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Have you seen the 2024 tax brackets, I think it’s one of the biggest reductions in tax I have ever seen, it’s the opposite of bracket creep.
Market response to the Election outcome
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Yep, I don’t argue that, it’s just that’s not what the article you posted was talking about, it was talking about the legitimate reasons some companies aren’t paying taxes.
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No they can reduce the total tax payable because they distribute income to those paying tax at a lower rate or not at all like children or other dependents.
'Total dollars subject to tax' is pretty irrelevant, the point is tax collected on income produced.
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wait until 2024 and see what the wages are ( if you are lucky enough to have a job )
i remember the 1968 to 1972 period well it took only 4 years for a first week apprentice ( in 1972 ) to get a full adult wage ( for a worker in 1968 ) AND it wasn't until later that year Gough Whitlam was elected so you can't blame that on the ALP( although it probably helped them get elected )
i remember the 1968 to 1972 period well it took only 4 years for a first week apprentice ( in 1972 ) to get a full adult wage ( for a worker in 1968 ) AND it wasn't until later that year Gough Whitlam was elected so you can't blame that on the ALP( although it probably helped them get elected )
JohnDe
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Mark McGowan pretty much saying what I think that the new federal government will attempt with China - "I urge a reset on the relationship, it will be good for us if it is reset to more diplomatic and we can talk to them"
Value Collector
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Firstly you are talking. About family trusts, which are totally different to the unit trusts and stapled trusts mentioned in the article, stapled trusts and unit trusts can only distribute profits to their owner/share holder, they have no discretion to distribute profits to lower tax payers.
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But, Even family trusts can’t do what you said.
If you distribute trust income to a child under 18 it is taxed at the highest tax bracket of 47%.
Family trusts can not reduce the total amount of dollars which are subject to tax, all they can do is distribute those dollars to the family member that might be on lower tax rates, but there is nothing wrong with that.
Eg, If a family holds their investments in a Trust, and they earn $80k a year in dividends, they can distribute that to the stay at home Dad rather than the Mum that is a doctor and earns $150k a year already.
All that is happening by doing that is that the dividends are taxed at the tax rate of the stay at home Dad instead of the higher tax rate of the stay at home Mum, which makes sense because they are family assets, infact both the wage and the dividends are basically family assets, so it doesn’t make sense to load up just one family members tax return.
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well picking a fight with China is a no-win for Australia , we ain't going to shift them with either strong words or force
HOWEVER if we sit down and talk/negotiate we might persuade them to move in a direction ( a little bit ) we would prefer
HOWEVER if we sit down and talk/negotiate we might persuade them to move in a direction ( a little bit ) we would prefer
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Garpal Gumnut
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Value Collector
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No it can be used as a tax minimisation strategy, but not tax avoidance. it’s simply a way of owning family assets, in a way that the profits can be distributed so that the family as a whole are not over paying tax.
I actually believe married couples should be able to do this without a trust.
I mean why should a married couple with one partner earning $200k pay more tax than a couple where both partners earn $100K each ($200k in Total).
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At the end of the day family trusts are simply a way to hold long term family capital, and yes the profits can be distributed to the members with the lower tax brackets, but this isn’t avoidance it’s minimisation, and really is just fixing some unfairness in the way the tax law works.
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So why doesn't everyone use them ?
Make the benefits available to all and I wouldn't complain, but it just seems a dodge available to high income earners only.
JohnDe
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Yes, hopefully the beginning of a new more civil relationship that benefits both countries. The next several weeks will be watched closely by many market leaders. "...you can have a very strong relationship with the United States, Briton and our other Allies, and a productive relationship with China..." If we can maintain such an idea, without selling out or values, there will be sunny days for investors.
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There are a few million active family trusts in Australia at the moment, so I think a lot more people are using them than you probably think.
But some people find other ways to level the playing field, eg a High income earner in a relationship might purchase the family investments in her husbands name, this would essentially achieve the same outcome.
Some people higher their spouse as a “consultant” or “book keeper” and pay them a wage even though the actual work might not be done, but it allows them to move some earnings into their tax rate.
Some people own assets under company structure and pay their spouse a wage or dividends from the company.
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There are lots of ways to achieve the same outcome, but as I said I think married couples should be able to lodge joint tax returns that achieve a balanced result.
In the mean time, the most legitimate option is a family trust, which obviously cost extra money and effort to setup and maintain, so not everyone will do it.
The ATO has been actively investigating matters associated with trusts for some years. Here is the link with the latest updates on advisories and determinations
Trust entitlements - draft guidance
Draft advice and guidance products set out our evolving view on trust entitlements under reimbursement agreements and unpaid present entitlements of trust beneficiaries.
umm ... not quite. What actually happens is that the net (discounted) capital gains are passed from the trust to the individual. In the individual's tax return, the trust's capital gains are grossed up, so that the value of the discount is removed. Then, if the individual is entitled to the 50% CGT discount, then the discount is re-applied.
For the larger, listed, trusts (e.g. ETFs and property trusts), the individual is almost always entitled to the gain. However, in many smaller private trusts, this is not always the case.
Small difference, but it does make a difference.
KH
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Isn’t that basically the same end result?
My point was that the trust is chosen because it allows the capital gain to be taxed at the individuals tax rate, where as in a company structure a capital gain would be treated at regular company tax with no discount applied.
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Keep in mind also, Family Trusts are also used for handling large multi-generational assets, that belong to a family as a whole such as a large family farming enterprise or large family business. (Trusts are actually an entity that predates Australia, it goes back to Middle Ages, and families set them up to control land etc that was to be used to benefit the family not just an individual)
In these situations income needs to be distributed to various beneficiaries at different time and at different rates depending on that persons input.
