The ScoMo Government

[sptrawler]

As crazy as the Auditor General perhaps.

https://www.ausleisure.com.au/news/...seats-with-potentially-illegal-sports-grants/

Like I said if someone has been rorting take them to court, this 24/7 trail by media about everything that happens in every aspect of life, is one of the reasons I don't watch the media.
Just start and demand legal action, if there is evidence send some f%$er to jail, with a bit of luck they will empty parliament and we can elect a whole new group.

 

[sptrawler]

Nothing new about this sadly, "sports rorts" was a term that became popular back when Keating was PM

That doesn't make it even slightly acceptable, just pointing out that it's nothing new.

Which is what I'm alluding to, the media try and make everything an OMG moment and everyone on que goes OMG, it is all a bit like a pantomime.
I'm a bit surprised the media don't give away away a free bag of chips and popcorn, with every paper sold.

 

[Smurf1976]

You mentioned deserving and i think you are using an odd and now obsolete context: you see taxation as a kind of social justice, it is not anymore, it is a grab for cash

There's that aspect but my underlying reasoning is somewhat more hard nosed than that.

If someone stops working age 55, spends 5 years on the Newstart treadmill, lives on their compulsory super age 60 - 67 and then goes onto the Age Pension until death well that can easily be a $350K cost to government and that's just for one person.

If I was the treasurer, and I could persuade people to self-fund their own retirement, well then that's a huge saving and remains so even if they don't pay even one cent in tax on their investment earnings.

The benefit to government comes through never paying them Newstart or the Age Pension. If they pay some tax well that's just a bonus, the icing on the cake, but it wouldn't be foolish enough to make the tax high enough to discourage this idea and have them on Newstart / Age Pension instead. That would be seriously silly.

I'm seeing it as a business thing far more than an ideological one. Get people self-funded of their own accord if they're out of work or retired, that cuts government spending = taxes can be reduced and that makes Australian business more competitive and the economy benefits.

How to push people to do that is a bit of a question yes but point is no way should anyone be discouraged from doing so.

 

[Smurf1976]

Meanwhile down in Tasmania I see that Peter Gutwein is the new Premier.

What can I say?

Well I'll say that the sooner Tasmanians come to their senses and elect a Labor government, or for that matter anyone who isn't Liberal, the smaller will be the financial black hole to be filled. I'm in SA these days but for heaven's sake people in Tassie, read the damn budget papers and stop the rot at the next election otherwise you'll end up broke.

 

[sptrawler]

There's that aspect but my underlying reasoning is somewhat more hard nosed than that.

If someone stops working age 55, spends 5 years on the Newstart treadmill, lives on their compulsory super age 60 - 67 and then goes onto the Age Pension until death well that can easily be a $350K cost to government and that's just for one person.

If I was the treasurer, and I could persuade people to self-fund their own retirement, well then that's a huge saving and remains so even if they don't pay even one cent in tax on their investment earnings.

The benefit to government comes through never paying them Newstart or the Age Pension. If they pay some tax well that's just a bonus, the icing on the cake, but it wouldn't be foolish enough to make the tax high enough to discourage this idea and have them on Newstart / Age Pension instead. That would be seriously silly.

I'm seeing it as a business thing far more than an ideological one. Get people self-funded of their own accord if they're out of work or retired, that cuts government spending = taxes can be reduced and that makes Australian business more competitive and the economy benefits.

How to push people to do that is a bit of a question yes but point is no way should anyone be discouraged from doing so.

Try and get that message through to the masses, even trying to get the media to understand it, is impossible. I said to someone a long time ago, you either have to be filthy rich or just under the full pension threshold, if you get caught in the middle you will be cannon fodder.
It took till last election for him to understand what I was talking about. Now I'm seeing everyone I know aiming for the latter, which is a shame and is just another nail in Australia's living standard.
The rush to the bottom is on IMO, people aren't stupid and the last election just gave the working class a heads up on what's coming.
By the way, I'm off to Canada and the U.S in April.

 

[IFocus]

Its worth noting that since Howard introduced the ATO paying out franking credits its now $8bil (19/20) and growing, its more than the federal government spends on education, says a hell of a lot about Australia as a nation and its priorities.

I think its a disgrace.

Rapidly moving from the lucky country to full on stupid country

 

[sptrawler]

Its worth noting that since Howard introduced the ATO paying out franking credits its now $8bil (19/20) and growing, its more than the federal government spends on education, says a hell of a lot about Australia as a nation and its priorities.

I think its a disgrace.

Rapidly moving from the lucky country to full on stupid country

https://www.afr.com/companies/minin...-fantastic-for-andrew-forrest-20190220-h1bhh3

https://www.afr.com/companies/minin...m-surprise-fortescue-dividend-20190514-p51n8d

https://www.afr.com/policy/tax-and-...-forrest-took-different-paths-20160323-gnp7qt
From the article:
In contrast, the special purpose accounts that Tattarang filed with the Australian Securities and Investments Commission show the company earned only $197 million in 2014.

