The Elephant in the room - Taxation

[SirRumpole]

The latest winners and losers in the taxation system.

66 people earned an average of $14.5 million in 2020-21. None of them paid a cent in tax to the ATO

Sixty-six people earned more than $14 million in the 2020-21 financial year, but new data from the Australian Taxation Office shows they paid zero income tax.

www.abc.net.au

 

[farmerge]

The latest winners and losers in the taxation system.

66 people earned an average of $14.5 million in 2020-21. None of them paid a cent in tax to the ATO

Sixty-six people earned more than $14 million in the 2020-21 financial year, but new data from the Australian Taxation Office shows they paid zero income tax.

www.abc.net.au

Nah this is not good enough, poor old tax payer on the bones of his/her a**e would be screwed to the floor for just 1 cent.
Well payed, clever accounting , but not paying their part.

 

[dyna]

The ATO ought to reveal just what those accountants recommended for their clients.
Gearing up the business ?
Their share portfolio?
R.E. ?
Whatever , they have been pushed way out there , on the limb of very high risk .
Come the revolution or just a little old war or maybe a big recession , they lose the lot. Shot down in flames.
If I'm paying scheit - loads of tax , I tell myself I must be muddling along , profitably at least , must be doing something right .

 

[farmerge]

The ATO ought to reveal just what those accountants recommended for their clients.
Gearing up the business ?
Their share portfolio?
R.E. ?
Whatever , they have been pushed way out there , on the limb of very high risk .
Come the revolution or just a little old war or maybe a big recession , they lose the lot. Shot down in flames.
If I'm paying scheit - loads of tax , I tell myself I must be muddling along , profitably at least , must be doing something right .

Just goes to show that 60 odd super wealthies don't give a rats about the rest of the country, just their own miserable well being.

 

[Value Collector]

Just goes to show that 60 odd super wealthies don't give a rats about the rest of the country, just their own miserable well being.

Sure there is tax dodgers out there, but the article doesn’t give much detail, there is genuine reasons why some people won’t pay tax in any given year.

For example, they might be writing off this years profits against big losses they made in prior years, or they may have made big investments into new equipment that was part of the accelerated write offs available in that year, eg writing off the full value in the first year rather than over the normal 10 year - 40 year etc.

Maybe they made huge donations to charity, who knows.

There are many reasons, with out knowing the details we won’t know, and it’s not really our business, it’s up to the ATO to follow up and audit.

 

[farmerge]

Sure there is tax dodgers out there, but the article doesn’t give much detail, there is genuine reasons why some people won’t pay tax in any given year.

For example, they might be writing off this years profits against big losses they made in prior years, or they may have made big investments into new equipment that was part of the accelerated write offs available in that year, eg writing off the full value in the first year rather than over the normal 10 year - 40 year etc.

There are many reasons, with out knowing the details we won’t know, and it’s not really our business, it’s up to the ATO to follow up and audit.

I understand that because in our business we do the same. But the numbers mentioned were many millions of dollars, far more than annual write off or write downs.

 

[Value Collector]

I understand that because in our business we do the same. But the numbers mentioned were many millions of dollars, far more than annual write off or write downs.

If they can earn millions, they obviously control businesses worth many millions also, and so naturally are dealing with capital and cashflows that can slosh either way into profit or loss in any given year.

There will be alarmist articles every year stating X number of millionaires paid zero tax, but they are probably different millionaires to the ones from last year that paid zero, and the millionaires that paid zero last year might pay millions this year.

I remember there was a big stink one year because Andrew Forrest got a refund on his franking credits because he donated his FMG dividend of $100’s of Millions to charity.

 

[farmerge]

If they can earn millions, they obviously control businesses worth many millions also, and so naturally are dealing with capital and cashflows that can slosh either way into profit or loss in any given year.

There will be alarmist articles every year stating X number of millionaires paid zero tax, but they are probably different millionaires to the ones from last year that paid zero, and the millionaires that paid zero last year might pay millions this year.

