Dividend franking credits

[galumay]

LOL!! Lets be honest what Labor is proposing iis an end to a rort, a form of wealthfare that has no place in a fair society. If receiving franking credit rebates make you self funded, then someone on the dole is a self funded non-worker.

There is so much arrant nonsense spread about ending this rort, calling it a tax, saying its a return to double tax, implying it will impact pensioners, luckily most voters can see right through the self interested outrage from high wealth, asset rich, boomers squealing like stuck pigs over the proposed loss of their welfare payment.

 

[sptrawler]

LOL!! Lets be honest what Labor is proposing iis an end to a rort, a form of wealthfare that has no place in a fair society. If receiving franking credit rebates make you self funded, then someone on the dole is a self funded non-worker.

There is so much arrant nonsense spread about ending this rort, calling it a tax, saying its a return to double tax, implying it will impact pensioners, luckily most voters can see right through the self interested outrage from high wealth, asset rich, boomers squealing like stuck pigs over the proposed loss of their welfare payment.

The problem is IMO, the way they are doing it, if you can't see that then you are in for some shocks as you go through life.
They aren't ending it, they are still giving it to those on welfare, so by your definition that's triple dipping.
If they wanted a sensible effective way of efficiently dealing with it, they would just introduce tax scales to super pensions, then at a certain level of pension the rate goes to 30% which in effect cancels the franking credit.
But that isn't what this whole thing is about, self funded people do so because they don't trust other people managing their money, Labor want them in the industry funds so they can fatten the gravy train.
That is all this is about, self interest.
If you can't see that, well like I said, you will be at the receiving end. IMO

 

[sptrawler]

I personally, would be staying away from anything, involving residential real estate.

Well smurf, the results are starting to show. From your post #91

http://www.thebull.com.au/articles/a/80052-rea-group-flags-election-led-listings-drop.html

 

[Logique]

LOL!! Lets be honest what Labor is proposing iis an end to a rort, a form of wealthfare that has no place in a fair society. If receiving franking credit rebates make you self funded, then someone on the dole is a self funded non-worker.

There is so much arrant nonsense spread about ending this rort, calling it a tax, saying its a return to double tax, implying it will impact pensioners, luckily most voters can see right through the self interested outrage from high wealth, asset rich, boomers squealing like stuck pigs over the proposed loss of their welfare payment.

B/S. Spare us the social justice posturing. Electricity Bill and Chris Bowen could still claim the franking credit, but not Nanna on $18k ann. That's Labor's fair society.

 

[tinhat]

I have a vague recollection of reading somewhere a few years ago an argument that it would be cheaper to just give everyone that is at retirement age the aged pension (without limiting eligibility through an asset or income test) compared to the amount of tax concessions that the government gives to retirees. The entire tax system needs to be reformed but no government has had the nerve to do it.

 

[sptrawler]

I have a vague recollection of reading somewhere a few years ago an argument that it would be cheaper to just give everyone that is at retirement age the aged pension (without limiting eligibility through an asset or income test) compared to the amount of tax concessions that the government gives to retirees. The entire tax system needs to be reformed but no government has had the nerve to do it.

That retirement system you are talking about, is the system we used to have, the same as NZ, U.K and Canada, but our pollies screwed it up as usual, from what I've read.
Everyone pays in, everyone gets a basic pension, if you invest in super it is taxed as income.

All that is happening now is, the politicians are trying to find any worker with money and take it off them. Dumb $hit.
How Labor can say with a straight face, they are helping the middle income earner, by stopping negative gearing on established cheap houses and only allowing it on new builds WTF.

How the hell can a worker pay for their own home, and then build a brand new rental property, what planet are they on? The rich can do that, workers have no chance.

Then even if the worker could afford to do it, when they sell it, they will get hit with more capital gains? The only ones who could afford that scenario are developers, who work on flipping.
Then to really take the cake, labor is going to give the developers the money to do it, as long as they give cheaper rent than the market average. So use tax payers money, to put people in the rent trap.
FFS if the Libs suggested it, there would be an uproar.
What I can't believe is how people are supporting it, it is mind boggling, the lemming like attitude of people. Is there any wonder our education standards are falling, they have to, so the population can be sold this crap.

 

[Kremmen]

LOL!! Lets be honest what Labor is proposing iis an end to a rort, a form of wealthfare that has no place in a fair society.

Currently, any individual earning $35k per year, salaried or from investments, is taxed $3192. The proposed scheme would mean someone earning that from dividends would be taxed $10500.

Being charged over 3 times as much tax as someone else with the same income, just because of the source, is anything but fair.

 

[Smurf1976]

LOL!! Lets be honest what Labor is proposing iis an end to a rort, a form of wealthfare that has no place in a fair society.

Someone earning $500K loses nothing at all from the proposed changes.

Someone earning $100K also loses nothing.

Someone earning $20K loses quite a bit.

Assuming in all cases they own shares which pay franked dividends.

So it's cutting welfare for those in the bottom half but who still have investments whilst keeping it keeping it fully intact for those at the top.

So if you're upper class then it's business as usual. If you're lower class then you're not affected since you won't own any shares anyway. If you're middle class then you're being given a push toward becoming lower class*

This is a good idea because?

