Australian (ASX) Stock Market Forum

Is Shorten PM material?

Is Shorten PM material?

  • Yes

    Votes: 6 16.2%

  • No

    Votes: 31 83.8%
  • Total voters
    37
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Classy guy is ole 'Answer-Depends-On-the-Current-Audience'.
Going after retirees and pensioners now!
https://www.smh.com.au/politics/fed...n-tax-hit-as-anti-growth-20180313-p4z430.html
...In a move mostly affecting wealthier Australians, a Bill Shorten-led Labor government would end cash refunds for taxpayers who own shares and claim tax credits on their dividends.
Treasurer Scott Morrison said the policy was a "brutal and cruel blow for retirees, for pensioners" which would bring the total value of Labor's tax proposals to more than $200 billion...
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http://www.tai.org.au/content/peter...ate-decisions-treasurer-cost-budget-56bn-year

When companies pay dividends to Australia shareholders out of after-tax profit, shareholders also receive 'franking credits' which are a credit against their own tax obligation and based on the tax paid by the company. This system, known as 'dividend imputation' is unusual and only 4 other countries in the world use it.


However, in 2000 Mr Costello made the system even more generous to shareholders by allowing them to get a cash refund if they receive more in 'franking credits' than they actually owe in tax. Because income from superannuation is tax free for people over 60, high income retirees can use franking credits to get a cash gift of over 40 cents for every dollar they receive in dividends.


The ATO estimates that Peter Costello's decision to allow 'excess' franking credits to be refunded as cash cost $4.6 billion in 2012-13.
 
SirRumpole said:
In a move mostly affecting wealthier Australians,
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Hopefully Labor tax pensioners, who recieve more than the $18,000 tax free threshold, also.lol
A tax free handout as a pension, for those who have saved sod all, now that is welfare to the max.
 
Well if we're going to be honest, we might as well say it as it is.:p

Actually if we are going to apply your reasoning on fairness, the only people who should be able to apply the franking credit, are those who pay tax at a higher level than the corporate rate.
Everyone else is getting a tax advantage from it, so why target one group? like I said it is discriminatory.
 
SirRumpole said:
In a move mostly affecting wealthier Australians,
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I doubt the majority of retirees are paying tax at a higher rate than the company rate, whether or not reduced by the Coalition. So the majority of retirees would be slugged unfairly with an effective tax increase.

This needs to be better targeted at the few using it as tax avoidance.
 
sptrawler said:
Well if we're going to be honest, we might as well say it as it is.:p

Actually if we are going to apply your reasoning on fairness, the only people who should be able to apply the franking credit, are those who pay tax at a higher level than the corporate rate.
Everyone else is getting a tax advantage from it, so why target one group? like I said it is discriminatory.
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Strangely that is pretty much exactly how i see this thing being described by the labor announcements......just this aspect not getting a lot of airplay. I read the announcements as under $37K taxable then lose, or about $51K gross before salary sacrifice then lose.
 
HelloU said:
Strangely that is pretty much exactly how i see this thing being described by the labor announcements......just this aspect not getting a lot of airplay. I read the announcements as under $37K taxable then lose, or about $51K gross before salary sacrifice then lose.
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Yes this is the problem with a left leaning media, they bag the "rich" and everyone's eyes roll back, then alleluia starts playing in the background.
What they fail to realise is, it hits them, and also puts the final nail in their super coffin.lol
If your not getting the franking credit, your super is no better of than outside super, which is probably what Labor want.
But before everyone takes it out, they will legislate to stop it being allowed, well that's my guess.lol
 
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PZ99 said:
Well it looks like a partial fack blip is on the way from the ALP which suggests that it wasn't properly thought out or estimated. Typical of these Yes Minister style grand schemes.

Selling the hard yards sounds popular until it becomes unpopular :D
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So dividend imputation will still exist but can't offset taxable income or tax owed? I don't understand because I'm a dummy.
 
SirRumpole said:
Investors should be glad dividend imputation exists at all and should give thanks to the Labor Party for it's introduction. :D
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Yes the same guy who introduced is behind the latest policy to return it to its original 1987 form.