This was $4 million in dividends and $193 million in distributions from the Peepingee Trust, which holds the bulk of Mr Forrest's shareholding in Fortescue.

The higher figures for taxable income in the ATO data suggest that other related entities have been consolidated into the Tattarang tax return which the ASIC accounts do not include.

The distribution to Tattarang appears to have been in the form of shares, with Tattarang reporting it had available for sale investments at a fair value of $242.5 million at June 30 2014
The dividends would have been franked, and thus tax-free. By transferring assets to Tattarang in the form of a capital distribution, Mr Forrest appears to have ensured the payment was not taxable, though the accounts record a $4.7 million deferred tax liability.
Absolutely.

 

[Smurf1976]

Its worth noting that since Howard introduced the ATO paying out franking credits its now $8bil (19/20) and growing, its more than the federal government spends on education, says a hell of a lot about Australia as a nation and its priorities.

How much are we paying out in the exact same Tax Free Threshold and 19% tax rate to everyone else?

How much are we paying out for Newstart and Age Pension because people didn't invest when they could have?

How much will it cost the budget if those who'd be up for higher taxes in dividends decide it's all too much and simply don't bother investing and claim welfare instead?

A lot more than $8 billion for each one of those.....

 

[sptrawler]

How much are we paying out in the exact same Tax Free Threshold and 19% tax rate to everyone else?

How much are we paying out for Newstart and Age Pension because people didn't invest when they could have?

How much will it cost the budget if those who'd be up for higher taxes in dividends decide it's all too much and simply don't bother investing and claim welfare instead?

A lot more than $8 billion for each one of those.....

I told you it was a waste of time.
People only believe what the media tells them, they can't see that reducing the amount a billionaire pays by 30% costs more, than giving a self funded pensioner a small amount and stopping them accessing the pension.
No it is better to take $6k of franking credits of a self funded pensioner, so that they sell their shares spend their money and get $10k of pension + the health care card + cheap rates, cheap licenses, cheap presciptions, than to make a billionaire pay 30% tax.
Yep the clever Country, is there any wonder the S bend is coming up fast.
Just booking a trip to China end of September. they wont have to worry about getting my franking credits.lol

 

[IFocus]

Franking credits will be changed no ifs no buts, how I don't know but it will the drag on revenue is massive, put up any argument you like but what cannot happen wont what the government cannot afford they won't pay.


As for welfare age pension is by far the biggest expense and growing rapidly just like franking credits note how small unemployment benefit is.

 

[sptrawler]

Franking credits will be changed no ifs no buts, how I don't know but it will the drag on revenue is massive, put up any argument you like but what cannot happen wont what the government cannot afford they won't pay.


As for welfare age pension is by far the biggest expense and growing rapidly just like franking credits note how small unemployment benefit is.

The gain from not paying franking credits, to self funded retirees, will cost more in welfare and associated costs brought about by people qualifying for the age pension. Time will tell, but I bet it will be found true, within one term of Government.
There was only talk of taking it off SMSF and those who didn't pay tax, not including those in Industry or Retail funds.
Therefore those who transferred to super funds would still qualify and those who get part age pension qualify.
Also the savings quoted were before the $1.6m cap was introduced and therefore the money in accumulation qualifies as well.
It was a joke that would have backfired, but it would have got in to being and more people would have been pushed onto the pension.
It was just a nasty attempt, to force SMSF money into Industry Funds.
If it was about being unaffordable, take it off all super funds and trusts, I'd agree to that and would save ten times the amount.
It was all BS and lies.

 

[macca]

Yes, no doubt a ploy suggested by the Super Funds to gain more commission as SMSF transfer over to the big funds.

They mention that the tax refunds have grown over the years, that is good news, it simply means that more people have saved and invested for their retirement.

As the number of retired people grow we need everyone to sock a bit away to ease the burden on those still working

 

[Smurf1976]

Franking credits will be changed no ifs no buts, how I don't know but it will the drag on revenue is massive, put up any argument you like but what cannot happen wont what the government cannot afford they won't pay.

An observation having spent much of my working life thus far in situations where it is at times necessary to ask others to go considerably beyond what they really have to do, a concept that anyone who's worked in utilities and so on will likely be familiar with, there's a few unwritten rules which go with this:

1. Make sure everyone understands the need. Show them hard data not just your opinion.

2. Go through all the options with proper facts and figures and explain why we're going with this one and not some other way. Expect scrutiny and remember that yes, the boss does indeed need to answer to those below at least they do if they want respect.

3. Make sure that everyone's pulling their weight and this includes management. No reason the bosses can't be on the tools if this really is an emergency.

Now translating that to this debate about franking credits, what Labor needs to do is:

1. Explain the need. Hard facts and figures not ideological stuff.

2. Put everything on the table and have a broader debate about tax reform. And yes, politicians are indeed answerable to the public who don't like being told otherwise by the leader of a party.