If we're considering franking credits, which represent tax already paid, to be a form of welfare and there's an aim to remove that then wouldn't it be more sensible to remove it from high income earners instead of removing it from low income earners? A welfare scheme that only applies to high income earners seems a rather odd approach to me.

*Not that I like the concept of "class" but it seemed the best way to make the point.

 

[Knobby22]

I'm missing something because that is incorrect.
You know the guy that's running the online petition collects well over 2 million a year from franking credits which he will lose if the change occurs.
I don't know if he works for a living, probably not.

 

[basilio]

How about some facts around the Labour party proposal to abolish refunds of unused imputation credits ?
Have a close look at just which people are getting the $5b plus a year by creative accounting.

The real story of Labor’s dividend imputation reforms
http://insidestory.org.au/the-real-story-of-labors-dividend-imputation-reforms/

 

[basilio]

How about some facts around the Labour party proposal to abolish refunds of unused imputation credits ?
Have a close look at just which people are getting the $5b plus a year by creative accounting.

The real story of Labor’s dividend imputation reforms
http://insidestory.org.au/the-real-story-of-labors-dividend-imputation-reforms/

 

[Zaxon]

You know the guy that's running the online petition collects well over 2 million a year from franking credits which he will lose if the change occurs.
I don't know if he works for a living, probably not.

"Franking credits" and "franking credit refunds" are not the same thing. If your dividends are pre-taxed at 30%, when it comes to paying your own tax on that money, you're credited for that 30% already paid - franking credits. If your tax rate is lower, you're refunded the difference (currently).

No millionaire is getting franking credit refunds.

 

[basilio]

"Franking credits" and "franking credit refunds" are not the same thing. If your dividends are pre-taxed at 30%, when it comes to paying your own tax on that money, you're credited for that 30% already paid - franking credits. If your tax rate is lower, you're refunded the difference (currently).

No millionaire is getting franking credit refunds .

!!!

Really Zaxon ? Sorry that is just not the case. In fact the entire case for the Labour party moving on this issue is the realisation that $5b a year is being given as franking credit refunds overwhelmingly to very wealthy people.

It is true that their nominal taxable income is less than $18k a year. That doesn't change what is behind those carefully constructed figures.

And guess what ? Older people are now paying far less tax than their peers 20 years ago. Check out the analysis I quoted in my previous post.




For more than a decade, superannuation tax concessions have been absurdly generous to older people on high incomes. They are one of the major reasons older households pay less income tax in real terms today than they did twenty years ago, even though their workforce participation rates and real wages have jumped.

These age-based tax breaks help to explain why the proportion of seniors paying tax almost halved in twenty years, from 27 per cent in 1995 to 16 per cent in 2014. The rise of these “taxed-nots” coincides with the introduction of the Senior Australian Tax Offset in 2000, and tax-free super withdrawals in 2007.

http://insidestory.org.au/the-real-story-of-labors-dividend-imputation-reforms/

 

[Toyota Lexcen]

would be good if they used data from independent source

 

[basilio]

would be good if they used data from independent source

It is an independent source. It comes from the ABS Survey of Income and Housing 2014-15. They have just used it in their analysis.

Does it strike you as intriguing that 43% of the wealthiest 10% of Australians over 65 have an official taxable income less than $18k ? Does that help explain concern where most of $5b a year of imputation refunds is going ?

Because it certainly isn't being used by the poor buggers in the bottom 40-50% of the wealth/income scale.

 

[willy1111]

It is an independent source. It comes from the ABS Survey of Income and Housing 2014-15. They have just used it in their analysis.

Does it strike you as intriguing that 43% of the wealthiest 10% of Australians over 65 have an official taxable income less than $18k ? Does that help explain concern where most of $5b a year of imputation refunds is going ?

Because it certainly isn't being used by the poor buggers in the bottom 40-50% of the wealth/income scale.

So basically it is because couples can hold upto $3.2m in Super between them and not have to pay any tax on the earnings from the $3.2m if held in pension mode.

So why not just change the tax rules to do with Super? Just apply marginal tax rates on the Super earnings once it goes into pension mode.

 

[Toyota Lexcen]

Couldn't find any reference to ABS only to Grattan Report.

 

[Zaxon]

Couldn't find any reference to ABS only to Grattan Report.

The same Grattan Institute who says "Most Australians will retire with enough savings".

 

[basilio]

Couldn't find any reference to ABS only to Grattan Report.

Go to the original story and look under the pictures of the graphs. The first two state Survey of Income and Housing 2015. That is the ABS report. Gratten Institute used that survey for the information in their report. The creation of the graphs to reflect the information in the survey would be the work of the Gratten researchers
They don't have the capacity or the independent credibility to undertake such a survey.

http://www.abs.gov.au/household-income
http://insidestory.org.au/the-real-story-of-labors-dividend-imputation-reforms/

 

[basilio]

So basically it is because couples can hold upto $3.2m in Super between them and not have to pay any tax on the earnings from the $3.2m if held in pension mode.

So why not just change the tax rules to do with Super? Just apply marginal tax rates on the Super earnings once it goes into pension mode.

Not sure Willy. Certainly that could be the case for a number of people. On the other hand there may be other Trust or Company structures that have enabled people to hold exceptional wealth and a great lifestyle but report a minimal tax position.

Perhaps other posters can offer insight into how this can be done ?