It was introduced to end double taxation, not collect a subsidy where you get paid for delivering zip tax to the tax dept. I'm not saying it's a bad thing ...who wouldn't want to get a cheque at the end of the year even if you earned way more money than the minimum tax threshold ...yeah!

For those who don't know how it works:

Depending on previous annual turnover, some companies frank at 27.5% and the larger ones 30% .... they are prepaying the tax at a set rate, which is then compared to the shareholder's tax rate at tax return time for either a graduated tax credit or liability against the grossed up dividend payment.

If you are paying tax at the superannuation rate of 15% your 30% franked dividend will return you the 15% remaining as a cash payment.

If you are in the highest tax bracket you end up paying 16.5% or whatever of the grossed up dividend value to the taxman.

But what Howard and Costello did was allow cash payments by the taxation dept even if their imputation credits exceeded their tax liability.... it's like getting paid a bonus for not kicking in any tax...yeah. I'd like it if my companies could put their hand out and get money instead of tax credits.

8% of taxpayers get cash refunds, 90% of the those payments gets sunk back into self managed super funds, which are 10% of the total superannuation industry and 45% of the payments goes to the top 10% of self managed super funds.... how could that possibly a rort.:D
 
SirRumpole said:
Investors should be glad dividend imputation exists at all and should give thanks to the Labor Party for it's introduction. :D
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Agreed. However dividends can be a drag on capital growth and while it might look enticing at first glance it can sometimes cost you if the the companies' profits aren't compounding. Some of our banks are giving away most - if not all of their EPS as dividend payouts, which in the opinion of some economists is unsustainable - hence the cutbacks by BHP, TLS, WBC, ANZ etc.

In any event I still think this "bonus" should've been rolled back by the Gillard govt.

It was their policy to substantially increase the tax free threshold (to offset the carbon tax for low income earners) that has caused this bizarre problem with the imputation credits.

The thing for Silly Billy here is the ability to put together a policy after you've done the homework, otherwise you end up with the same flip flop policy chaos that Tony Abbott gave us.

The Turnbull Govt has at least scored a point or two in that regard (my view)
 
PZ99 said:
The thing for Silly Billy here is the ability to put together a policy after you've done the homework, otherwise you end up with the same flip flop policy chaos that Tony Abbott gave us.

The Turnbull Govt has at least scored a point or two in that regard (my view)
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Yes, I think you are right, but I still remember Julia Gillard's statement that pensioners don't vote Labor, so maybe it was a calculated risk by Shorten.
 
The reason the Labor/Greens proposal is hypocritical, and a little sinister, is this.

There aren't two classes of Ordinary shares in banks or BHP. There's just fully paid ordinary shares. You take the same market risk to buy and hold them, and you earn the same benefits, i.e. including franking credits. I think the legality/constitutionality of Labor/Green proposal is questionable.

Consider these two groups that Labor/Greens wish to create:

Group 1: Shorten, Bowen, Plibersek, Natali
This group gets the full claimable benefit of franking credits, since they can claim it against their current year tax liability

Group 2: Retirees, part-Pensioners, Self-funded retirees
This group, with little or no current year tax liability, is now being asked to forgo their franking credit (as a rebate). But they have earned this benefit, by owning the shares at market risk.

Many in Group 2 will simply be forced onto pension or part-pension. Let alone having the rug pulled from under them on Super rules they have spent decades using to provide for their own retirement.

The opposition has belled the cat. They're coming after Superannuation, and this is just the start.
 
Logique said:
The opposition has belled the cat. They're coming after Superannuation, and this is just the start.
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As Labor introduced compulsory super I doubt if they are going to wreck their own plan.

Howard gave some money wasting concessions for upper income earners by only taxing super contributions at 15%, a massive tax break for people earning enough to put a lot of their salaries into super, but not much use to low income earners.
 
SirRumpole said:
As Labor introduced compulsory super I doubt if they are going to wreck their own plan.
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Oh they are behind closed doors scheming ways to take money off comfortable lifestylers. The subtle (or not so subtle) way to redistribute other peoples money.
 
Labor thinks they're going after a privileged group of superannuants, but this policy will most hurt the people at the bottom end, with small retirement balances. They couldn't use the rules to build large balances.

If Bill Shorten wants to make money out of dividend imputation, he should start by giving up his own franking credits.
 

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