Inflation

[Value Collector]

Capital gain tax deduction a rort? seriously
Buy something 100$ today 10% inflation
Sell it $121 in 2 years you have made zero real term profit yet we are taxed on 10.5 ..yet not 21 and you consider that a rort ,?
The fact that there is a capital gain tax without any indexation is pure stealing.

Not to mention as I said to Rumpole, when it comes to shares, a decent portion of the capital gains arises from retained after tax earnings.

Eg a company earns $1 per share, pays 30% company tax and keeps the other 70 cents to open a new store, this new investment caused the share price to rise 70cents which becomes a taxable capital gain.

————————
It’s like me earnings $100, paying $30 tax and then when I put the remaining $70 in my money box they say my money box is now worth $70 more and I need to pay capital gains tax, but it only increased by $70 because I put $70 of my after tax dollars in there.

 

[sptrawler]

attend a workplace and being productive can be two different things,

Yes, but if they attend a workplace someone is usually paying them and also contributing to the ATO.

 

[SirRumpole]

However, one man’s loss is another man’s profit, so the loss on the interest they pay will increase the profits of the banks and depositors, and they will pay income tax on those profits.

Well, that's as good as saying we need more health care spending because all the extra doctors and nurses we employ pay tax on their incomes and gst etc.

 

[Value Collector]

Well, that's as good as saying we need more health care spending because all the extra doctors and nurses we employ pay tax on their incomes and gst etc.

What I am saying is that, if one man’s taxable income drops by $5,000 because of negative gearing. Obviously this means that a bankers income has risen by some other amount (potentially a lot more than $5000).

So either way some one or some institution is paying tax on that money.

 

[Value Collector]

@SirRumpole Either way negative gearing is not something I want to argue about much.

But, did you understand my explanation of the capital gains tax discount, and why it’s vital?

Even places that don’t have a capital gains tax discount still create other ways to achieve the same goal.

For example in the USA capital gains tax is capped at 15%, which is less than I pay here even after my capital gains tax discount.

Eg. My tax bracket is 47%, even with a 50% discount that’s still 23.5% I am paying, much higher than the USA 15% capital gains tax rate.

While we are at it, the USA also taxes dividends at 15%, which is less than I pay even after franking credits are counted.

————————

My point is, franking credits and cap gain discount are valid ways to prevent some of the double taxation that occurs, try not to jump on band wagons against them.

 

[SirRumpole]

For example in the USA capital gains tax is capped at 15%, which is less than I pay here even after my capital gains tax discount.

Eg. My tax bracket is 47%, even with a 50% discount that’s still 23.5% I am paying, much higher than the USA 15% capital gains tax rate.

While we are at it, the USA also taxes dividends at 15%, which is less than I pay even after franking credits are counted.

No comparison between the US and Aus taxation systems. 220 million population vs 23 million. They can have lower taxes because they have more taxpayers.

 

[qldfrog]

No comparison between the US and Aus taxation systems. 220 million population vs 23 million. They can have lower taxes because they have more taxpayers.

So imagine the tax we should pay for local councils rate being a few thousands.lol
You must be tired to even suggest such argument, so China does not need hardly any tax while Monaco or Seychelles must tax like mad due to their small population ..

Or could it be that Australia does not need submarines, not pretend to play with adults when it can hardly build a lawnmower let alone a car or a submarine.
Repeat argument with NDIS, fighter jets, help to Ukraine, current level of dole and pensions, destruction of coal powerplants and massive help to fanciful green schemes etc etc..

 

[SirRumpole]

Or could it be that Australia does not need submarines, not pretend to play with adults when it can hardly build a lawnmower let alone a car or a submarine.

Well you appear to have a European outlook, safety in numbers etc.

Here we are isolated at the bottom of the world close to countries that don't particularly like us and shoot ultrasonic pulses at our naval divers and lasers at our pilots and you don't think we need a reasonable means of defence ?

Yes our industrial system has been destroyed by ideologs who leave it to "the market" and globalisation, but some of us long term residents remember the days when we did have a manufacturing industry and think that we should have one again.

"You must be tired to even suggest such argument, so China does not need hardly any tax while Monaco or Seychelles must tax like mad due to their small population .."

Monaco is tiny, and doesn't have to defend 7.6 million km2.

 

[divs4ever]

Well you appear to have a European outlook, safety in numbers etc.

Here we are isolated at the bottom of the world close to countries that don't particularly like us and shoot ultrasonic pulses at our naval divers and lasers at our pilots and you don't think we need a reasonable means of defence ?

Yes our industrial system has been destroyed by ideologs who leave it to "the market" and globalisation, but some of us long term residents remember the days when we did have a manufacturing industry and think that we should have one again.

