Typical Labor bigdog, they made a dog's breakfast of it yet again.
If they had progressive component, it would have been accepted, but then they would have missed out ripping off the 'little man'.
Absolutely, they did modeling and it would have cost $270m to cap it at $5k, they would still have got $billions.All they needed to do was cap the franking credits refund at say 4K, problem neutralised..poor (normal people) keep all or most of their credits - rich people the opposite.
That will be the problem for Labor at the next election, if they try and roll it out again, it will be shown that they are using dodgy figures.any journalists that are quoting figures from 2014 or pre 2018 tax year may have very little to contribute to the argument going forwards .... those figures do make very good copy though to get the attention of readers who do not understand the current legislation. Those figures cannot EVER be attained again by young aussies after recent legislation changes.
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The problem is that the discussion should not be about franking credits at all.
The discussion should be about “should there be tax exempt earnings”
If the answer is yes, then franking credit refunds is total ok, because we are just returning the tax charged on the person’s earnings that they should be paying.
But if the answer is no, then don’t target franking credits target all earnings, eg Bank interest, dividends, rental income, uber, etc etc etc
Haha you are talking into the wind here VC yes it should be about tax not free money for nothing.
Current system hands out welfare to the very wealthy as Dick Smith has pointed out the tax system needs reform instead we got a political decision to hand the wealthy even more by the way of unfunded taxs cuts go figure.
And its not all Labors fault Howard started the rot in the middle of the largest revue flow to government coffers ever seen leaving a mega deficit black hole no one wants to still to discuss (just like the current mob sound familiar) and it was never about SMSF's going to industry funds.
Over to you SP
i reckon the real problem is that nobody can really say what the actual problem is with franking credits - except that those without money want more money from those that have money - but that does not apply solely to credits .......
And its not all Labors fault Howard started the rot in the middle of the largest revue flow to government coffers ever seen leaving a mega deficit black hole no one wants to still to discuss (just like the current mob sound familiar) and it was never about SMSF's going to industry funds.
Over to you SP
Come on you are pulling a long bow there, it had to be Menzies fault.
But in reality, there is a real problem, education standards falling, manufacturing declining, technology replacing functions, power and service costs increasing, welfare increasing.
There is no easy answer, I know I'm helping my kids, as you and many others probably are. But the long term prognosis isn't good, jobs will have to be invented or virtual reality will have to improve.
Is there any wonder there is a drug epidemic.
The system would allow dick Smith to earn tax free dollars no matter where his dollars were invested.
There is no difference between allowing him to earn $1 tax free in bank interest or rental property income and giving him a $0.30 refund of franking credits on a $0.70 dividend.
Both involve an investment earning $1, and both allow the investor to take that $1 tax free.
The fact that the $1 was earned inside a company and was taxed before the investor got so the investor needs a refund is irrelevant,
If it was in his super, which I can't believe it was, most of the earnings(dividends) would have been taxed at 15%. Only the earnings on $1.6m would have been tax free, so approx $50k of dividends.The point I made (perhaps poorly) is there were no earning's by the investor to offset the franked div against its paid regardless.
The tax offset against earnings then should end at the company IMHO.
In 1965 when I came to Australia the population was 12 million, small farms employed farm hands, the mining boom started, immigration cranked up to fill jobs in foundaries, factories, we made everything washing machines, t.v's, fridges, shoes, clothes, wool mills, blankets, trains, rolling stock, tractors, cars, ships, steel mills, blast furnaces, rubbish trucks had three men on them, buses had conductors and drivers .For a long time, we've automated manual tasks. Somehow, the unemployent rate stayed low. Even as females came into the workforce in large numbers, unemployment stayed low. Why automation of manual tasks is NOW a problem, I have no idea.
As for 'jobs' - the idea of actually working for a company, as opposed to yourself, is relatively new (a few hundred years?). I hazard a guess that the benefits paid (Workcover, superannuation, Sick leave, annual leave) are all making full time employment more expensive, as is the consistent increase in minimum wage. Either we'll start relaxing these, then provide other means of welfare to those on the lowest of incomes... or many more companies will take the Uber approach and treat everyone as their own company.
In 1965 when I came to Australia the population was 12 million, small farms employed farm hands, the mining boom started, immigration cranked up to fill jobs in foundaries, factories, we made everything washing machines, t.v's, fridges, shoes, clothes, wool mills, blankets, trains, rolling stock, tractors, cars, ships, steel mills, blast furnaces, rubbish trucks had three men on them, buses had conductors and drivers .
