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Labor's proposed franking credit changes

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1) Because he earns under $18,200 and so his marginal rate is less than 30 cents. he would be eligible to lose the moment he bought an Australian share, in his own name, under Shorten.
He would lose the franking credit refund.

2) But he will lose with an Industry Super Fund. Just remember, with Industry Super Funds, on average they take 20% of income in admin fees and expenses as per the summary I did of the six Industry Super Funds on https://shortentaxlosers.com.au/shortens-super-funds. These are taken from extracts from the Annual Financial Reports, which are online for all to see. Just google.For instance:

AUSTRALIAN MTAA
SUPER SUPER
Income 4660 253
Expenses 967 73.7
% Expenses 20.8% 29.1%

A lot of the expenses go to Shorten's union mates. Take the MTAA for example. Six people alone
get $229K-$437k in wages to manage the fund. The names are all declared in the financial reports and are on my website.

Shorten promotes the Industry Super Funds. By the way, these Super Funds don.t have much Australian shares, so they don't have much or many franking credits. The franking credits are mostly soaked up by tax on other income. But the ones that do have excess franking credits don't seem to pass them on to their members.

If he is of pension age and is eligible to withdraw from compulsory super, he is losing a lot by staying in, because he could have just put the $30k into Australian banks shares directly and got say 6% plus 2.6% franked cash refund plus any capital gain, average 9.1 %, via the All Ords.

These six funds Industry funds I reported on the website managed only 1.5 % return apart from the All Ords gain over the year, to 30/6/18. How shocking is this ? The All Ords went up 9.1 % and they managed total return of only 1.5% more than this.

There are 11.6 million people losing money in the Industry Super Funds. The retail funds are just as bad. The banking royal commission has mentioned this. There is an example of a man who put $100k into the Cash Fund at AMP. 3 years later his balance was $97k, just because of the AMP fund's fees.


 
shortentaxlosers.com.au said:
1) Because he earns under $18,200 and so his marginal rate is less than 30 cents. he would be eligible to lose the moment he bought an Australian share, in his own name, under Shorten.
He would lose the franking credit refund.
Click to expand...
But as preciously stated he doesn't have any shares.

Therefore he doesn't lose the franking credit refund. He didn't get it in the first place.

Most people in Australia don't have shares because most people don't have the funds.

So how on Earth can you say 8.1 million will lose a credit they never even got ?
 

1.1 million people are SMSF members who have a marginal rate of 15 cents or Nil.
10.5 million people have income less than $37k, which means they have a marginal rate less than 30 cents.
Minus 3.5 million exempt pensioners. (Bowen says 2.5 million)

They are all eligible to lose. I may not use my Medicare card for 10 years, if I am young
Does that mean I should lose my Medicare card ?

There must be around 3 million mums and dads alone who own Commonwealth Bank shares alone.
Only 1% of COM Bank is owned by companies.

https://www.theaustralian.com.au/na...o/news-story/b33eb43c0c32739659f2515c34ff0b41

Carling says that 1,000,000 people under $37k will lose $1.3B in lost cash refunds each year. Over 10 years that is $13 Billion. I can't stand politicians projecting for 10 years because the average person just hears Shorten's 55 B. Anyway, lets use Shorten's method.

Do you have any quoted figures to the contrary ? Not everyone can afford a Super Fund startup costs and accounting fees mate. Of course there are millions of Australians who own shares in their own right without a SMSF.

The point is that your friend has a marginal rate of $nil but Shorten wants to tax his dividend at 30 cents, and he gets no franking credit offset.

Take a person past election on $25k, even under Shorten, whilst this person will not receive a cash refund, will get a franking credit offset to reduce their tax to zero. (no cash refund)., Why will the $25k person get franking credit offset to reduce tax but your friend gets nothing ? Once again, your friend will lose. May I ask you why will your friend lose under Shorten, compared to the $25K person ?

Individual taxpayers over $37k will still pay 34.5 cents, 39 cents, or 47 cents for their dividend, in their tax return, pre and post Shorten. Their situation will not change under Shorten. They receive 30 cents franking credit offset but have to pay a Franking debit to the ATO. This is simply full dividend imputation. Is this the same all over the world where individuals pay more than the company tax rate ??
 
How Dividend Imputation Is Applied Around the World
Taxpayers in countries wherein dividend imputation is offered will typically claim the appropriate credit when filing their taxes.


