Correction on my part.
$1000 Grossed up dividend.
$1000 Rent boy.
I'll answer for you, in both cases it is $480
Don't be such an idiot. You said the shareholder's marginal rate is 45%, so if he were to get a dividend of $700 and if he was double taxed, he would pay an additional $315 in tax. But he is only paying an additional $150. Why? Because the NET EFFECT of dividend imputation is that he ends up being taxed as if the company profits were taxed just once at his marginal tax rate of 45%. So, as per your figures, the company paid $300 tax and he paid just $150 tax, which is 45% of the company profits of $1000.
What you in your idiocy is now trying to say is that because the process goes through 2 iterations, company is taxed and shareholder is taxed, that it is double taxation. But the shareholder is reimbursed the company tax paid, so it is not double taxation, just single taxation at the shareholder's marginal rate, as your figures show.
If your issue is that you do not want to have to report dividends received because they are already taxed, then that is not the same as double taxation. The reporting is needed to ensure that the shareholders are taxed at their marginal rate, rather than the company's rate. Individuals are not companies, so they pay their taxes at their respective rates.
Reimbursing the company tax means you are only taxed ONCE, not DOUBLE TAXED.
Okey, so do you see my point though? Why do I pay $480 in tax for an amount of money which was already taxed once?
And here is the only point where I concur.OH WAIT HAHA THAT'S PRECISELY WHAT THEY DO, HOW SMART OF THEM.
Oh FFS!
You do not pay $480 on an amount already taxed. You receive $700 because $300 has already been paid. Your additional taxation (or credit as the case may be) is to bring the total tax into line with your marginal rate as an individual.
Why? Does does my company's profit have to do with my marginal tax rate?
Because dividends are personal income, just like your income from Kings Cross.
If the company retains earnings, they are only be taxed at the company rate.
It seems to me that "income" is a magical word that the government slaps onto any money you are capable of receiving so that you get less and they get more (for doing nothing).
My chief difference of opinion is that because the money is already taxed, I do not see why it has to be taxed further. I do not see what benefit or service the government provides in between the point where the company income is taxed at 30% and where it is taxed a further 18% points at the individual level. Do you?
Yes I understand this - but why? How is that fair or logical? I just don't get it. He did not make this money - the company did - and the company was already taxed for it.
Why should he then be taxed so that the total amount of tax is equal to his marginal rate? What is the justification for that?
I agree - individuals are not companies. So why are individuals taxed for company profits? It is nonsensical. I don't see how it's not the same as double taxation. What do you call it?
I don't recall anyone having paid for my degree. Last time I checked, I paid for all of it.
jancha said:I'm glad you brought up the point of getting a rebate on the company tax if your personal income doesn't meet the criteria but what if the following year you made a profit would you then have to pay back the 30% + the 15% from the previous year?
Your example was based on a shareholder who had a marginal rate of 45%, so the net effect is that shareholder paid an extra 15% of the company pre-tax profit so that his portion of pretax profits were effectively taxed at his rate of 45%, rather than the company's rate of 30%. This to you may seem unfair as the company has already paid tax. But for shareholders whose marginal rate is 30% or less, they effectively pay no extra tax (for those on 30%) and actually get additional tax reimbursed for those whose rate is less than 30%.
That is entirely another can of worms, perhaps company and individual tax should be closer.
But don't forget company tax is flat, individual tax is progressive.
Would you be happy for instance, if your main income was taxed at the flat company rate?
For all but the highest earning Australians, this would mean a greater tax burden.
So, using your example, if a taxpayer was in the lowest tax bracket (0%) and they remained in that bracket after receiving the $700 dividend, they would actually get a tax rebate of $300. The ATO would assess their tax as Other Income + $1,000, tax due is $0, tax paid = $300 (e.g. the imputation credit on the dividend), so they get $300 back. How can you call this double taxation when they are getting an additional tax rebate rather than paying more.
You mentioned that the company already paid 30% so why should the shareholder pay more (for those on a higher marginal rate than 30%, as those on less get reimbursed). One reason is you do not want people setting up companies purely as an investment structure to avoid tax. If a 45% marginal tax individual were to set up a company to hold his investment assets, then that person would only pay 30% on dividends received through the company (on your preferred system) than if he held the investments in his own name. That is clearly inequitable and favours those who are wealthier and can afford accounting resources and professional advice. The dividend imputation system ensures that the end recipient receives the same tax treatment irrespective of whatever intermediate structures may exist between him and the investments.
That's pretty dumb. You plan on moving overseas, wouldn't you have been smarter to have used HECS and then once you left you'd never have to pay it back?
These individuals are already rich... pay up!!
They should be taxed at 45% no?
Tax is already paid at the company level for dividends, meaning they only have to fork up another 15%. Sounds right to me.
with the world's most overpriced property.
Wait till you get to Singapore. You'll change your mind on that one.
Ideological considerations aside, it would mean although those on say $200k would pay only $60k in tax, someone on 60k would pay 18k and someone on 30k would pay $9,000.I would be happy, it only seems fair. Does an individual use more government services if they make more money? Probably not, they are in fact more likely to use private healthcare, private education, private infrastructure, etc. If anything they should pay less tax.
I think that effort expended in order to gain that income also ought to be taken into account somehow.Ideological considerations aside, it would mean although those on say $200k would pay only $60k in tax, someone on 60k would pay 18k and someone on 30k would pay $9,000.
That doesn't strike me as reasonable for those on the lower pay rates.
The study estimating the extent of global private financial wealth held in offshore accounts - excluding non-financial assets such as real estate, gold, yachts and racehorses - puts the sum at between $21 and $32 trillion.
This amounts to roughly the US and Japanese GDP combined. Roughly 10 million people worldwide have offshore accounts, with 100,000 people owning half of those secreted assets.
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