It's just as likely costings and other figures were done on the back of an envelope by Morrison or Frydenberg.
Showing posts with label taxation. Show all posts
Showing posts with label taxation. Show all posts
Monday 29 April 2019
Scott Morrison and News Corp need fact checking - again!
The Australian Labor Party released its
dividend
imputation policy in 2018 and began to come under sustained political
attack by the Morrison Government and News Corp with claims that there was a
$10 billion dollar hole in Labor’s costing of its policy.
On 18 June
2018 the Parliamentary Budget Office issued
a media release:
Imputation
credits policy costing
Earlier today, comments
have been made about the Parliamentary Budget Office (PBO) estimates of the
gains to revenue that may flow from the Australian Labor Party’s (ALP’s) policy
to make imputation credits non-refundable.
“The PBO brings our best
professional judgement to the independent policy costing advice we
provide. We have access to the same data
and economic parameters as The Treasury and draw upon similar information in
forming our judgements,” Parliamentary Budget Officer Jenny Wilkinson stated
today.
“We stand behind the PBO
estimates that have been published by the ALP in relation to this policy,
noting that all policy costings, no matter who they are prepared by, are
subject to uncertainty.” In its advice,
the PBO is explicit about the judgements and uncertainties associated with
individual policy costings.
The PBO confirms that it
always takes into account current and future policy commitments, as well as
behavioural changes, in its policy costings.
In this case, as outlined at the recent Senate Estimates hearings, these
included the superannuation changes announced in the 2016–17 Budget and the
scheduled company tax cuts. In addition,
the PBO explicitly assumed that there would be significant behavioural changes
that would flow from this policy, particularly for trustees of self-managed
superannuation funds.
The PBO was established
as an independent institution in 2012 with broad support from the
Parliament. A key rationale for the
formation of the PBO was to develop a more level playing field, by providing
independent and unbiased advice to all parliamentarians about the estimated
fiscal cost of policy proposals. The
purpose of establishing the PBO was to improve the public’s understanding of,
and confidence in, policy costings and enable policy debates to focus on the
merits of alternative policy proposals.
Ten months later on 25 April
2019 News Corp’s The Daily Examiner ran an article on page 8 concerning Labor’s
dividend imputation policy which stated:
The independent
Parliamentary Budget Office has estimated Labor’s plan would save $7 billion
less over a decade than the party expects and that it would affect 840,000
individuals, 210,000 self-managed super funds (SMSFs) plus some bigger funds.
Now the
Parliamentary Budget Office publishes
the requests for information it receives, including requests for policy implications and
costings, however there appears to be no new request for information and
costings on Labor’s dividend imputation policy on its website.
Morrison
& Co have been caught out misrepresenting the source of their costings
before and even flat out lying on occasion, so one has to suspect the veracity
of their latest attack on this particular policy.
It's just as likely costings and other figures were done on the back of an envelope by Morrison or Frydenberg.
Monday 22 April 2019
Morrison & Co can’t guarantee delivery of promised tax cuts this year if they win May 18 federal election
The
West Australian,
17 April 2019:
Scott Morrison has been
forced to explain why his promise to deliver immediate $1080 tax cuts for low
and middle-income earners from July 1 may not happen.
Treasury officials today
confirmed a key plank of the Morrison Government’s re-election platform –
immediate tax cuts for 10 million workers when they receive their 2019 tax
returns – cannot occur without Federal Parliament’s support.
Treasury officials said
the tax cuts had to be legislated before the end of this financial year – on
June 30 – before workers could receive the rebates with their 2019 tax returns.
With the Federal
Election on May 18, it means the Coalition has little time – if it wins the election
- to pass the tax cuts through Parliament before June 30.
The Coalition has
promised rebates of up to $1080 for low and middle-income earners, and up to
$2160 for dual-income families, who lodge their tax returns from July 1.
Treasurer Josh Frydenberg,
when he released the Budget weeks ago, claimed the timing of the Federal
Election would be “no impediment” to the tax cuts being delivered quickly.
But Treasury officials
appeared to contradict that claim today.
They said the tax
rebates would require “the relevant legislation to be passed before the
increase to the low and middle income tax offset (LMITO) can be provided for
the 2018-19 financial year.”
They also warned if the
tax cuts were not delivered by June 30 the revenue cost of the measure would “need
to be reassessed.”
Wednesday 13 February 2019
Australian Tax Office Excess Franking Credits: “When people next receive their dividend refund cheque from the government, remember the government has had to borrow that money”
The Australian Government's public debt stood at an estimated $541.73 billion and growing on 8 February 2019.