"You must be tired to even suggest such argument, so China does not need hardly any tax while Monaco or Seychelles must tax like mad due to their small population .."

Monaco is tiny, and doesn't have to defend 7.6 million km2.

but manufacturing what ??

my choice would be to make stuff for our own citizens first and sell any excess

but that idea is terribly unpopular with bankers and other financial sharks

 

[Value Collector]

No comparison between the US and Aus taxation systems. 220 million population vs 23 million. They can have lower taxes because they have more taxpayers.

The higher population also means they have higher expenses.

But the point is to stop double taxation there needs to be certain things put in place, in Australia we have franking credits and capital gains tax discount, in other nations they have other methods, but the concept is the same.

 

[Smurf1976]

but manufacturing what ??

The first step is to refine the minerals and agricultural products we presently produce.

Get that up and running then go from there.

And don't be even slightly afraid to play the game in order to win. There's no such thing as a "level playing field" - cheating is exactly what others do and what we need to do also. Leave the fair play stuff for sports.

 

[SirRumpole]

Either way negative gearing is not something I want to argue about much.

If you benefit from it then it's understandable that you want to keep it.

But looking at it from the point of view of a government housing policy, the justification for it was to encourage investment in NEW housing and provide more affordable housing by increasing supply.

As a housing policy it has clearly failed , being that Australian housing is one of the world's most unaffordable and the policy costs the taxpayers billions of dollars a year which could be invested by governments into affordable housing.

So clearly as a housing policy it's a dog and is now just another way for a certain class of investors to reduce their taxable income and get a discount on capital gains tax as well.

In other words, an upper middle class tax rort.

 

[Belli]

If you benefit from it then it's understandable that you want to keep it.

Some will like this and some won't.

The 50% CGT Discount: A Cluster Analysis of Individual Taxpayers With Capital Gains - Austaxpolicy: The Tax and Transfer Policy Blog

The results of our analysis show that the benefit of the 50% CGT discount is enjoyed disproportionately by a miniscule group of wealthier taxpayers.

www.austaxpolicy.com

But, hey, let's also go back a couple of years.

Australia’s 50% Capital Gains Tax Discount: Policy Oversight? - Austaxpolicy: The Tax and Transfer Policy Blog

One of main purposes of Australia introducing a comprehensive capital gains tax (CGT) was to ensure the overall tax system integrity. In the absence of… Read More ›

www.austaxpolicy.com

 

[Value Collector]

If you benefit from it then it's understandable that you want to keep it.

But looking at it from the point of view of a government housing policy, the justification for it was to encourage investment in NEW housing and provide more affordable housing by increasing supply.

As a housing policy it has clearly failed , being that Australian housing is one of the world's most unaffordable and the policy costs the taxpayers billions of dollars a year which could be invested by governments into affordable housing.

So clearly as a housing policy it's a dog and is now just another way for a certain class of investors to reduce their taxable income and get a discount on capital gains tax as well.

In other words, an upper middle class tax rort.

I don’t Negative gear.

Also negative gearing can be on any asset, for example if you have a loan on the shares you own, and pay more interest than you earn in dividends you are negative gearing. It’s not just for housing, it’s any business activity.


—————-

I do benefit from capital gains tax discount and franking credits in the sense that they prevent me from being double taxed. Which I don’t see as “benefiting” it’s just common sense and common courtesy not to double tax people.

By the way I paid over $600,000 in tax last year, the bulk of it at 47%. So getting rid of capital gains discount and franking credits to try an double dip into my pocket would be pretty unfair in my opinion.

 

[qldfrog]

Some will like this and some won't.

The 50% CGT Discount: A Cluster Analysis of Individual Taxpayers With Capital Gains - Austaxpolicy: The Tax and Transfer Policy Blog

The results of our analysis show that the benefit of the 50% CGT discount is enjoyed disproportionately by a miniscule group of wealthier taxpayers.

www.austaxpolicy.com

But, hey, let's also go back a couple of years.

Australia’s 50% Capital Gains Tax Discount: Policy Oversight? - Austaxpolicy: The Tax and Transfer Policy Blog

One of main purposes of Australia introducing a comprehensive capital gains tax (CGT) was to ensure the overall tax system integrity. In the absence of… Read More ›

www.austaxpolicy.com

But remember that there is no CPI indexation either, which is common on other jurisdictions.
A fair system would be full capital gain tax, or loss , after indexation on a CPI ..but current CPI is such a rort that even that would be pure robbery .
That could also bring some incentives for government to control inflation. Whereas currently, the more inflation, the higher the taxation...

