists talking about him on Radio National last night.

Anyway we've gone off topic. Back to the budget.

 

[sptrawler]

There is a guy with $200,000,000 in Super. I heard some economists talking about him on Radio National last night.

Priceless, just priceless, ring up the ATO

 

[McLovin]

When you have a guy with $200,000,000 in his Super account then there is a point when he doesn't need any more tax breaks. There should be a limit.

I'm not disagreeing with that, in fact if you look at any of the super threads on here, I think earnings should be taxed as ordinary income. That being said, what you are describing is not a loophole anymore than middle class welfare is a loophole.

Finally, why should family trusts be so powerful, they have lost their purpose and become ways of avoiding tax. OK if you have the money, bad otherwise. They should be limited.

What power do they have? All they allow you to do is stream income and shelter assets. Get rid of trusts and most users of trusts will just corporatise their earnings. Hard to believe there would be much improvement in revenue.

There are so many myths around family trusts.

I am not against imputation, getting rid of that would mean paying tax twice + it is great for retirees of normal means.

What's wrong with paying tax twice? The company and the individual both utilise the resources of the state as independent actors. Is it sound economic policy that retirees are being handed back the tax paid by some of the most profitable enterprises in the country?

The above is more of a Devil's advocate question.

Can you explain how someone could get $200,000,000 into super, you're being a dick.

Somewhere on the ATO website there is a breakdown of SMSF asset sizes, from memory, there were 5 SMSF's with >$100m in assets.