On 8 February
2019 in Sydney economist Stephen
Koukoulas made a short three minute statement before the House of
Representatives Economics Committee ‘inquiry’ into the Labor Federal Opposition’s
policy to eliminate excess franking credits.
Excess franking credits are refundable to a shareholder who receives a dividend but has no tax liability to use those franking credits against.
It is free money - money for jam - granted to shareholders for the last eighteen years under a Liberal-Nationals federal government tax policy.
By 30 June 2015 these excess franking credit refunds were costing the federal government an est. $2.54 billion annually and, are currently estimated to be costing the Australian Government well in excess of $5.9 billion each year.
Below are the
notes Koukoulas used for that oral Statement
which boiled down to two issues, the cost to the budget and how the policy is
distorting investment decisions from investors and lazy financial planners.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Tax policy is always
riddled with trade offs.
No government wants to tax anyone more than it needs to, nor should it impose a tax regime that is unfair if it means cuts to services, a heavy tax impost on others in the community or adds unnecessarily to the budget deficit and government debt.
Labor’s policy on refundable franking credits will impact the budget bottom line by more than $5 billion a year.
Without the change, this $5 billion, or $100 million a week, means less money is available for the government to provide health care, roads, education, disability assistance and defence.
It is disconcerting that every dollar of refundable franking credits is currently borrowed by the government.
When people next receive their dividend refund cheque from the government, remember the government has had to borrow that money:
… every cent of it.
… this adds to government debt that will have to be repaid one day in the future by our children and our grandchildren.
I think this is unfair.
The policy also distorts the way we Australians invest our savings.
Many investors put money into companies that pay high, fully franked dividends regardless of the underlying strength or potential of that business.
Look at Telstra. The banks.
It is blind, uneducated and lazy investing recommended by lazy financial planners.
It is only the dividend, not the underlying strength of the business, that guides the investment decision.
This is one reason why the Australian stock market is still 15 per cent below the 2007 peak, while the US, German and Canadian stock markets are substantially higher.
None of these countries have refundable franking credits.
Investors in those countries provide finance to dynamic growth companies and strong businesses.
In Australia, such companies are often shunned by investors because they pay no or low dividends.
Investors instead place their money with what are average firms that structure their businesses according to tax policy distortions.
Imagine if the ASX was at 10,000 points, not the 6,000 point level prevailing today?
I suspect the concerns about dividend refunds would be trivial.
The Australian tax distortions mean that local entrepreneurial firms have less access to local capital.
The money is instead tied up in dinosaur companies paying high dividends.
It is one reason why so many of the 21st century technology and start up firms in Australia head overseas to pursue their business models.
No government wants to tax anyone more than it needs to, nor should it impose a tax regime that is unfair if it means cuts to services, a heavy tax impost on others in the community or adds unnecessarily to the budget deficit and government debt.
Labor’s policy on refundable franking credits will impact the budget bottom line by more than $5 billion a year.
Without the change, this $5 billion, or $100 million a week, means less money is available for the government to provide health care, roads, education, disability assistance and defence.
It is disconcerting that every dollar of refundable franking credits is currently borrowed by the government.
When people next receive their dividend refund cheque from the government, remember the government has had to borrow that money:
… every cent of it.
… this adds to government debt that will have to be repaid one day in the future by our children and our grandchildren.
I think this is unfair.
The policy also distorts the way we Australians invest our savings.
Many investors put money into companies that pay high, fully franked dividends regardless of the underlying strength or potential of that business.
Look at Telstra. The banks.
It is blind, uneducated and lazy investing recommended by lazy financial planners.
It is only the dividend, not the underlying strength of the business, that guides the investment decision.
This is one reason why the Australian stock market is still 15 per cent below the 2007 peak, while the US, German and Canadian stock markets are substantially higher.
None of these countries have refundable franking credits.
Investors in those countries provide finance to dynamic growth companies and strong businesses.
In Australia, such companies are often shunned by investors because they pay no or low dividends.
Investors instead place their money with what are average firms that structure their businesses according to tax policy distortions.
Imagine if the ASX was at 10,000 points, not the 6,000 point level prevailing today?
I suspect the concerns about dividend refunds would be trivial.
The Australian tax distortions mean that local entrepreneurial firms have less access to local capital.
The money is instead tied up in dinosaur companies paying high dividends.
It is one reason why so many of the 21st century technology and start up firms in Australia head overseas to pursue their business models.
This costs the
Australian economy growth and jobs.
With the policy change on refundable franking credits, there will be a greater incentive to invest in companies and other assets for reasons of growth and entrepreneurial flair…
… which will be a positive for the economy and jobs …
… and it will be good for the long term future of Australia.
