Yer. The PPL levy paid by the top 3,000 companies will also not have franking credits attached because it's a "levy".
There are kids out there from multi generational welfare families who have no concept of actually working for a living. I spent about 12 years volunteering with a community agency doing emergency relief applications.
Just an astonishing number of young people turned up with bare, dirty feet and clothes, a face full of metal, and tatts everywhere. When asked how their search for work was going, there was just a blank face.
Largely under the radar but the devil is always in the detail.
A retiree living on 100K of grossed up dividends would currently have a net income of $73,553 that will reduce by $1,290 directly as a result of the PPL being funded by a ‘levy’ and the implication on franking credits.
edit:
The above is for outside the super system
For inside super (over 60 and receiving tax free status) the current net figure is 100K reducing by $2,097.
Also...if the company has to be less tax, there should be higher profits to distribute to shareholders = higher dividend payments.
Listening to the budget last night, it sounded very much like wait 6 months (zero income) and then you will qualify for the dole if you work for it (work for the dole). That is, an outright no dole for 6 months policy. That's how I interpreted what was said.On the six month stand down period for young people, is that only if they do not engage in any 'learning program'?
eg the government says young people should be 'earning or learning'.
You're missing the impact of the PPL Levy.The benefit lies in the area of retained earnings reinvested in items of a capital (ie, depreciable, not deductable) nature, because the company sees less erosion in its retained earnings.
It's effect is to encourage companies to reinvest profits, not to increase spendable cash in the hands of domestic shareholders.
You're missing the impact of the PPL Levy.
The Government confirmed that it was committed to cutting the company tax rate by 1.5 percentage points (to 28.5%) from 1 July 2015. For large companies, the reduction will offset the cost of the Government’s 1.5% Paid Parental Leave levy.
If you compare the paid-out dividend, your contradiction has merits. But you'll have to compare apples and apples, which is the company's after-tax profit that's paid out as dividend.
If a company's before-tax profit is $100, under 30% tax, it can pay out 70c. Grossed-up by the Franking Credit, the investor gets $100, of which $30 has been paid in tax.
After the reduction to 28.5%, the $100 before-tax profit become $71.50 dividend, grossed-up to $100 with $28.50 tax paid.
In both cases, you pay your own marginal tax rate on those $100; whether you receive a credit of $30 now or $28.50 later won't make a penny difference because you have to add the $1.50 additional dividend you received when the dividend was paid out.
On the six month stand down period for young people, is that only if they do not engage in any 'learning program'?
eg the government says young people should be 'earning or learning'.
If they receive youth allowance or newstart while learning something useful then that's reasonable enough.
KMPG miss the point that with a lower tax rate, the amount of proceeds available for distribution via dividends is higher, thus the "100" at the top of each column is an assumption which is not necessarily correct.
http://www.businessspectator.com.au/article/2014/5/13/politics/another-budget-bounty-lucky-party
basically for the budget to meet it's forecasts we're looking at private debt grow of a tad over 6% each year (less than half the Howard years)
But the second thing to say is that this required rate of growth of private debt sits on top of a much bigger private debt pyramid than the Howard years commenced with. When John Winston Howard came to power, private sector debt in Australia (the sum of household plus business debt) was roughly 85 per cent of GDP. When Tony Abbott took over, it was roughly 145 per cent of GDP.
So for private debt to grow at 7 per cent of GDP per year when it is currently about 1.4 times GDP means an annual growth rate of private debt of about 10 per cent per year (correct level is something like 6.2%-9.5%)-- 5 per cent faster than the expected rate of growth of nominal GDP (correct level is up to 4.5%).
So for Joe Hockey’s budget books to balance, how high would Australian private sector debt need to be by 2025? On the back of the envelope calculations here, it would need to be about 250 per cent of GDP
.... back of the envelope calculations here, it would need to be about 250 per cent of GDP[/I]
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