Toss out the rule book on tax planning and start again

[son of baglimit]

http://www.ato.gov.au/print.asp?doc=/content/00189164.htm

From 1 July 2009, changes to tax law will mean changes to the way we work out your income for some government benefits and obligations administered by us and other government organisations.

The changes do not change the income thresholds or the way we work out your assessable or taxable income. However, they may affect the amount of tax you are liable to pay as you may no longer receive a tax offset.

****************

yes folks, significant changes are already upon us, and i dont think too many are aware - YET.
these changes will mean anyone receiving some form of government assistance thru pensions or payments, or have various investments that create deductions that in turn reduce income and maintain eligibility for various tax offsets, or avoid having to pay other requirements are in for a rude shock.

IN OTHER WORDS, GOODBYE MIDDLE CLASS WELFARE.

*****************

i encourage anyone who relies or enjoys their little centrelink payment, or more importantly those who carefully structure their investments and deductions on investments to claim offsets, or avoid medicare levy surcharge or even paying your HECS debt had better revisit everything - NOW.

I GUARANTEE MOST ACCOUNTANTS HAVE NO IDEA THAT ITS ALREADY HERE, SO DONT THINK THEYVE KEPT WATCH FOR YOU.

 

[Prospector]

Re: toss out the rule book on tax planning and start again / GOODBYE MIDDLE CLASS WEL

http://www.ato.gov.au/print.asp?doc=/content/00189164.htm

From 1 July 2009, changes to tax law will mean changes to the way we work out your income for some government benefits and obligations administered by us and other government organisations.

The changes do not change the income thresholds or the way we work out your assessable or taxable income. However, they may affect the amount of tax you are liable to pay as you may no longer receive a tax offset.

****************

yes folks, significant changes are already upon us, and i dont think too many are aware - YET.
these changes will mean anyone receiving some form of government assistance thru pensions or payments, or have various investments that create deductions that in turn reduce income and maintain eligibility for various tax offsets, or avoid having to pay other requirements are in for a rude shock.
IN OTHER WORDS, GOODBYE MIDDLE CLASS WELFARE.

*****************

i encourage anyone who relies or enjoys their little centrelink payment, or more importantly those who carefully structure their investments and deductions on investments to claim offsets, or avoid medicare levy surcharge or even paying your HECS debt had better revisit everything - NOW.

I GUARANTEE MOST ACCOUNTANTS HAVE NO IDEA THAT ITS ALREADY HERE, SO DONT THINK THEYVE KEPT WATCH FOR YOU.

I knew about this, so I suspect our accountant does too. Not that we have ever received any centrelink benefits, although we could have, due to negative gearing etc. The new law only applies to centrelink payouts though, so things like HECS and medicare are calculated in the same way. There is a difference between gearing assets and reducing tax, versus reducing income to receive benefits. But I think you have bundled them all up in the same package in the Bold bits above.

 

[Krusty the Klown]

[I GUARANTEE MOST ACCOUNTANTS HAVE NO IDEA THAT ITS ALREADY HERE, SO DONT THINK THEYVE KEPT WATCH FOR YOU.

That's a very provocative statement.

Since your so sure, it sounds like you must have conducted some very extensive research to back up your guarantee.

Would you like to share it with us?

 

[awg]

Re: toss out the rule book on tax planning and start again / GOODBYE MIDDLE CLASS WEL

I knew about this, so I suspect our accountant does too. Not that we have ever received any centrelink benefits, although we could have, due to negative gearing etc. The new law only applies to centrelink payouts though, so things like HECS and medicare are calculated in the same way. There is a difference between gearing assets and reducing tax, versus reducing income to receive benefits. But I think you have bundled them all up in the same package in the Bold bits above.

Centrelink disallowed negative gearing on rental property years ago.

Not sure about negative gearing on shares, but I doubt that could be used as a deduction for Centrelink income assessment purposes either.

The driving purpose of most changes in regulations for ATO and Centrelink is to REDUCE expenditure, other motives are usually secondary, and all changes are costed.

Surprises me how many people dont realise this.

The Family Payments system is an absolute mess, an administrative wasteland.