Thank you
With the policy change on refundable franking credits, there will be a greater incentive to invest in companies and other assets for reasons of growth and entrepreneurial flair…
… which will be a positive for the economy and jobs …
… and it will be good for the long term future of Australia.
Thank you
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Thursday 7 February 2019
The truth about dividend imputation/franking credits that Morrison and Co are not telling you
“Example – low taxable income A self-funded retiree
couple has a $3.2 million super balance, plus their own home, and $200,000 in
Australian shares held outside super. Even after drawing $130,000 a year in
superannuation income, and $15,000 a year in dividend income, they would report
a combined taxable income of $15,000, and pay no income tax at all.” [Australian Labor Party, Fact Sheet, 2018]
In 1987 the Hawke Labor Government introduced
legislation which changed taxation law regarding dividend imputation/franking dividends.
In order for
tax on dividends not to be paid twice – once by the company issuing the
dividends via underlying company tax on profits and once by the shareholding
receiving those dividends – it introduced franking credits. Whereby the tax on dividends for which the shareholder has previously been liable was credited to them for use
in a given financial year to offset all or part of their tax liability for that
year*.
Any excess
franking credits could not be used as there was no shareholder tax liability
remaining to which these credits could be applied and, therefore no chance that
any dividends were being taxed twice.
In 1997, 1999
and 2000 the Howard Coalition Government
changed the rules on franked dividends until by July 2000 excess franking
credits became fully refundable and a great many shareholders began to receive cash
tax rebates from the Australian Taxation Office (ATO) for taxation that they had never personally paid.
Based on ATO
2014-15 figures people
earning more than a million dollars a year received 17 per cent of franking
credits and about half of all franking credits went to those who earn more than
$180,000 a year.
According to a study by the Australian Institute reported in 2015; the wealthiest 10 per cent of households – those earning disposable income of more than $207,000 – gain almost 75 per cent of the $10 billion in franking credits siphoned directly to them.
According to a study by the Australian Institute reported in 2015; the wealthiest 10 per cent of households – those earning disposable income of more than $207,000 – gain almost 75 per cent of the $10 billion in franking credits siphoned directly to them.
CommSec
explains the
franking credit system this way (retrieved 4 February 2019):
Dividends are paid out of profits which
have already been subject to Australian company tax which is currently 30%.
This means that shareholders receive a rebate for the tax paid by the company
on profits distributed as dividends.
These dividends are described as being 'franked'. Franked dividends have
a franking credit attached to them which represents the amount of tax the
company has already paid. Franking credits are also known as imputation
credits.
You are entitled to receive a credit for any tax the company has paid.
If your top tax rate is less than the company's tax rate, the Australian Tax
Office (ATO) will refund you the difference.
Case study: James
receives a tax refund
James owns shares in a
company. The company pays him a fully franked dividend of $700. His dividend
statement says there is a franking credit of $300. This represents the tax the
company has already paid. This means the dividend, before company tax was
deducted, would have been $1,000 ($700 + $300).
Come tax time, James
must declare $1,000 (the $700 dividend plus the $300 franking credit) in his
taxable income. If his marginal tax rate was 15%, he would have paid $150 tax
on the dividend. Because the company has already paid $300 in tax, James will
receive a refund of the difference, which is $150.
If James was in a higher
tax bracket he may not have been entitled to a refund of any of the franking
credit, he may even have to pay additional tax. However, if he is a low [taxable] income
earner, it is possible to be refunded the full amount of the franking credit…..
Refunding of excess
imputation credits
The refund applies when
your total imputation credits that are attached to your franked dividends paid
exceeds your basic income tax liability for the year.
A cash amount can be
refunded to you reflecting the amount of excess imputation credits, after
applying them and any other tax offsets to which you are entitled to. This will
in turn reduce your basic income tax liability to zero.
If you are required to
lodge an income tax return, you can use it to claim a refund of excess
imputation credits. If you are not required to lodge a tax return, the refund
is available on application.
In other
words, if “James” after deducting all other tax concessions available to him
finds himself with zero tax liability then since July 2000 he has been able to claim
a cash tax rebate from the ATO on tax he has never personally paid.
There are an
estimated 1.1 million shareholders receiving this type of rebate on a tax they
haven’t paid and they are currently costing the Australian Government well in
excess of $5.9 billion each year.
That’s billions of dollars that should rightly remain in Treasury to help cover the costs of things like national infrastructure, defence, health, education, aged care, pensions and other social services.
That’s billions of dollars that should rightly remain in Treasury to help cover the costs of things like national infrastructure, defence, health, education, aged care, pensions and other social services.