The population is now 24 million and most of those jobs have gone and the associated industries, now most people work in the service industry, which doesn't produce much just circulates money in the economy.
So what funds our ever increasing living standards and welfare costs?
When I was working, the rule of thumb was it cost 50% on top of wages, to employ some one as a full time employee.
A manager in the late 80's said to me, it was a saving of $1m per employee they got rid of, so it was an extra $1m they could borrow to build the business. I wouldn't think it has become cheaper, so as you say full time employees are expensive and if they aren't productive well the result is obvious.
I think you are right about the Uber approach, it will become more the norm, as bigger businesses close.
The welfare bill IMO is the elephant in the room, everyone wants to improve welfare which is understandable, however eventually we will run out of money to fund it.
Yes but in itself it isn't adding anything to the economy, say you were unemployed, all that has happened is the Government has paid the plumber. If you worked for Bunnings, they earn all their money from Australians buying stuff, so really the plumber has just got another Australians money. Now if you manufactured shoes, and sold them on ebay, then paid the plumber, you have brought more money into the economy. A bit simplistic, but i think that is what I was getting at.I can agree with most of that. Just two points I'm not so sure of:
"The population is now 24 million and most of those jobs have gone and the associated industries, now most people work in the service industry, which doesn't produce much just circulates money in the economy."
I'm not so sure. As we specialise, we can perform the same service at a higher quality, faster.
For example, I pay a plumber a call out fee + $X per hour, as opposed to me doing the same work. There's a very high chance that if I pay him to do it, and work those same hours myself, it's more productive. And as specialization goes on, we'll improve that difference and increase productivity.
Actually the welfare 6% tax, was absorbed into consolidated revenue in the 1950's by Menzies, from memory. Hawke and Keating removed it from the statutes, in the 1980's and started the current super system."The welfare bill IMO is the elephant in the room, everyone wants to improve welfare which is understandable, however eventually we will run out of money to fund it."
I sort of agree, but it depends. The pension is not really welfare in my view. 30 years back (you'll know this better than me), many people had taxes taken from their income, which was to fund their pension. Now, they're told they're receiving welfare. The government at the time didn't tell them that - and I think we're obliged to meet those promises to a certain degree.
Once my generation hits retirement, it's a different story - we have superannuation.
I agree with your sentiment, but IMO there is a bit of a gray area when you say the World is driven by envy not greed, one is a function of the other. IMOOther forms of welfare might be different, I don't know enough about it. But if we can increase productivity faster than we increase welfare, we're good. If we're 3% more productive every year, why shouldn't some of that go to helping those with less?
After all, the world is driven by envy, not greed. So if the gap between the haves and the have-nots gets too big, people will be upset - and rightly so. (I don't know where the sweet spot is, but there is one)
The point I made (perhaps poorly) is there were no earning's by the investor to offset the franked div against its paid regardless.
The tax offset against earnings then should end at the company IMHO.
I don’t understand what you are saying there.
Are you saying it’s some how ok for an investor to ever $1 tax renting out property.
But,
If that same property were held under a company name, and that $1 was taxed 30cents at the company level, it isn’t ok for that investor to get that 30cents refunded later so that he earns the same $1 tax free as the guy who invested outside a company structure?
You must be able to see getting a franking credit refund is no different To any other income that is tax free
A super fund in pension phase pays no tax its essentially a tax vehicle but is paid the franked amount by the government even though the fund pays no tax its makes no sense.
A super fund in pension phase pays no tax its essentially a tax vehicle but is paid the franked amount by the government even though the fund pays no tax its makes no sense.
You have lost me as well
From the start the idea of not being taxed on the franked amount was to avoid tax x 2 i.e. tax paid by the company and then tax paid again on the income distribution to an investor.
A super fund in pension phase pays no tax its essentially a tax vehicle but is paid the franked amount by the government even though the fund pays no tax its makes no sense.
Where the issue arises is that the residential plumber, for example, almost certainly isn't doing any work at all for export and is only serving the local population.I can agree with most of that. Just two points I'm not so sure of:
"The population is now 24 million and most of those jobs have gone and the associated industries, now most people work in the service industry, which doesn't produce much just circulates money in the economy."
I'm not so sure. As we specialise, we can perform the same service at a higher quality, faster.
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