Dividend imputation has had a mixed history among different nations, as the circumstances of each country’s tax system prompt varying applications. Nine countries that once offered such an arrangement have either changed or ended the practice. These countries include the following:


  • United Kingdom
  • Ireland
  • Germany
  • Singapore
  • Italy
  • Finland
  • France
  • Norway
  • Malaysia

The United Kingdom and Ireland, for example, previously offered partial imputation with tax credits that were, effectively, portions 12 cents to 25 cents on each dollar. The partial imputation in the United Kingdom provided a 20 percent refund against a 33 percent corporate tax rate. Starting in 1997, however, the government moved away from this, first by eliminating the refund to tax-exempt shareholders that includes pension funds. Then, in 1999, the refund rate was cut to 10 percent.


Germany, Finland, Norway, and France all previously offered full dividend imputation. France offered tax credits equal to 50 percent of the face value of the dividend. After the repeal, these countries taxed dividends at a rate of 50 percent or greater. Germany did away with its dividend imputation program with the intent of reducing the nation’s tax rate. Finland, likewise, lowered its corporate tax rate after dividend imputation as repealed. Norway, on the other hand, did not lower its corporate tax rate when dividend imputation ended.
 
(just being the messenger)

if bloke worked less ($254 instead of $600pf) he would end up with $628 pf in the hand thru newstart and still have access to rent/transport/energy etc subsidies on top. Funny how some incentives are skewed ......

(ironically, a very similar dilemma some smsf peeps maybe soon face)
 

Look - I'm not disagreeing about the merits, or lack thereof, of the policy.
I'm disagreeing with the obvious spin you are applying in your interpretations.

I'll give you an analogy. The Abbott Govt wanted to increase the pension age to 70 (+3 years)

Using your logic, and the bolding that comes with it, I could say that 100% of Australian workers would have had $70,000 confiscated from them UP FRONT by Tony Abbott !!

Or better still, Tony Abbott will have cost workers over $70 billion dollars over 10 years.

Of course we both know that not all workers will go on the full pension so naturally the statements are false.

But it's no more false than you claiming 8.1 million people will lose their credits because I said before, most people don't trade stock on the sharemarket. They don't have the money.

https://www.smh.com.au/money/invest...ns-dont-invest-in-shares-20171208-h01m2v.html

You could use the Medicare angle if you want, but of course we both know the Coalitions' policy on sick people
 
easy to ignore the fact that peeps would still retire at 60 years of age and access tax-free super at that point.

Increasing the pension age to 70 meant that typical worker, if still working at 70, would have been making mandatory super payments into their super fund for 40 years or something (from memory).

Wow, pension at 70 but they would have at least 30 years of super behind them to access 10 years earlier (tax-free)............. not sure what the actual problem was with this ..........
 
Yes but there's a minimum number of hours you have to work to be a permanent part timer.
He works two x 7.5 hour days a week and gets holidays, sick leave etc. He doesn't want to go on Newstart.

And on your second point (and I think we discussed this before) there's no way I would be blowing my savings or super on an assumption that the pension would give me a lifestyle similar to what I would enjoy had I kept the money.
 

That is very interesting Ifocus, but we are talking about how it applies, in a pension context.

Maybe you should include a section, on pension eligibility in the listed Countries, for example the U.K and Ireland everyone gets the pension. Their super is taxed.

In Germany everyone gets a pension, the amount is based on your average salary and time contributed. Then you can also have your personal super which I think can't be passed on to your estate.

So in reality franking credits are a part of the picture, but I doubt many of the first world countries, means test the age pension and also penalise those who self fund and claim no State pension.
 
Well for starters the Superannuation industry wanted to increase your preservation age to the retirement age. Abbott / Hockey were talking about doing that prior to being sent to the far queue

There are a lot of things being ignored by the OP of this thread.

The point is you can spin up just about any disastrous conspiracy theory you want from a policy you don't agree with. That's exactly what the OP is doing - misconstruing to suit an addendum.
 
i see .... always 6 sides to a cube.
 
PZ99 said:
And on your second point (and I think we discussed this before) there's no way I would be blowing my savings or super on an assumption that the pension would give me a lifestyle similar to what I would enjoy had I kept the money.
Click to expand...

That could well be a folly on your part, if Labor go back to the original scheme, there were maximum and minimum withdrawls dependent on life expectancy, as you probably remember.