For example a large family farm owned by the family trust might be paying -
Older generation - who build no longer tend the farm, but receive income from the trust in recognition of their ownership interest as beneficiaries.
Active Middle generation - who receive income from the farm for both the labour they put in and as owners.
In Active Middle generation- who don’t work the farm and instead have other jobs but still receive payments for their ownership interest.
Younger generation- who might still be studying might get payments from the family trust to pay school fees etc
In this way the whole family benefits from the assets owned by the whole family, but those benefits are distributed to each member based on what the contribute, (according to how the trust deed says)
JohnDe
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It's beginning -
After close to two-and-a-half years of a Chinese cold shoulder, Beijing has moved quickly to show it's willing to patch things up with the newly elected Albanese government.
After close to two-and-a-half years of a Chinese cold shoulder, Beijing has moved quickly to show it's willing to patch things up with the newly elected Albanese government.
Chinese Premier Li Keqiang had a warm welcome message for Anthony Albanese. Is this the start of a new friendship with China?
After close to two-and-a-half years of a Chinese cold shoulder, Beijing has moved quickly to show it's willing to patch things up with the newly elected Albanese government.
Premier Li Keqiang's congratulatory message would be routine under normal circumstances, but the warm language referencing the Whitlam Labor government's establishment of diplomatic ties with the People's Republic 50 years ago set the tone.
Mr Li said China was "ready to work with the Australian side to review the past, face the future, uphold principles of mutual respect, mutual benefit" — a far cry from the Cold War mentality language often hurled at the Morrison government.
While it's a sign China sees the change of government as a chance to reset relations, the expectations on both sides are of only a modest improvement in ties.
State media coverage of Anthony Albanese's win gives a better idea of what the Chinese leadership is thinking rather than officially saying.
While the Global Times, a Communist Party-owned outlet, is known for its attention-seeking nationalistic antics, it has played an outsized role in complimenting the Foreign Ministry's diplomacy in recent years.
It said Mr Albanese's government should be "a turning point" for relations and called on Australia to regain its "rationality" when dealing with China.
Indications are at the very least that Beijing expects less frank and forthright public criticism of its political repression in Hong Kong, Xinjiang and its increasing sabre-rattling over Taiwan.
As usual, state media put all blame on the Morrison government for the deteriorating ties and made nostalgic references to the "pleasant diplomacy" of the John Howard days.
There was no mention of the two Australians Beijing has locked in prisons on espionage charges, the billions of dollars of thinly disguised political trade bans it has put on Australian exports, or of President Xi Jinping — a leader very different from the less ambitious and repressive pair that John Howard dealt with in his terms.
It's for these reasons that Mr Albanese stated that relations with China would "remain difficult" before he jumped on a plane to attend the Quad meeting in Tokyo — a grouping Beijing objects to.
"It's China that's changed," Mr Albanese said, seeking to reassure the public that his government won't seek to return to the cosy days of Chinese government-linked donors lining the pockets of Australian political parties, whenever closer engagement was in vogue.
State media, too, is tempering expectations, noting Australia's military alliance with the United States means things can only get so much warmer.
Judging from the language out of China's government, Mr Xi increasingly sees the US as the ultimate adversary that can challenge China's dominance.
Unlike a decade ago, Beijing seems to now realise Australia isn't going to break its American ties.
But for the barley farmers, wine growers, lobster fishers and thousands of others affected by China's political trade bans, the hope will be that some improvement is better than none, and that exports will soon start moving through Chinese ports.
What we should make of the surprising message that China sent to Anthony Albanese
Messages of congratulations from foreign leaders are usually just a standard inclusion in the election win welcome pack, but the warm reception of Anthony Albanese by China's Li Keqiang signals a small but significant shift in our frostiest friendship, writes Bill Birtles.www.abc.net.au
No, it isn't, because even though the trust might be entitled to, and distribute, the capital gains discount to an individual, not all individuals might be eligible to claim that same discount.
Just one example: if an individual has brought forward capital losses, those capital losses must be applied to the grossed up capital gains from the trust, before any discount is applied to the remainder. There are also special rules that affect an individual's eligibility to claim the CGT discount, depending on how past year's distributions from the trust were distributed among beneficiaries.
Also, when a company receives a distribution from a trust that includes a discounted capital gain, the company must gross up that capital gain by the amount of the discount when it is completing its tax return. This includes distributions from ETFs and listed property trusts. The company isn't entitled to any CGT discount.
The use of trusts in tax planning has changed quite a bit over the last 20 years or so. It is now common to use a dual trust structure, one trust containing assets that may in the future be subject to a capital gain, the other trust receiving all income, including franking credit type income. Trusts are still quite an effective way to structure any family assets, business or investments, but we just have to wait now to see what the new Australian Government has to say in this regard.
KH
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In that case it's the same as if the person had earned a capital gain in their own name isn't? eg if they earned a capital gain in their own name, but had a previous capital loss they would first deduct the gain from previous loss?
either way this is splitting hairs, and doesn't really affect my original point, which was simply that if an institution is setup to invest in assets that are likely to produce capital gains, its better to have the institution setup as a trust, so it can distribute the capital gains in a way that allows the investors CGT discount to apply, where a company structure wouldn't.
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Remember this quote below was my original comment, and it's true a trust structure allows capital gains benefits to pass through to the investor where a simple straight forward company structure wouldn't. Of course it also depends on the situation of the person whether these benefits will apply to them, but there is no doubt that a lot of the investors in these stapled securities will be better off under the stapled trust structure rather than the company structure.
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