My pet hate is very wealthy persons over 60 paying no tax on super.
It should be capped, so easy and reasonable

IMO, use of discretionary trusts is an area that reform is also overdue

 

[son of baglimit]

I knew about this, so I suspect our accountant does too. Not that we have ever received any centrelink benefits, although we could have, due to negative gearing etc. The new law only applies to centrelink payouts though, so things like HECS and medicare are calculated in the same way. There is a difference between gearing assets and reducing tax, versus reducing income to receive benefits. But I think you have bundled them all up in the same package in the Bold bits above.

sorry, but the purpose of these new rules is 2 fold - increase the 'adjusted taxable income' of people to reduce their eligibility or payment of benefits
AND
increase their 'adjusted taxable income' which will now become the determinant for eligibility of a multitued of tax offsets, and liability for HECS & MLS.

so for those who have used the tax system to either reduce their taxable income and remain eligible to gain various tax credits, or avoid paying HECS & MLS, or to gain access to centrelink benefits, then this is gonna sting.

That's a very provocative statement.

Since your so sure, it sounds like you must have conducted some very extensive research to back up your guarantee.

Would you like to share it with us?

sorry krusty, i may have hit a nerve, so i will withdraw that guarantee, and provide another.
i guarantee a large proportion of the staff within an accountants practice who are the ones most folk as meaningless individuals (to them) are the only ones you ever get to see, will not be aware of these changes and when you call to discuss the implications with these staff they wont be able to provide assistance. and of course the ato staff wont know either.

i hope that clears this up.

 

[Garpal Gumnut]

The middle class and the poor need to be taxed more as they do not have the bottle to complain about it.

The criminal and the rich such as in NSW and Victorian Politics are the only group in our society who can flaunt tax and criminal law with impunity.

The lumpenproletariat deserve everything they get and in my opinion should actually pay more due to their hard work daily and their inactivity at a political level.

They are wage slaves, taxed to the hilt and should remain so.

gg

 

[Krusty the Klown]

sorry krusty, i may have hit a nerve, so i will withdraw that guarantee, and provide another.
i guarantee a large proportion of the staff within an accountants practice who are the ones most folk as meaningless individuals (to them) are the only ones you ever get to see, will not be aware of these changes and when you call to discuss the implications with these staff they wont be able to provide assistance. and of course the ato staff wont know either.

i hope that clears this up.

No worries Son of, I always find it amusing when a statement as absolute as that one is said out loud.

What you'll find though, is that all accountants who have anything to do with tax were well aware of these changes long before they were implemented.

The tax system "rule book" is not a static thing. It constantly changes and evolves. It evolves and has to keep up with the society that it supports,

Think when the Federal budget goes from deficit to surplus and vice versa, funding needs change with changes in society, changes in governments, policy changes etc.

Back in March 2006, I finished a course of study on ways to minimise tax when accessing super, then in May the Federal budget came out and they abolished ALL tax on super, so the whole course I did became obsolete overnight!!!

Our taxation laws are the most complex legislation we have.

You will find that the rule book changes every year, constantly, on and on and on.

 

[son of baglimit]

appreciate your thoughts krusty - i was aware of the constant need for keeping aware of the tax system and how it evolves.

one question then arises - and i will apologise if im incorrect, but why hadnt you made ASF aware of these changes - i certainly couldnt find any previous reference, and so posted the link etc for everyone.

 

[Krusty the Klown]

appreciate your thoughts krusty - i was aware of the constant need for keeping aware of the tax system and how it evolves.

one question then arises - and i will apologise if im incorrect, but why hadnt you made ASF aware of these changes - i certainly couldnt find any previous reference, and so posted the link etc for everyone.

Mainly because this is a site for discussion of shares, not taxation.

You could start a site just as big on taxation. But between you and me most people find talking about tax as boring as batsh$t.

The last reason is because there is literally dozens and dozens of changes to the treatment of varying tax regimes each year.... GST, CGT, payroll tax, company tax, taxation of trusts, tax rates, rebates, offsets, eligibility for Centrelink, superannuation etc, etc, etc. and it would be hard to keep posting about each change and its implications.

Its not far off being a full time job just not only keeping up with the changes, but understanding the impact of EACH change and how EACH change affects each individual or company or trust etc.

