The election thread - Two middle-late aged white men trying to be blokey and convincing..., same old shit, FFS.

[scblack]

Salary sacrifice. If you dont have a salary.

Technically correct, but of course available to every income earner.

But it's still declare the entire income inclusive of the franking credit. The divident statement is declared as $1000 total, $700 income and $300 franking credit (you're paid only $700, the company paying pays the $300 in tax to the ATO as part of the Corporate tax). Come tax time, you declare it as $1000 in earnings with the noted $300 franked offset. If your marginal tax rate is above 30% you're going to pay more tax on that declared income, not less.

->Here is where the penny dropped for me!
I see now what you mean. You won't get it as a return as such, but you'll get the full 30% of any franking credited earnings as a reduction at the end. That's neat!!! Poor people get the money back in pocket as a return, rich people get it as a tax break and encouraged to invest in Australian businesses in doing so.

...And this is the problem.

Most people simply do NOT understand what franking credits are - even when it is explained. And then to further understand what franking credit Refunds are, is a further step again.

Not a go at you, but it simply has no meaning to the vast majority. They just see cash refunds, and react.

 

[scblack]

Easily amused I see... I’m sure we can al apologise for taking your question seriously then.

What Question????

 

[DeBloot]

Family tax benefits...if we are all lucky, @Haakon will never need them.



So you class public education, public hospitals, public roads, public toilets, public transport, public parks, and other government funded not for profit services as hand outs? You would prefer to walk down a street lined with human filth and garbage than pay tax for it to be cleared away? Or to face 3rd world beggars and thieves along your lunch time walk? Than pay a little tax to have those stuck in a cycle of poverty receive a little governement assistance to try and break the cycle? Would you be ok with paying a higher insurance premium rather than being taxed because desperate people keep stealing your car land breaking into your house so that unemployment benefits could be axed? This sounds like a true bizarro universe that you wish to live in.

Poor people deserve it for not trying harder
The rabble and their tiresome whinging and filthy habits don't affect us landed gentry
We drive over them on the way home to our gated communities

 

[Haakon]

Family tax benefits...if we are all lucky, @Haakon will never need them.

Trust me, that frightens me more than you...
Mind you, happy to take the parental leave I’ll never access as cash or actual extras leave.

 

[Zaf]

Removed by user

 

[pink poodle]

Trust me, that frightens me more than you...
Mind you, happy to take the parental leave I’ll never access as cash or actual extras leave.

Paid maternity leave probably meets SC's criteria. I'm quite happy to shell out my share of tax for that to be a thing.


I wonder, who is the greater burden on the community? The true in every sense of the words welfare bludgers or those who cheat on their tax? Is there an equitable vilification of these very different leaches in Australia? I don't remember the last time my notice of assessment included a thank you for paying tax accompanied by series of graphs breaking down the issue of tax evasion, similar to the graphs about welfare that were being applied.

 

[pink poodle]

Here's some more tax dollars hard at work...

#takemymoney

 

[SummitFever]

...Most people simply do NOT understand what franking credits are - even when it is explained. And then to further understand what franking credit Refunds are, is a further step again...

This is the problem right here. The fact that there are posts on RB parotting the pollies oversimplification of franking credits just shows how easily voters can be manipulated into voting for something that really won't be in their long or short term interests.

 

[Dales Cannon]

Is that interest before or after tax?

 

[SummitFever]

But it's the same benefit. Rich people get it as an offset, poor people get it as a return. ..I'm really not seeing the what the big issue is here.

If the proposed changes go through poor people will not get the benefit. Ie. No refund even if overall tax rate less than 30%. Govt actually gets a tax windfall. See my earlier example of uni student with shares.

 

[scblack]

But it's the same benefit. Rich people get it as an offset, poor people get it as a return. If you entire earnings from the year is in franking credits dividends, and your marginal tax rate is above 30%, you're going to still pay more tax on that, not less. International companies aren't subject to the franking offset, so it's encouraging investment into Australian companies. I'm really not seeing the what the big issue is here.

Sorry, but its clear you do not understand the issue. Again, not a go at you, but lack of understanding is the crux of this issue.

Franking Credits are tax PAID by the company (for simplification) at 30%.. That tax Paid, is then offset against your Personal income tax Liability.

Because a rich person has a tax rate above 30%, they Fully use the franking credits.
But a poor person who has less income Loses the benefit because they cannot offset the Credit provided.

Labor wishes to take this Credit off the poorer people of our society. That is the issue here.

 

[Zaf]

Removed by user

 

[Flow-Rider]

Here's some more tax dollars hard at work...


View attachment 352995

#takemymoney

You got ripped off, you should see the one we got. 2.3 Mil with toilet block, lights and built on an old asbestos dump.