 

[qldfrog]

I don’t Negative gear.

Also negative gearing can be on any asset, for example if you have a loan on the shares you own, and pay more interest than you earn in dividends you are negative gearing. It’s not just for housing, it’s any business activity.


—————-

I do benefit from capital gains tax discount and franking credits in the sense that they prevent me from being double taxed. Which I don’t see as “benefiting” it’s just common sense and common courtesy not to double tax people.

By the way I paid over $600,000 in tax last year, the bulk of it at 47%. So getting rid of capital gains discount and franking credits to try an double dip into my pocket would be pretty unfair in my opinion.

But the fact you pay that much seems a justification by many to make you pay even more.
During that time, 74 billions income with Exon,and 0 tax.
I would close my business if unable to make profit after such a year.why bother
And vc, do you never wonder why you are actually bothering carrying on if paying that much tax .my personal conclusion was:
Nahh..early retirement ...
Yet still have to paid taxes.....but just low 5 digits nowadays

But thanks on behalf of the few dozen of ASIC and NDIS recipients who made with your loot..
I do not remember having ever been thanked myself for paying my taxes!

 

[Value Collector]

But the fact you pay that much seems a justification by many to make you pay even more.
During that time, 74 billions income with Exon,and 0 tax.
I would close my business if unable to make profit after such a year.why bother
And vc, do you never wonder why you are actually bothering carrying on if paying that much tax .my personal conclusion was:
Nahh..early retirement ...
Yet still have to paid taxes.....but just low 5 digits nowadays

But thanks on behalf of the few dozen of ASIC and NDIS recipients who made with your loot..
I do not remember having ever been thanked myself for paying my taxes!

I stopped working my day job when I was 36, I am just a full time investor now.

47% tax is pretty high, but I don’t mind it that much, but without capital gains tax discount and franking credits it would be terrible because it would mean an actual tax rate of about 65%, which at that point I might just take my capital some where it’s wanted.

Some people think franking credits are a rort, but in reality they are just designed so that each person actually just pays tax at the tax bracket they are supposed too, and don’t get taxed twice on the same income.

 

[sptrawler]

I don’t Negative gear.

Also negative gearing can be on any asset, for example if you have a loan on the shares you own, and pay more interest than you earn in dividends you are negative gearing. It’s not just for housing,.

But housing adds very little ongoing employment, as opposed to industrial investment, once it is built it supplies very little employment, but it has had a huge amount of stimulus.
Anyway it is what it is, a huge and ever growing gap between the haves and the have nots, which in turn leads to a very divided population.
It will just end up like most other countries in the world, which IMO is very sad.
But that's life.

What differentiates a great Government, from a Government which is just full of people who really don't want a real job, is one which actually makes changes to fit with the times.
The economy is dynamic as China is finding out, it wasn't long ago they had a one child policy, now 30 years later it isn't fit for purpose and has ended up with unintended consequence. They are now paying people to have children.

The same in Australia, rolling out the same old taxes and and policies, for a changing economy, isn't going to work, politicians are way too focused on the next election, rather than the next phase in Australia's journey.

Now the only blue chip investment in Australia is property, which is strange, when we have so much free space and such a small population. It tells you the market is being manipulated, which tells us that the Government should be doing something about it.

Shelter is a basic need and when a country like Australia, has shelter as an unaffordable commodity, something is seriously wrong.
The countries of the world we smugly look down upon, due to their terrible living conditions, we are fast becoming.
This situation wasn't unintended, it is actively encouraged.

 

[wayneL]

wait until unrealized capital gains .... would they be a one-off ( per asset ) or annually

in some greed knows no boundaries

Unrealised capital gains aren't worth the paper they're written on.

1) How are these assessed when not marked to market, such as real estate, art, etc.

2) As we all know, when assets are marked to market these unrealised capital gains may be fleeting.

3) What happens in the inevitable eventuality of unrealised capital losses? A tax credit/refund? Somehow I suspect not.

In a deflationary environment the g'mint would have its a55 handed to in in refunds and credits. It is quite possibly the stupidest thought bubble ever.

 

[sptrawler]

Unrealised capital gains aren't worth the paper they're written on.

1) How are these assessed when not marked to market, such as real estate, art, etc.

2) As we all know, when assets are marked to market these unrealised capital gains may be fleeting.

3) What happens in the inevitable eventuality of unrealised capital losses? A tax credit/refund? Somehow I suspect not.

In a deflationary environment the g'mint would have its a55 handed to in in refunds and credits. It is quite possibly the stupidest thought bubble ever.

It's just another pressure raising exercise, that will end up as a brain fart.