And thats the kicker - changes affect each taxpayer differently.

Like I said, you could have a whole website devoted to just that subject.

But if you have any individual questions or queries I would be quite happy to help where I can.

 

[doogie_goes_off]

Have not scored handouts from the Govt since Austudy days (measly $14K over 1.5 years). Now I am paying extra tax over and above everyone else for woking hard. The tax system is imbalanced and now KRUDD and his patsies have means tested everything that was on a level playing field. Also those in business with legitimate expenses are being smashed by the tighter restrictions. How can business grow if you tax the crap out of everything they do?? I don't plan anymore, I know the turkeys will get me unless I take an ultra conservative line. End of rant.

Well done Son of a baglimit for realising we are being shafted whilst the government changes the regulations willy nilly to increase the revenue base instead of critically analysing what govt services should be cut and saving money. The KRUDD razor gang cut industry support and wonder why tax revenue decreased. Where's the support for innovation and hence the chance to create jobs and grow our industries?

I want good social policy and good financial/industry policy - how do I vote for either Labor/Liberal, the fact is I can't, both have significant downfalls. Looking for an alternative, but they are smothered by political donations to the big 2. End Rant #2

 

[son of baglimit]

Mainly because this is a site for discussion of shares, not taxation.

You could start a site just as big on taxation. But between you and me most people find talking about tax as boring as batsh$t.

.................... and it would be hard to keep posting about each change and its implications.

discussion of shares !!! - cmon krusty you'd have to admit that a good percentage of threads are non financial, let alone non shares.

and very true, most folk would find the evolution of phosphates more intruiging.

BUT i do take issue on this occasion - the changes listed on the link are broad-reaching, covering so many scenarios, and ultimately have an impact on what method many people will (or should) take on investing, whether it be gearing, ownership, distributions, etc etc etc. on this occasion i thought it important enough to have those that DO structure their decisions according to the tax implications, or centrelink entitlements, to revisit their plans and potentially make appropriate changes.

just trying to avoid some nasty shocks for some come the 2010 tax return.

 

[Krusty the Klown]

I don't disagree with what you are saying regarding tax planning and taking a forward looking approach.

Where I differ is that it seems to you that these amendments and adjustments are out of the ordinary, where to me they are just the usual changes to the tax and transfer system that happens every year. It may be that these annual amendments haven't significantly impacted you before so you've never noticed.

And what you are saying is correct in that you SHOULD review your situation every year.

Kudos for bringing it to the attention of many who were not aware.

My original post was about your quote that you "guaranteed most accountants were not aware" of these changes. YOUR accountant may have dropped the ball but that does not mean EVERY member of the profession has done so.

Its like saying all cops are on the take, all judges are owned by the mob, all doctors rape their patients, all plumbers, mechanics and builders are dodgy etc etc etc.....when in fact its usually only a handfull out of tens of thousands.

 

[Krusty the Klown]

Son of, if you are not happy with the current amendments you are really not going to want to read the Henry Tax Review when it comes out in December.

I was privileged to have been consulted to submit my to the review but lay no claim to the following recommendations that look like being included:

- Reduction of company tax rate to 25%

- Increase in CGT rate

- Increase the age to access super to 67

I don't think Kenny boy is going to be very popular with John Q Public!!!!

 

[awg]

- Increase the age to access super to 67

I don't think Kenny boy is going to be very popular with John Q Public!!!!

Do you really think they will implement this one?

that would be incredibly unpopular, unfair and retrogressive, imo

 

[gav]

- Reduction of company tax rate to 25%

- Increase in CGT rate

- Increase the age to access super to 67

I don't think Kenny boy is going to be very popular with John Q Public!!!!

What a joke! Companies don't pay enough tax as it is!

 

[Krusty the Klown]

Do you really think they will implement this one?

that would be incredibly unpopular, unfair and retrogressive, imo

I think it will come in eventually, they are already raising the age pension age to 67, so it stands to reason to follow with this also.

It's those damned doctors' fault, we are all living much longer now due to good health care and the governments don't want to foot the bill!!!

 

[gooner]

I think it will come in eventually, they are already raising the age pension age to 67, so it stands to reason to follow with this also.