In 2017 the
Labor Opposition announced that if it won government in 2019 it would return
the franking credit rules to their original intent and no longer allow excess franking
credits to be realised as ATO cash tax rebates – with
the exception that shareholders who also receive a Veterans Affairs or
Centrelink full or part age pension or an allowance would still receive a full cash tax rebate for their excess franking credits commencing July 2019.
Whenever Prime Minister Scott Morrison, Treasurer Josh Frydenberg or one of his other cabinet ministers and backbenchers like the MP for Goldstein Tim Wilson open their mouths on the subject of excess franking credits they are very careful not to let truth escape their lips - until such time as they get found out.
A case in point is Tim Wilson's financial interests. A subject which became sensitive once his irregular behaviour as Chairman of the Standing Committee on Economics'
Inquiry into the implications of removing refundable franking credits became public knowledge.
This is a snapshot of a part of his financial interests. As a 50 per cent holder of equity in at least two investment/superannuation funds which may benefit from excess franking credits:
A case in point is Tim Wilson's financial interests. A subject which became sensitive once his irregular behaviour as Chairman of the Standing Committee on Economics'
Inquiry into the implications of removing refundable franking credits became public knowledge.
This is a snapshot of a part of his financial interests. As a 50 per cent holder of equity in at least two investment/superannuation funds which may benefit from excess franking credits:
Register of Members Interests- 45th Parliament - Tim Wilson, excerpt February 2019 |
Tim
Wilson is
also an investor in funds run by Wilson Asset Management, a firm founded and
chaired by Geoff Wilson with $3 billion in funds under management… Under an entry listed as a
'shareholding', Mr Wilson's register of parliamentary interests shows he and
husband Ryan Bolger invested in a Wilson Asset-managed fund in May 2017 through
the couple's self-managed superannuation fund. They invested in another Wilson
Asset fund, WAM leaders, in December 2017.
It has been further reported in mainstream media that Chairman & Chief Investment Officer of Wilson Asset Management, Geoff Wilson, is in fact a relative of Tim Wilson and, that during one public hearing Geoff Wilson gave evidence before Tim Wilson as inquiry chairman and neither declared their personal or financial relationship.
Indeed, Tim Wilson could now be considered ethically compromised in his role as Chairman of the Standing Committee.
Wilson is a politician whose statements and opinions on excess franking credits cannot be trusted, heading a a parliamentary inquiry whose formal report and findings cannot be trusted.
So it is up to every voter to acquaint themselves with the facts. Make Internet search engines your friends between now and the May 2019 federal election if you want the facts on legislation and policy which is being debated in the media.
It has been further reported in mainstream media that Chairman & Chief Investment Officer of Wilson Asset Management, Geoff Wilson, is in fact a relative of Tim Wilson and, that during one public hearing Geoff Wilson gave evidence before Tim Wilson as inquiry chairman and neither declared their personal or financial relationship.
Indeed, Tim Wilson could now be considered ethically compromised in his role as Chairman of the Standing Committee.
Australian Parliament, House of Representatives Practice 6th Edition |
Wilson is a politician whose statements and opinions on excess franking credits cannot be trusted, heading a a parliamentary inquiry whose formal report and findings cannot be trusted.
So it is up to every voter to acquaint themselves with the facts. Make Internet search engines your friends between now and the May 2019 federal election if you want the facts on legislation and policy which is being debated in the media.
Monday 14 January 2019
The Morrison Government has given permission for oil and gas exploration in NSW coastal waters by a company set up as a tax minimisation ploy
Those Liberal-Nationals MPs and senators preparing to return to Canberra late next month appear determined to annoy NSW voters - especially those who live in coastal communities.
Having wrecked the Murray-Darling freshwater river system that runs through four states, they have now turned their eyes towards the coastal commercial and recreational fishing grounds of New South Wales.
This is how it is playing out........
Asset Energy Pty Ltd holds an 85 per cent interest in Petroleum Exploration Permit PEP11, an offshore petroleum exploration lease covering 4,649 square kilometres in Commonwealth waters off the coast of New South Wales.
Having wrecked the Murray-Darling freshwater river system that runs through four states, they have now turned their eyes towards the coastal commercial and recreational fishing grounds of New South Wales.
This is how it is playing out........
Asset Energy Pty Ltd holds an 85 per cent interest in Petroleum Exploration Permit PEP11, an offshore petroleum exploration lease covering 4,649 square kilometres in Commonwealth waters off the coast of New South Wales.
Asset Energy is a wholly owned subsidiary of the Melbourne-based (formerly Perth-based) mining company MEC Resources Ltd’s investee company Advent Energy Ltd.
