Budget 2013

[sptrawler]

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.



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.

Well Mclovin, what is the difference between sheltering assetts and corporatising their earnings, in a familly trust or a familly super fund?
At a moral level not a tax level?

 

[McLovin]

Well Mclovin, what is the difference between sheltering assetts and corporatising their earnings, in a familly trust or a familly super fund?

Err...the tax rate paid, when you can access the assets, the fact that you can't run a small business through your smsf...

 

[sptrawler]

Err...the tax rate paid, when you can access the assets, the fact that you can't run a small business through your smsf...

So why would you knock smsf getting imputed credits?

Seems as though you want the cream now and probably will want to have the cream later.

 

[McLovin]

So why would you knock smsf getting imputed credits?

Because it's Tuesday.

 

[sptrawler]

Because it's Tuesday.

Fair enough.

 

[McLovin]

At a moral level not a tax level?

Sorry, I missed this bit, and didn't actually know what you were getting at. At a moral level and ignoring tax (which is the elephant in the room) the structure is irrelevant to the point I was making.

And that's all I'm going to say on it, lest this become another super thread.

 

[moXJO]

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.

This is a big issue for business. Labor has made constant attacks on sole traders and this will be the one that sinks them. Having to now stuff around monthly with added costs is typical labor.

 

[Aussiejeff]

The worse thing about this Budget?

Knowing Labor still has 4 mths to dig an even deeper hole for the Oz economy....

 

[Julia]

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.

Thank you, craft, for (as usual) clear and helpful comment.

So not at all the interpretation by gg as below.

Typical ALP.

Putting extra accountancy costs on savers.

I will now have to pay x 12 times my costs to my accountant for my SMSF return.

Idiots.

gg

 

[McLovin]

This is a big issue for business.

Why? The information that is required will already be there, it's just a change from quarterly to monthly. My IAS takes about 30 seconds to fill out and involves getting my computer to spit out some numbers, filling in two boxes and doing a little multiplication. I can't see why it will be significantly more onerous to shift the requirement to monthly rather than quarterly.

 

[Dibbler]

Why? The information that is required will already be there, it's just a change from quarterly to monthly. My IAS takes about 30 seconds to fill out and involves getting my computer to spit out some numbers, filling in two boxes and doing a little multiplication. I can't see why it will be significantly more onerous to shift the requirement to monthly rather than quarterly.

I'm an inclined to agree, I fail to understand beyond cash flow for the commonwealth what this achieves in terms of extra revenue. In some respects it should be better for small companies as they can pay monthly rather than having to save the money and make a quarterly payments which some business owners seem unable to budget for.

I didnt hear what level the changes came down to last night but according to the ATO website http://www.ato.gov.au/taxprofessionals/content.aspx?doc=/content/00338153.htm
it currently only filters down to businesses with over $20Mill T/O after Jan '16 not what I would call 'Small business'

For Example say I currently pay $60k Corp Tax per year, whether I pay $15k p.q or $5k p.m makes little difference to me, I have to submit PAYG Witholding every month anyway.

Any idea how this affects the bottom line of the budget?

Simon

 

[Judd]

In my view the worst thing about the Budget 2013 is the scrapping of the Medical Expenses Tax Offset. You know the one where if you incurred out-of-pocket health expenses over $2060, you would receive a rebate of 20% of the costs above that. Gone or rather means tested as per advice from the ATO web-site:

Taxpayers with an adjusted taxable income above $84,000 for singles or $168,000 for a couple or family in 2012-13 will be affected. The family threshold will increase by $1,500 for each dependent child after the first. These taxpayers will only be able to claim a reimbursement of 10% for eligible out of pocket expenses incurred in excess of $5,000 (indexed annually).

So if you have a disability, we come to you with open arms but if you have serious health issues, screw you as you can afford it. I know of no family who would willingly undergo the trauma of medical intervention merely to obtain a crappy tax deduction and I feel they should not be done over like this.

However, I probably live on a different planet so it's all OK.

 

[Knobby22]

In my view the worst thing about the Budget 2013 is the scrapping of the Medical Expenses Tax Offset. You know the one where if you incurred out-of-pocket health expenses over $2060, you would receive a rebate of 20% of the costs above that. Gone or rather means tested as per advice from the ATO web-site:



So if you have a disability, we come to you with open arms but if you have serious health issues, screw you as you can afford it. I know of no family who would willingly undergo the trauma of medical intervention merely to obtain a crappy tax deduction and I feel they should not be done over like this.

However, I probably live on a different planet so it's all OK.

I agree. it is the worst decision in the Budget. This is a real negative.

 

[MrBurns]

I agree. it is the worst decision in the Budget. This is a real negative.

These things slip under the radar, covered neatly by timely tears that divert attention.

 

[FlyingFox]

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.

With McLovin on this. There may have been loopholes with trusts but a lot of them have been tied up over the years. Tax thresholds for minors for unearned income are essentially non-existant. Hybrid trusts have essentially been made illegal.

In fact if you are using a trust structure for other reasons than asset protection, you are perhaps putting a big bulls-eye on yourself from the ATO.

 

[McLovin]

In fact if you are using a trust structure for other reasons than asset protection, you are perhaps putting a big bulls-eye on yourself from the ATO.

Bingo.

The ATO has been continuially lowering the asset test for "preliminary risk reviews". Iirc, it was $100m, then it dropped to $30m and now it is down at $5m. This has gone hand in hand with a huge increase in funding for the team that investigates this sort of stuff. The prevailing theory now is that if you have significant assets it is when not if the ATO will come knocking for a look under the bonnet.

Since 2008, and the fall off in revenue, they've been making sure they get every cent they're entitled to. My accountant was telling me one of his clients was modestly late (30 days) paying his GST and the ATO went straight into his bank account and took what they thought they were owed.

Cheating the tax man is bad for your health, imo. There's 650k trusts in Australia, I'd hazzard most of those are not set up to avoid tax.