 

[scblack]

@scblack
And after all that, it just clicked. Labor are planning on removing the "you get it paid back"...which basically makes them fucking retards. It took me several posts, but I got there. Sorry, little behind on the current events and was sitting there going "but that's not how it works!" and commenting on how it currently works and not what they intend to do with it.

But since I've done it all, essentially if Labor gets their reforms, the poor guy with only a portfolio is now out of pocket $6654 because...I don't even have a reason because. Because they don't like low earners investing in Australian business? This is dumber than lowering the cap on voluntary super contributions and increasing the length of time in employment to prove independence.

Well done, at least you made the effort and eventually got to the understanding of the issue..

Yes it is very dumb. No, the vast majority of people will not understand what this issue really is.

Its dumb policy and Labor are counting on people to not understand the issue, and treat it in their minds as a handout.

And remember franking credits, more correctly known as Dividend Imputation was introduced by the Labor govts of Hawke/Keating.

 

[Haakon]

How do you figure they won't get the Return if their marginal tax is below 30%?

If you've paid more tax than you should have for the projected income for that financial year, you'll get a return.

If we take the example of somebody who has earned, only through franking credited shares, $40,000 for the year (lets assume it meets the holding rule conditions).
They will have gotten $28,000 with $12,000 in franking credit.

Their first $18,200 is tax free.
They then pay 19c on the dollar for the next bracket ($18,201-$37,000) - $3571
The last $3000 will be at 32.5c on the dollar - $975.
Total tax should be $4546
+medicare levy of 2% = $5346
Their franking offset will be $12,000

They should receive a return of: $6654 (barring any other deductibles).

Now if we take this example, but add a $140,000pa salary to the mix, the projected tax for $180,000 income year should be:
3571+16249+34409 = $54,229
+Medicare = $57,829 (32% marginal rate)

But they have paid: 3571+16249+19609= $39,429 (+$12,000 paid already by the Company)
+Medicare = $43,209

Their tax bill should be for another $14,620, but will get $12,000 in offsets due to the 30% being paid already, bringing their bill to $2,620.

@scblack
And after all that, it just clicked. Labor are planning on removing the "you get it paid back"...which basically makes them fucking retards. It took me several posts, but I got there. Sorry, little behind on the current events and was sitting there going "but that's not how it works!" and commenting on how it currently works and not what they intend to do with it.

But since I've done it all, essentially if Labor gets their reforms, the poor guy with only a portfolio is now out of pocket $6654 because...I don't even have a reason because. Because they don't like low earners investing in Australian business? This is dumber than lowering the cap on voluntary super contributions and increasing the length of time in employment to prove independence.

Ok, but how many people fall into that category and how do the exemptions labour have proposed play into it?

 

[pink poodle]

You got ripped off, you should see the one we got. 2.3 Mil with toilet block, lights and built on an old asbestos dump.


View attachment 352999

That is very attractive.

 

[SummitFever]

...the poor guy with only a portfolio is now out of pocket $6654 because...I don't even have a reason because. Because they don't like low earners investing in Australian business? This is dumber than lowering the cap on voluntary super contributions and increasing the length of time in employment to prove independence.

We have a winner!

 

[SummitFever]

Ok, but how many people fall into that category and how do the exemptions labour have proposed play into it?

Why should that matter? The fewer people affected, the more unfair it is on the people that are affected. It's like saying a law that targets one-legged, one-eyed red heads is OK because there are only 3 of them in Australia.

In any event, the exemptions only cover people getting the pension. Young, low earning people who try to better themselves with a share portfolio because they can't afford to buy a house are the type of people that will get screwed. I have no idea how many people that actually is, but it's probably more than you think.

Also, any small business owner uses a pty limited company to trade with will be affected if they retain earnings in the company (and don't pay it all out as salary). It applies to all franked dividends and not just those from big publicly listed companies or SMSF companies. That is probably another big number of people who have no idea that this is going to adversely affect them.

 

[Flow-Rider]

Why should that matter? The fewer people affected, the more unfair it is on the people that are affected. It's like saying a law that targets one-legged, one-eyed red heads is OK because there are only 3 of them in Australia.

In any event, the exemptions only cover people getting the pension. Young, low earning people who try to better themselves with a share portfolio because they can't afford to buy a house are the type of people that will get screwed. I have no idea how many people that actually is, but it's probably more than you think.

Also, any small business owner uses a pty limited company to trade with will be affected if they retain earnings in the company (and don't pay it all out as salary). It applies to all franked dividends and not just those from big publicly listed companies or SMSF companies. That is probably another big number of people who have no idea that this is going to adversely affect them.

That's what I done to help get a deposit for my house years ago, it wasn't a lot but it sure did help when you're not getting paid much.

 

[Haakon]

It’s matters if 6 people are affected and they're exempted anyway and it’s stops 1000 people sucking the tax purse dry...

As Spock would say, the needs of the many outweigh the needs of the few.