Bounty Oil and Gas NL is the junior joint venture partner
in PEP11 holding a 15 per cent interest,
Newcastle Herald, 9 January 2019 |
In March 2018 the National Offshore Petroleum Safety and
Environment Management Authority (“NOPSEMA”) gave approval for a survey which
acquired high resolution 2D seismic data over the Baleen prospect,
approximately 30km southeast of Newcastle, which evaluated (amongst other things)
shallow geohazard indications including shallow gas accumulations that can
affect future potential gas drilling operations.
NOPSEMA falls within the portfolio of Australian Minister for Resources and Northern Australia & Nationals Senator for Queensland, Matt Canavan.
That particular survey
has been completed and on New Year's Eve 2018 MEC Resources informed the Australian Stock Exchange that it now intends
to do 3D seismic mapping in the vicinity of the potential test drill site at the
earliest opportunity.
Underwater seismic testing involves continuous seismic airgun blasts approximately every 2-3 seconds for 24 hours continuously, for days or weeks at a time. That is, such testing creates compressed air streams or focused sonic waves - in simple language, loud booms - towards the ocean floor in order to gauge the depth, location and structure of the oil or gas resources. The sounds of which can travel many thousands of square kilometres and which are known to have a negative effect on marine ecosystems.
Underwater seismic testing involves continuous seismic airgun blasts approximately every 2-3 seconds for 24 hours continuously, for days or weeks at a time. That is, such testing creates compressed air streams or focused sonic waves - in simple language, loud booms - towards the ocean floor in order to gauge the depth, location and structure of the oil or gas resources. The sounds of which can travel many thousands of square kilometres and which are known to have a negative effect on marine ecosystems.
Previous to this, on 15 May 2018 the NSW
Parliament had called on the federal government to suspend Asset Energy’s permit to
conduct seismic testing off the coast of Newcastle, with the NSW Minister for Resources
and Energy & Liberal Party Member of the Legislative Council Don Harwin expressing a lack of
confidence in Australia’s current offshore mining regulations.
The Morrison
Coalition Government in Canberra appears to be ignoring NSW Government and community concerns. Being more concerned itself with offering tax free investment opportunities to the market. 1
It is worth noting that any
significant Advent Energy/Asset Energy drilling rig (left) mishap has the potential for an uncontrolled release
of untreated oil into coastal waters.
It is reportedly intended that one or more exploration drilling rigs should be in place sometime in 2020.
MEC Resources (formerly MEC Strategic Ltd) is a registered corporation which only been in existence for the last thirteen years and for the last three years there has been a bitter rift between the board and certain shareholders involving repeated calls for removal of the entire board, with the last call for a spill occurring in November 2018. The company was also involved in a dispute with a former managing director, as well litigation involving a $295,000 loan.
One of the shareholder bones of contention appears to be the cost of exploration in PEP11. On 31 October 2018 MEC Resources informed the stock exchange that a cost reduction plan remains in place to ensure all costs are reduced wherever possible.
Questions raised about the rigour of offshore mining regulations covering PEP11 and an oil & gas exploration company determined to cut costs. What could possibly go wrong?
Concerned readers can sign Stop Seismic Testing Newcastle's change.org petition to Minister Canavan and NOPSEMA here.
Footnotes
1. www.mecresources.com.au, Tax Advanatges, retrieved
10 January 2018:
MEC is a registered
Pooled Development Fund (PDF). PDF shareholders pay no capital gains tax on the
sale of their PDF shares. Investors who receive dividends will also be exempt
from income tax on dividends.
This can be particularly
attractive to both traders and investors, since any profits derived from trades
or investments are tax-free or low tax. The Pooled Development Fund Programme
was established by the Federal Government to develop the market for patient
venture capital for growing small and medium enterprises and to provide a
concessional tax regime to encourage such investments. Any capital losses on
the sale of PDF’s are not deductable.
To encourage investors,
the government offers tax benefits to both the PDF and its shareholders as
follows:
capital
gains made by PDF shareholders are not taxable,
shareholders
can elect to treat dividends paid by a PDF as tax free,......
PDF’s tend to invest in
a portfolio of growing companies, thereby potentially reducing investors’ risk
through diversification. Investee companies have the potential to become listed
companies in their own right, which has the possibility of providing investors
with attractive returns.
This is not a complete
list of the taxation issues surrounding Pooled Development Funds. For further
information please contact AusIndustry.
See Pooled Development FundsAct 1992 as amended up to September 2018.
Monday 7 January 2019
Why has Australian Treasurer & Liberal MP for Kooyong Josh Frydenberg morphed into a frenzied Trump?
“Ultimately, a dollar of tax avoided by high income Australians is an extra dollar of tax paid by all other Australians.” [Australian
Labor Party (ALP) policy document Positive
plan to help housing affordability]
The
Australian Labor Party has put forward a number of policies which limit the
degree to which affluent groups in our society can manipulate the tax system.