Yeah I guess it is a hit and run piece of journo work,
Would be interesting to know though, if the business is one that generates personal wealth or is a business that is a very large employer with legitimate write downs/offs..

 

[Value Collector]

Yeah I guess it is a hit and run piece of journo work,
Would be interesting to know though, if the business is one that generates personal wealth or is a business that is a very large employer with legitimate write downs/offs..

Keep in mind even FMG which is a tax paying giant today, paid zero tax for its first 11 years because at first it was generating losses, and then even when profits started coming they took a couple of years to work through the accumulated losses.

Then once they finally had enough profits to pay dividends to Twiggy, you can bet he would have used the large losses he was sitting on from the failed Anaconda investment to offset the tax that would have been payable on the FMG earnings.

 

[SirRumpole]

Makes me wonder if the tax system should be changed to say 5% of gross income with no deductions.

That would make people think about what expenses were really necessary and what were just a tax write off.

 

[Value Collector]

Makes me wonder if the tax system should be changed to say 5% of gross income with no deductions.

That would make people think about what expenses were really necessary and what were just a tax write off.

That’s a terrible idea, it would punish people that operate businesses with high costs and low profit margins like farmers, who only make 5% returns.

But be great for companies like Google, who earn super high profit margins.

Many companies earn very small returns on gross revenue, coles and Woolies for example only earn about 5% pre tax, so that 5% on gross would be a 100% tax.

The fairest system is the current one, eg taxing profits, not revenue. although we do have gst already which is a revenue tax.

 

[SirRumpole]

The fairest system is the current one, eg taxing profits, not revenue. although we do have gst already which is a revenue tax.

GST is not paid by businesss so it's not a tax on their revenue.

 

[qldfrog]

Makes me wonder if the tax system should be changed to say 5% of gross income with no deductions.

That would make people think about what expenses were really necessary and what were just a tax write off.

That would also make people think twice and be sure we end up as Zimbabwe ..with followup white farmers farm occupation by native first nation members, the rightfuls..not Pauline's club....

 

[rnr]

GST is not paid by businesss so it's not a tax on their revenue.

How on earth did you arrive at that conclusion?

 

[Knobby22]

The ATO ought to reveal just what those accountants recommended for their clients.
Gearing up the business ?
Their share portfolio?
R.E. ?
Whatever , they have been pushed way out there , on the limb of very high risk .
Come the revolution or just a little old war or maybe a big recession , they lose the lot. Shot down in flames.
If I'm paying scheit - loads of tax , I tell myself I must be muddling along , profitably at least , must be doing something right .

I expect the accountants used were PWC.?

 

[sptrawler]

What I can't understand, is why people think it will change, when the politicians and media people are trying to become number 67. ?

 

[SirRumpole]

How on earth did you arrive at that conclusion?

Does business pay GST ?

They claim it back afterwards so it doesn't affect them.

 

[Value Collector]

GST is not paid by businesss so it's not a tax on their revenue.

It’s a tax added to their prices, which is what a 5% revenue tax would have to become.

Think about if every lay of business had to pay 5%.

Eg the produce store pays 5% of the fertiliser and seed she sells to the farmer, the farmer pays 5% of the wheat he sells to the miller, the miller pays 5% on the flour he sells to the baker, the baker pays 5% on the bread he sells to the retailer/wholesaler, the cafe pays 5% on the sand which they make.

At the end of all that the total amount of tax would be higher than the profit earned.

 

[rnr]

Does business pay GST ?

They claim it back afterwards so it doesn't affect them.

Yes, a business does pay GST (where applicable) and they also collect GST (where applicable) which ,in most cases, results in a net outgoing.

 

[Value Collector]

Does business pay GST ?

They claim it back afterwards so it doesn't affect them.

The gst is deducted from the revenue they bring in.

If a business charges you $110, they have to pass $10 along to the government, leaving them with $100.

If they purchased $55 worth of goods from a supplier in order to make what they sold to you, they deduct the $5 gst they paid to the supplier from the $10 they owe the government and pass along the remaining $5.