It’s basically saying if you make a lot of money from you shares, have some more on the old ATP. Didn’t Shorten say it cost $0.5 Billion when brought in, was now up to 6, and was increasing with a rocket. I guess the big boat in the harbour costs a bit on maintenance and you wouldn’t drink Australian bubbly, would you?
Be interesting to know what the numbers look like if you capped it at say $10k per person, took out the really wealthy but left some there for those who are not so upper tier. Or means tested as well so the fat cats didn’t even get the 10?
You do realise the pension is welfare and is a safety net - not a rite of passage.
It is actually quite easy. Currently the state government performs a valuation each year 31.12 - so you have an improved value of the property - peg that against the median for the state and work out the difference. Align the asset testing with that date, if their value of property has tanked then obviously their net assets are under the threshold and qualify for the pension.
I just fundamentally disagree with paying someone welfare who has $1.7million+ in net assets.
Would you rather that not go towards newstart or helping disadvantaged youths?
Edit: You know people pay financial planners, to structure their assets to qualify for the pension
Are we over-reacting? Not just here but in the media as well. The polls predicted 51-49. It turned out to be 51-49 the other way. 4%.
Progressives/ALP are slitting their wrists. The Conservative side is crowing - calling it a victory for the people, a win for aspirational Australians etc etc.
If Labor had won it would be calling it a victory for vision, making the ‘big end of town’ pay their share. If Labor had won the LNP would be blaming themselves for being disunited.
4%. Not a landslide to anyone. You would think otherwise.
Its pretty clear that in the post industrial trade union era of the early 2000s, the true base of the ALP is the social service recipient. If the ALP work to get more than 50% of voters on welfare and keep them there the ALP can retain power indefinitely, as long as they can keep the taxpayers who support the welfare state happy. But I guess taxpayers don’t really matter, once more than 50% are on welfare, less than 50% of voters will be taxpayers and thus will be effectively disenfranchised.
The Franking Credit system works fine, when all individual income is taxed.
with all the superfunds in pension phase getting paid franking tax and paying zero tax its not working.
while Baby Boomers were working it was ok, now they are all retiring getting tax free pensions plus franking credits.
Example
while you are woking lets just say your 35
have 200,000 in super and get 8% return in australian shares
16,000 earning lets say franking credit of $6857
Your yearly salary is $100,000p.a and contribute $9,500 SGC to super
earning s+ contribution =22857+9500
15% on 32357 = $4853.55
Your in a net tax refund position of $2003 but have paid some tax you get a tax refund to your super fund, most people wouldnt complain about this.
whereas lets just say next example person has
$1,000,000 in super earn 8% $80,000 income $34285 Franking Credits
their super fund is in pension phase and they pay no tax. and get a $34285 refund
If they were taxed individually (assuming no other income)
I.e you earn $114,285 they would be paying $31,943 tax
and get a refund of $2342
Franking credit system…hmm, it actually IS hard to explain!
Well it starts with a company generating a profit throughout the year and paying the government 30% tax to the government on that profit.
Then, when a dividend is returned to shareholders at the end of the year, the franking credit system basically overrides the 30% company tax paid and says “Actually, forget that 30% tax was already paid, instead, we will recalculate the tax burden at a rate that is more appropriate to your personal situation”. So if you are a low tax eligible person, you get part of that 30% tax that has been paid back as cash. If your personal tax rate is more than 30%, you get nothing back, in fact you have to pay more…but my overall message is that franking credits just result in a more personalised tax treatment on your investment return.
Now, people will argue that the wealthy are getting huge tax refunds…That IS worthy of debate, but it should be a different debate like “Why should the ultra wealthy be able to access low tax rates, like a flat 15% tax rate inside super?”…ie. Debate the illogical tax rates of the environment where income ends up.
PS. I’ll finish by comparing two investments.