So the situation could quite easily arrive, where your balance and you age, in actual fact gives you a very similar outcome as the pension.
I would never have thought, the situation would arrive, where $1m in super gives a similar outcome to the pension and minimal savings.
Time will tell, but it will be interesting, I'm pleased that i am close to pension age.
 
If I had a million dollars in or out of super I can assure you the last thing I'll be worrying about is refunding franking credits. But I suspect my situation will be quite different.
 

Now did any of those countries keep the system for high income earners but abolish it for low income earners?

Getting rid of it is one thing and there are rational arguments for or against that.

Leaving it in place solely as a tax break for high income earners is somewhat harder to justify however and without that aspect I doubt this thread would exist.

If we're taxing company profits then tax company profits. Don't tax them only for lower income shareholders - a policy that's truly bizarre really.
 
PZ99 said:
If I had a million dollars in or out of super I can assure you the last thing I'll be worrying about is refunding franking credits. But I suspect my situation will be quite different.
Click to expand...
Of course, if you have tons of money it doesn't matter, but $1m puts you right in the spot where it hurts the most.
At $1m franking credits help a lot, especially with minimum draw downs, as the draw down increases the supporting shares have to be sold.
The difference between 4-5% income and 7-8% income is substantial, at that level.
 
PZ99 said:
Are you saying Capital Gains tax to be 75% on all shares ?

OR

75% of all your share gains are to be taxed ?

There is a huge conflict between those two narratives
Click to expand...
the bill we cant afford wants to cut the discount from 50 to 25% arguing it's needed to help bring down property prices, yet the innocent share investor will be dragged into it too, its just labor's blunt instrument approach, it should have all investors up in arms, it's even more unfair than losing the fc refund, because share investors havent caused the property price bubble
 

John5 .

I believe you are correct. I am an accountant and so I have to advise on all taxation matters, so I have to know about franking credits as well. I hate share investing because of the low returns. I mainly do subdivisions where I can make 25% profit on costs, sometimes in 4 hours. I have a subdivision club of 500 members. However I believe the biggest Shorten slug is 75% capital gains tax which scientifically means 75% of any gain you make under Shorten must go in your tax return at your marginal rate. Currently it's 50%.

Does everyone know that Shorten wants 75% of all your share and property gains put in your tax return when you sell, just like salary and wages ???? Currently it is 50%. I hate the use of the wording "the discount will be halved. " The public haven't got a clue.

Shorten - It's a 25% discount if you hold for 12 months, or compared to a company which is full tax and doesn't get any discount no matter what.

It's actually a 75% tax (refer above definition ) compared to your own home, which is tax free.

For heavens sake can't the media use the phrase 75% of all profit will be taxed, instead of "halving the discount". Ordinary people wouldn't know this.
 
Quite a few on here agree with the tax increases, so if people on an investment forum want to give more money to the Government, one must assume the majority of the general public will agree. Labor must have struck the right chord obviously, the rapid rise in Sydney/Melbourne house prices, is fresh in people's minds.
They forget those same people who caused the prices rises, are the same ones getting burnt now.

I don't think it will sink in, untill it effects people personally, by then it will be all over.
I think it is just a case of wait and see, but if Labor win a majority in both houses, it's going to be an interesting three years.
 
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NSW state elections this week-end. I have not heard one policy from anyone that talks about lowering fees/taxes. In fact, both majors talk (very quietly) of more state debt in the future ..........
 

Sptrawler - Thanks for your honest post. And you have many apparently lol. If you wouldn't mind me asking, why would anyone on this forum mainly commenting about shares, and owning shares, who wish to make money on dividends and profit eventually, want an increase from 50% to 75% profit to be put in your tax return ??? To give money to the government ?

I have been to emergency department to a public hospital twice in the last 3 months and had magnificent care. Is there one area you want the government you want your money to go to ?. Smith Family say there are 1.2 million poor people who need donations. Why donate to the government instead of private needy organisations ?

I think you are right that it will take the public, after they see their accountant after they sell their shares will have a big shock coming, of 75% profit to go into your tax return. The horse has bolted now for the public. But at least the punters on this site should be aware of the mathematics of the proposed ALP policies. If there were proposed LNP policies I would cover them, but there aren't.

May I ask , what's the point in owning shares if Shorten wants 75% of your profit in your tax return?

Why not increase the capitals gains tax to 100% or 150% or 200% ? Why pick 75% ?
 
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