3. If removing franking credits is indeed the best option, it goes without saying that they'll be removed for everyone and starting at the top not the bottom. No chance it's going to be accepted to remove them for someone on $30K but retain them for someone on $30 million a year and no chance that loopholes involving handing money over to certain fund managers will be tolerated either. If we're removing franking credits well then we're removing franking credits - gone outright not just for some.

Do that and I doubt they'd have too much trouble getting it through. Yes the industry funds will be paying just like everyone else and so will the billionaires. No loopholes or exemptions unless they apply to everyone. "Everyone pulling their weight" as it goes.

 

[qldfrog]

About franking credits, for liabiity reason, i own a one man company
Profit taxed at 30pc.whatever company rate is
Without franking credit,any distribution would then be taxed twice first 30pc then own tax rate
Found difficult it could be seen as fair...

 

[Smurf1976]

Thinking about the tax question more broadly:

Government needs revenue in order to fund a wide range of services expected by the community or necessary for the nation's functioning. There's no real question about that.

Taxing businesses and/or individuals is thus a necessary evil. Nobody's ever going to like paying tax but it has to be.

The question thus comes down to doing it in a manner that's broadly proportionate to ability to pay and which doesn't produce a change in behaviour so as to avoid the tax, unless that change in behaviour is itself seen as highly desirable (eg sin taxes).

The broad concept that an increasing % rate of taxation applies as income increases, that is progressive taxation, seems to be broadly accepted in Australia and many other countries. Few seem to be objecting to the basic notion that someone earning $500K should pay more than 10 times as much tax as someone earning $50K. That said, at no point should the marginal rate reach or exceed 100% - all that does is in practice stop the earning of that money since few are going to work and hand over literally 100% to government, indeed the practical limit would be somewhere considerably lower (perhaps 50% at a rough guess).

Back to the franking credits, well the basic principle should be that someone who earns $x pays y amount of tax. How they earned that isn't something that's acknowledged at present in other contexts, anyone from a professor of history to a sex worker is paying the same rates assuming they're complying with the law, so it would seem unwarranted to treat investment income any differently. That is, tax it at the same rates that would apply if that income came from any other source. Someone earning $x pays $y tax whether that's from dividends, working, rent or whatever.

The only exception I'd make to that principle is in relation to venture capital. We ought to have a special class of shares, able to be issued by startup companies etc to fund their development, and as an encouragement to invest I'd tax that at a much lower rate, perhaps even zero, so long as the original shareholder continues to own those shares. Noting that such shares would only ever be issued by startups, the rules would preclude them being issued by any established business, the intent is to encourage investment into such companies and foster an entrepreneurial culture rather than focusing solely on existing shares, houses and so on. The associated rules would also include salary caps on senior managers of the business prior to and for a specified period following the issuing of such shares so as to minimise any rorting opportunities. Also a requirement that the physical operations of the business are conducted primarily in Australia - so an Australian company with a factory in China doesn't qualify.

 

[SirRumpole]

Like I said if someone has been rorting take them to court, this 24/7 trail by media about everything that happens in every aspect of life, is one of the reasons I don't watch the media.
Just start and demand legal action, if there is evidence send some f%$er to jail, with a bit of luck they will empty parliament and we can elect a whole new group.

If there was a Federal Corruption Commission then someone would most likely end up in court.

This case is one reason why there should be one and a pretty damning example of why there isn't.

 

[orr]

Gods taken a dump on Canberra and on the Sutherland Shire, Caringbah in particular. Ahh if only it wasn't just a coincidence. And I belived the Diety was trying to tell me something. Happy Clapping to all at the Taren Point Baptist revivolist Used car sales and Real Estate Warehouse/Monastery...
The Semon this week is from 'the Book Of Solomon' 'How inequity is good for All...(rich people)'

And Bas ... Gussy Taylor, like a two legged dog. You can keep them alive, but it's no life.

 

[sptrawler]

About franking credits, for liabiity reason, i own a one man company
Profit taxed at 30pc.whatever company rate is
Without franking credit,any distribution would then be taxed twice first 30pc then own tax rate
Found difficult it could be seen as fair...

That is a lot different, to someone who has a company to wash their tax obligation through, so that everything they get is tax free.

 

[sptrawler]

That is a lot different, to someone who has a company to wash their tax obligation through, so that everything they get is tax free.

As we said when this tax issue first came up and still remains today, the whole tax system requires an overhaul, Super, Trusts, Shelf Companies the whole lot of it. To focus on a sub set of one sector, was obviously not about tax reform.

 

[qldfrog]

Few seem to be objecting to the basic notion that someone earning $500K should pay more than 10 times as much tax as someone earning $50K. That said, at no point should the marginal rate reach or exceed 100%
I do and would consider that paying 10 times more than your neighbour while requiring LESS need would be already quite a lot of wealth transfer;
In Australia, legally this is nowhere near 10 times more but something like 20 more, so as a result the said individual either stops work, move O/S in more sensible country or pay a tax accountant and ends up paying nothing, or at least far less than the 100k individual..who ends up the sucker...again
"Progressive taxation system" is a punitive redistribution tool which will end up being the death of the west