First, is the unlisted Platinum Asset Management managed fund, which I have invested say $100k in. Now, over the course of a year, it grows by say 10%, so that’s $10k return. As it is a trust, it pays no tax to the government during the course of the year. Instead it sends me a statement at the end of the year that tells me to include the $10k as income in my personal tax return. So that $10k income will then receive whatever tax treatment is appropriate for me.
Next, let’s compare it to Platinum Asset Management’s listed investment company called PMC on the ASX. It’s run by the same manager, it holds all the same underlying investments as the unlisted trust, just a different route for investing. So a $100k investment in PMC will also rise by 10% for the year. The difference being that it is structured as a company, and will pay 30% tax on the income progressively during the year. So whereas the trust paid nothing (it is all calculated in arrears), the company makes progressive instalments…Now, at the end of the year, when PMC releases a dividend of $7k to me, it has this franking credit statement attached that says the original return was $10k prior to $3k tax being paid. So this franking credit statement just ensures that whether I invested via the managed fund, or via PMC, that the outcome will be the same, that I should effectively put $10k pre-tax income in my tax return, and receive a personalised tax treatment from there.
The ALP’s policy just wanted to create a trap. If you had invested via the company structure, where tax is paid progressively, then you can never get that return back into a personalised treatment where your tax rate is less than 30%, because they won’t refund any of the 30% tax paid. It was a quick and easy way of dealing with wealthy people that somehow have a tax rate below 30%. But IMO the real issue to deal with is why we have a tax system that has pockets of irrationally low tax rates…The obvious response to the ALP policy therefore, is to move money out of company structures (where tax is paid at 30% progressively, creating a potential trap) into trust structures where it is only calculated and paid for in arrears, which is what would have happened in response to the ALP policy, particularly by the ultra-wealthy who are sufficiently informed to realise it!
yes but alp also had a plan to tax all individuals @ 30% on trust distributions if they had a lower tax rate than 30%.
which was also a bit of a nightmare situation
which is why ALP should have had a watered down approach and limit Franking credit refunds to $20,000 equivelant to age pension. This would be seen as less of a tax grab from people who have saved for their retirement.
And as they Age pension gets indexed the $20,000 franking credit refund never does.
THeir negative gearing changes would hurt new investors so young people never get the same advantages their parents did.
whereas if limit investment property negative gearing to 1 property only - then this would still allow young people to enter the market that way.
My sister lives in Melbourne and cant afford a house there. But has considered buying a house in tassie just to be in the market - she would ahve rented it out.
Under Labors scenario she wouldnt ahve been able to deduct interest payments against her income.
But a baby boomer who had grandfathered loans could still claim on all their existing ones.
FYI I hold shares outside of super and pay more than 30% tax on mine.
As im not sure if i will get my super or reach retirement age… lol my dad didnt.
Franking credits are simply designed to prevent double taxation of the same income.
A franked dividend is an amount paid out of after-tax profit by a corporate entity. That dividend is assessable in the hands of the shareholder, hence the same income is taxed twice.
The franking credit is a tax offset allowed to the recipient of a dividend. It has the effect of countering double taxation by recognising the tax paid by the company paying that dividend, and it therefore reduces the recipient’s tax liability.
As a franking credit is a refundable tax offset (unlike nearly ever other type of tax offset), it results in taxpayers who have no tax liability otherwise in getting a refund.
One could argue that where a taxpayer has a nil tax liability, then any franked dividends received are not taxed twice and thus double taxation does not in fact exist in those circumstances.
What the actual F. That’s some whacked out US republican view of the world.
Look at the seats where the liberals got smashed. Wentworth, Warringa, Higgins, Kooyong, McNamara.
I’d hazard a guess, but doubt you will find too many on welfare in those postcards.
You will find educated professionals who are yes wealthy. But they are revolting because to be wealthy in modern Australia doesn’t mean your conservative in fact your just as likely to have progressive values.
see the way I see it, is if you relied on DI as a key component of your saved retirement, then you didn’t save enough…
I’m 25 years away retirement, Im not factoring in any DI because I know it’s not going to exsist when I retire. I’ve got zero sympathy for the boomers who get it. ■■■■ em.