These tax reform policies will:
* limit negative gearing to investment properties
already negatively geared and newly built residential housing. However net income
losses on existing negatively geared properties will not be able to be used to
offset salary & wage income;
* cease cash
refunds for excess dividend imputation credits on which the investor personally paid
no tax originally and who has no current tax liability to offset with these
credits;
* reduce the discount on capital
gains tax from 50 per cent to 25 per cent after the deduction for any capital losses. Some assets
and events are exempt from capital gains tax. These include selling your
principle home, personal car, personal use assets or selling an asset acquired before capital
gains tax was introduced on 20 September 1985.
According to the Australian Taxation Office if you are an individual rather than a corporation then the Capital Gains Tax Rate is the same as your Income Tax Rate in the applicable year.
According to the Australian Taxation Office if you are an individual rather than a corporation then the Capital Gains Tax Rate is the same as your Income Tax Rate in the applicable year.
These same policies have caused former Deutsche Bank director, current Australian Treasurer and Liberal MP for Kooyong Josh Frydenberg (left) to morph into a frenzied
Trump. Pumping out slogans, misrepresentations and sometimes downright political lies on
every media platform he can access.
The
Australian, 5
December 2018, p.2:
Josh Frydenberg has
launched a pre-election assault on Labor’s plan to halve the capital gains tax
discount, warning that hundreds of thousands of Australians will be taxed at
the “highest rates” in the Western world.
Shifting his focus from
Bill Shorten’s proposal to limit negative gearing to new dwellings and the
“retiree tax”, the Treasurer yesterday cited government analysis that showed
Australians would be taxed up to 36.75 per cent on their capital gains under Labor’s
policy, up from 23.5 per cent now….1
Labor’s 50% increase to capital gains tax will cost jobs, punish those who work hard and save, and give Australia a CGT rate much higher than other advanced economies. pic.twitter.com/W4c3pgcgCt— Josh Frydenberg (@JoshFrydenberg) January 4, 2019
.@JoshFrydenberg on Labor’s negative gearing: Everybody who owns equity in their home will be worse off under Labor’s policy.— Sky News Australia (@SkyNewsAust) November 6, 2018
This is a major tax grab by the Labor Party.
MORE: https://t.co/9fyClHfMTo #FirstEdition pic.twitter.com/H0H0WTtFV5
So why is
Frydenberg screaming misrepresentations at the top of his lungs, urged on by the Housing Industry Association?2
Could it be
because 56.2 per cent of the tax benefits from Negative Gearing go to individuals whose incomes are in the top 20
per cent of Australian incomes and only 5.2 per cent of the tax benefits go to individuals
in the lowest 20 per cent of incomes?
Or because est.
75 per cent of tax savings from Capital
GainsTax discounts go to the top 10 per cent of high income families?
Perhaps it’s
because Self-Managed Super Funds are a major beneficiary of cash refunds for excess dividend imputation
credits, with 50 per cent of the benefit to SMSFs accruing to the top 10 per
cent of SMSF balances and some funds receiving cash refunds of more than $2.5
million a year?
Likely he’s
screaming because all three instances represent how successfully the affluent have gamed
the tax system to date and he like most right-wing politicians see such tax
manipulation as a right belonging to them and their mates and, therefore have no
interest in supporting a fairer distribution of the tax burden.
He also
appears to be ignoring the fact that Treasury modelling of these Labor policies shows an increase in federal government revenue by $2 billion over time and, that these same policies have the potential to put downward pressure on property prices in the
short-term so that genuine first home buyers might get a foot in the door with
more affordable residential housing.
Bottom line
is that Labor’s tax reform policies are primarily targeted at investors with a marginal tax rate (including Medicare Levy) of over 45 per
cent - which roughly equates with the top 20 per cent of Australian residents
with private wealth.
That is, the 'professional' investors/tax avoiders amongst the 1.16 million Australians who according to Credit Suisse in 2017 are millionaires, some many, many times over.
Footnotes
1. KPMG, Demark- Taxation of investment income and capital gains: “Interest and rental income are taxable as investment (or capital) income with a marginal tax of 42 percent (2018).” Denmark's Capital Gains Tax Rate is higher than the worse case scenario of up to 36.75 per cent under Labor which Frydenberg postulates in Para 5 of this post. Therefore Labor would not be imposing "the highest" rates in the Western world'.
1. KPMG, Demark- Taxation of investment income and capital gains: “Interest and rental income are taxable as investment (or capital) income with a marginal tax of 42 percent (2018).” Denmark's Capital Gains Tax Rate is higher than the worse case scenario of up to 36.75 per cent under Labor which Frydenberg postulates in Para 5 of this post. Therefore Labor would not be imposing "the highest" rates in the Western world'.