It's those damned doctors' fault, we are all living much longer now due to good health care and the governments don't want to foot the bill!!!

Hmmm.

I'm unemployed and can access my super at 59. What happens if they increase access age to 67? Potentially, I have 8 years between 59 and 67 living in poverty on the dole whilst waiting for my super access date to arrive. What's the point of that? Hoping I'll get a job soon as only 46 now, and a bit early to take forced retirement, particularly with three young kids.

But lots of people are on the scrap heap at 60 employment wise - it does not make sense to make them wait to 67 to access super.

 

[awg]

Hmmm.

I'm unemployed and can access my super at 59. What happens if they increase access age to 67? Potentially, I have 8 years between 59 and 67 living in poverty on the dole whilst waiting for my super access date to arrive. What's the point of that? Hoping I'll get a job soon as only 46 now, and a bit early to take forced retirement, particularly with three young kids.

But lots of people are on the scrap heap at 60 employment wise - it does not make sense to make them wait to 67 to access super.

Presumably they would make it progressive implementation

67 is too damm old to wait to have to access yr retirement money

ok if yr a soft assed doctor, accountant or lawyer, but try being a brickie, mechanic or laborer at 67

why would you bother with extra super etc?

btw Gooner, best of luck with yr job search, sure you will find one soon, but if you dont, you will be eventually able to access yr super on the provision of "Hardship..9 months on welfare, no other means of support"..(unless they abolish that as well

I worked many years as a pubic servant, whilst at Centrelink I would occasionally deal with the policy goons from Canberra...no ****ing idea..I raised many questions with them when they designed the current Family payments system..they were most dismissive..of course, all the issues I raised are very much to the fore now

 

[gooner]

Presumably they would make it progressive implementation

67 is too damm old to wait to have to access yr retirement money

ok if yr a soft assed doctor, accountant or lawyer, but try being a brickie, mechanic or laborer at 67

why would you bother with extra super etc?

btw Gooner, best of luck with yr job search, sure you will find one soon, but if you dont, you will be eventually able to access yr super on the provision of "Hardship..9 months on welfare, no other means of support"..(unless they abolish that as well

I worked many years as a pubic servant, whilst at Centrelink I would occasionally deal with the policy goons from Canberra...no ****ing idea..I raised many questions with them when they designed the current Family payments system..they were most dismissive..of course, all the issues I raised are very much to the fore now

LOL - I am a soft assed accountant The challenge for accountants is that often 50 is too old and companies what "young guns" coming through. I have been knocked back for jobs at my level and below for age reasons, although usually is put differently such as "you do not really fit the profile of the role" or "we are looking for someone at a different stage of their career". Agree with your comment on people in hard manual jobs - my Dad was worn out at 60 as a floorlayer.

I've been out of work for nearly a year - was in banking so hit by GFC. Expect to get something soonish, but could see me being out the door again in my mid-50's, via retrenchment. Then it would be really hard to get back in which is why you need to be able to access super. I have put plenty away in super and have always kept some outside so I can retire earlier than 59. But if they suddenly bought in 67 as access age, it would be an absolute pain if I did not have enough money for a reasonable life style until I reached 67.

The early access provisions are very onerous - basically covers serious medical expenses, mortgage payments where you are to be evicted, or funeral costs. So not much use if you need it to live on. http://www.apra.gov.au/superannuation/early-release-of-superannuation-benefits.cfm

 

[awg]

LOL - I am a soft assed accountant The challenge for accountants is that often 50 is too old and companies what "young guns" coming through.

The early access provisions are very onerous - basically covers serious medical expenses, mortgage payments where you are to be evicted, or funeral costs. So not much use if you need it to live on. http://www.apra.gov.au/superannuation/early-release-of-superannuation-benefits.cfm

Yes, difficult for almost anyone, ageism..however, at least with a professional qualification such as accounting, experience and knowledge give some advantage.

re the early release, I saw it all the time, hence my comment of the retrogressive nature..it will encourage people to piss it all up against the wall..then cry poor to the Trustee of their super fund.

I agree it is a dire situation to find yourself in, however, after extended periods on welfare, the Trustee generally does release.

All this cocking with super makes me nervous, I live off it.