To put it another way, the liberals have formed government with a seven percent swing against them!
The mind boggles.
3 Likes
No, just the other kind of doctor
1 Like
GST is not income tax, so no double income taxation.
A franked dividend is issued by a company to shareholders out of post tax profits (therefore income tax paid by the company).
The recipient (shareholder) is then assessed on the dividend as it forms part of their taxabe income. Hence same income is double taxed at this point (at both company and individual entity levels).
The franking tax offset (Franking credits) removes the double taxation by providing the individual taxpayer (shareholder) a tax reduction or refund equal to the amount of company tax paid.
This is all cool, but other than âitâs not fairâ how does the âdouble-taxingâ affect the shareholder?
They get taxed on income from an investment?
True, but it is enshrined in income tax legislation is that any form of income cannot be double taxed. Not defending this, but thatâs the law.
ALP plan is simply to deny a refund of excess franking credits, they would still be able to reduce tax payable to nil, but not to provide a refund.
IMO this will hurt low income recipients far more than the wealthy.
That law seems to be broken millions of times a year by our beloved government.
Check your tax return.
Income = $X
Then subtract:
Income tax
Medicare âlevyâ which though called a levy but is still a tax
Then the delightful âtemporary deficit repair levyâ that the Tories imposed on us. If this is not a tax, WTF is?
There you go: three taxes on your income levied by our very own government at one time.
âNo double taxingâ may be âenshrinedâ in tax legislation, but it seems neither the Tories nor the ATO respect that shrine.
This probably belongs in the dumb questions thread, but here goes:
Is your compulsory super contribution part of your taxable income?
Ditto for your employerâs contribution.?
Does your employer pay tax on its contribution to your super?
Filled in!
4 Likes
I havenât seen the details, but would the credit remain for future use? Like capital gains and losses?
Thanks very much for your explanation. One further very ignorant question:
Can the employer deduct its contribution to my super from its own taxable income.?
How will this hurt low income recipients? The vast majority of low income earners do not have investment income. This change will effect the very highest earners.
1 Like
In my opinionâŚthe biggest issue with the tax system is that high income earners are able to setup low tax structuresâŚand the older I get, the more I think that company structures are to blame.
Why should a PAYG employee have to pay 35% or more tax on $87k income and upwardsâŚbut the person operating under a company structure can earn millions and never pay more than 28.5% (just setup companies for various purposes and shunt money between them)?
Or worse, the ultra rich set up a company in an offshore jurisdiction to lower their tax rate even further.
The cynic in me just believes that âcompaniesâ were invented to create a charmed tax class as a play thing for the wealthy. At least, that is how they function in Australia.
And donât get me started on super, with itâs 15% tax rate, and the way past governments allowed massive one-off injections of money for certain citizens into these tax classes.
Iâve becoming a convert to those countries with a flat tax rate across individuals and companies. Eliminate the games played with company structures.
1 Like
Yep, it is an allowable deduction.
2 Likes
Self funded retirees and those with taxable income less than the tax free threshold for starters would be affected
Iâm sure Iâm as confused as the next person, but the excerpt, below, from a Greg Jericho article from todayâs Guardian seems to contradict your assertion, at least for me.
When we look at those aged over 65 who claim dividend franking credits, overwhelmingly they are claimed by those with taxable incomes under $37,000, but the vast amount of dollar value of the credit goes to those with a taxable income above $180,000.
While just 3% of those aged over 65 had a taxable income above $180,000, they claimed 43% of the value of dividend franking credits. Their average credit was $60,697 compared to the average of $767 claimed by those with a taxable income below the tax free threshold:
My thinking is that those on little incomes could be compensated without too much difficulty. There is a plethora of compensatory activity anyway. (Not unusual). I would like to see a breakdown that shows what proportion the corporates are in these figures, and is that relevant?
1 Like
Stop calling it the employer contribution. Itâs your money and by law you have to contribute to super. Employers just need to follow your instructions which by default includes the mandatory amount to super. You can legally ask the employer not to contribute to super and manage it yourself but why bother unless your contributions to super are over the annual limit.To put it another way itâs your mandatory salary sacrifice!
Super is just a part of your wages. Wages are an expense to the business, thus can be claimed as a deduction.
4 Likes
I have a feeling âtaxable incomeâ includes all pre-tax deductions (including super contributions and other salary sacrifice schemes) when it is used to calculate your Medicare Rebate Tier.
Medicare levy uses taxable income, but with some items added back.
1 Like
There are only 3 countries with a flat tax rate.
I donât think companies are your issue. Itâs trusts.
So think of it in this basic term.
The trust owns the company. The company pays to the trust. The trust then distribute the income as it pleases.
So a trust could distribute to the husband, wife and three kids thus lowering the tax by spreading the income.
I am not sure you are correct here Soulnet.
I pay the compulsory super of 9.5% on top of my staff salary, and I am now required to pay this to the ATO and not direct to their designated SuperFunds as previously. The ATO have told me this is mandatory.
If I was not made to pay it, then I would not, as it is not part of the salary we agreed with their Employment Contracts.