Shadow Treasurer Chris Bowen, A
FAIRER TAX SYSTEM: DIVIDEND IMPUTATION REFORM, 13
March 2018.
Australian
Taxation Office, Individual
Income Tax Rates 2018-2019 and CGT
assets and exemptions
National Australia Bank, Calculating and Paying Capital Gains Tax,
Domain.com.au, The ‘little known’ tax strategy some millennials use to amass large property portfolios, 23 May 2016.
National Australia Bank, Calculating and Paying Capital Gains Tax,
Domain.com.au, The ‘little known’ tax strategy some millennials use to amass large property portfolios, 23 May 2016.
* Photograph of Josh Frydenberg from msn.com
Saturday 4 August 2018
Friday 13 July 2018
How Trump's corporate tax cuts played out in the US economy
Crikey.com.au, 10 July 2018:
Evidence is now emerging
of just how extraordinarily wasteful Donald Trump's trillion-dollar corporate
tax cut has been as the results -- or lack thereof -- filter into the real US
economy.
It's now
well-established that the bulk of the tax cuts have gone into record-breaking
share buybacks and increased dividends by US companies, with hundreds of
billions of dollars flowing or set to flow back to investors. But not a lot of
the rest is flowing into extra investment -- the raison d'etre of
company tax cuts. New
investment data shows US equipment investment fell in the first
quarter of the year compared to the final quarter of 2017. How about wages,
which are supposed to increase due to company tax cuts (at least according
to Mathias
Cormann)? In June, monthly wage growth in the US fell to
0.2% from 0.3% in March, lower than expected and leaving wage growth
at 2.7% for the 2017-18 year. Inflation in the US was 2.8%
for the year to May, suggesting US workers are actually going backwards
after inflation.
US unemployment is at 4%
(up a tad) — far below our own level of 5.5%. Like the Kiwis, the Americans
can’t get wages to grow even with full employment — or even with tax cuts that
have massively inflated the US deficit at a time of peak employment.
The fact that Trump and
his GOP cronies have pushed the US budget deficit toward $1 trillion a year
(remember when the Republicans were the party of fiscal restraint?) at a time
of such strong employment also has implications for the stimulatory effect of
such largesse. New research from the San
Francisco Federal Reserve shows that fiscal stimulus is significantly
weaker at times of expansion than during recessions, and that the Republican
tax cuts will not meet what the paper terms the “overly optimistic”
expectations of boosters. Instead of the boost to US GDP growth this year of
about 1.3 percentage points estimated by the Congressional Budget Office and
other forecasters, they write, “the true boost is more likely to be less than 1
percentage point,” with some studies pointing to as little as zero.....
Read the full article here.
Labels:
debt,
economics,
jobs,
taxation,
US politics
Saturday 30 June 2018
Tuesday 26 June 2018
All income groups strongly favour the Labor tax plan, according to Essential Research survey
In this Essential Research survey half the people polled preferred the Shorten Tax Plan over the Turnbull Tax Plan - including 30 per cent of Coalition voters.
That is a 5 per cent increase in support for the Shorten plan and a 4 per cent loss of support for the Turnbull plan since last month.
Essential Report, 19 June 2018:
Labels:
Bill Shorten,
inequality,
Malcolm Turnbull,
taxation
Friday 11 May 2018
Entrenching inequality in the Australian way of life
There are no
real winners in this 2018-19 federal budget – everyone loses something because funding/staffing cuts include services which affect the smooth running of the country, such as regulatory
oversight, law, policing and communication.
Partial winners in the longterm are those in the two highest income/asset deciles. The Anthony Pratts, Gina Rineharts, 'Twiggy' Forrests, Bruce Mathiesons, Malcolm Turnbulls and Peter Duttons of this world.
Those losing the most are low income households, especially those dependent on welfare payments and those with an annual salary/wage between $41,000 to $87,000 because they will be assessed under the same tax rate as now but with less of the tax benefit pie on their plates in the future.
Federal Budget 2018 Facts of Life - a non-exhaustive list
* Funding in
this budget does not fully compensate for funding cuts and tax increases in the
last three federal budgets.
* Cuts from
previous budgets are still impacting on health services; education funding for schools and vocational studies have been reduced by a combined total of $17.27 billion, funds for the public broadcaster are
frozen representing a loss of $84 million on top of $254 million in budget cuts since 2014.1
* Cuts are
also occurring in:
Australian
Securities and Investments Commission (ASIC) with permanent
funding cut from $346 million to $320
million over two years and staff numbers reduced by 30 investigators in the next
year.
Office
of the Director of Public Prosecutions with funding cut from $77.4
million to $73.75 million in two years.
The
Australian Federal Police funding cut from $1.03 billion to $926
million within four years.2
* Although the
federal government is contributing $43 billion, to fund what it calls its “share”
of the National Disability Insurance Scheme (NDIS) from 2018–19 to 2021–22, there is
still no dedicated funding stream for NDIS.
* Rural, regional
and remote area health is only receiving 16.66 million a year for five years to
improve health outcomes in those areas across Australia – none of which appears to go directly to treatment of patients or additional services.
* Personal
income tax cuts aren’t being offered to those on taxable incomes below $20,548
per annum. Those workers
with a taxable income of $20,548 will receive $1 a year in income tax relief. It is reported that the full range of personal income tax relief (which provides the most benefit to the highest earners) will eventually cost est. $17.8 billion annually in lost government revenue if scheme continues until 2027. 3
* Individuals earning $100,000 to $125,330 per annum now receive a low and middle income income tax offset despite being in high wage/salary deciles.
* There are estimated 101,508 older Australians on the waiting list for appropriate home care packages.4 At least 60,000 of these do not have even the initial lowest level of home care package and, all the federal government is offering is funding for an extra 14,000 high level packages still leaving 46,000 elder people with no hope of receiving assistance in the foreseeable future to keep living at home.
* Individuals earning $100,000 to $125,330 per annum now receive a low and middle income income tax offset despite being in high wage/salary deciles.
* There are estimated 101,508 older Australians on the waiting list for appropriate home care packages.4 At least 60,000 of these do not have even the initial lowest level of home care package and, all the federal government is offering is funding for an extra 14,000 high level packages still leaving 46,000 elder people with no hope of receiving assistance in the foreseeable future to keep living at home.
* There is a
proposal to change the progressive tax system from 2018-19 so there are only
four income tax brackets and people with incomes from $41,000 to $200,000 per
annum will pay the same tax rate. This means that est. 62 per cent of future
benefits would go to the highest salary/wage earners with only 7 per cent going
to those on the lowest wage.5
According
to Budget Strategy and Outlook Budget
Paper No. 1 2018-19; When completed,
the plan ensures that about 94 per cent of taxpayers are projected to face a
marginal tax rate of 32.5 per cent or less in 2024–25.
* People over retirement age receiving the Age Pension are being
urged to consider funding part of their retirement through the Pension Loans Scheme which will be expanded on
1 July 2019, with the available fortnightly loan plus pension amount increasing
to 150 per cent of the maximum rate of fortnightly Age Pension. The current
maximum fortnightly pension amount is $907.60. This loan will normally be repaid
when the secured real estate asset (usually the principal home) is sold or from
the pensioner’s deceased estate.6
* This budget continues the funding model which skews federal primary and highschool funding towards private schools via the Quality Schools scheme with funding for government schools set at $7.6 billion and non-government schools at $11.8 billion in 2018-19 increasing to $9.6 billion and 13.8 billion in 2021-22 .7
* The Northern Territory remote area Aboriginal children and schooling component has been cut by over $47 million across the next four financial years.
*TAFE further technical education funding has been cut by $270 million on top of previous budget cuts.
* This budget continues the funding model which skews federal primary and highschool funding towards private schools via the Quality Schools scheme with funding for government schools set at $7.6 billion and non-government schools at $11.8 billion in 2018-19 increasing to $9.6 billion and 13.8 billion in 2021-22 .7
* The Northern Territory remote area Aboriginal children and schooling component has been cut by over $47 million across the next four financial years.
*TAFE further technical education funding has been cut by $270 million on top of previous budget cuts.
* The Goods
and Services Tax has been extended to cover online hotel bookings made via
offshore websites. This is expected to raise $5 million in the 2019-20
financial year.
* Mobile blackspot
program funding ceases in 2019.8
* The cashless
debit card trial in Ceduna (South Australia) and East Kimberley (Western
Australia) will be extended for another year to 30 June 2019. The federal government
refuses to make the costs of this measure public.
* Part or all
of a welfare payment will be withheld to clear a welfare recipients court fines or address arrest
warrants.
* There has
been no increase in unemployment benefits.
* Women &
girls necessary sanitary products are still subject to a consumption tax
payable at the supermarket/chemist checkout.
* Finally,
the Turnbull Government cracked a joke in the budget papers – a new National
Energy Guarantee is expected to reduce annual residential power bills by $400
at some unspecified date in the future. 9
Footnotes:
2. http://www.afr.com/news/policy/budget/federal-budget-2018-asics-shock-26m-budget-cut-20180509-h0zud4
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