Talking Politics

[22nd Man]

And this is why we have payroll tax. Employees can't avoid tax, and as a result, companies can't hide employees. Payroll tax gets a lot of criticism, but the reason it exists is that it is damned difficult to avoid.

DS

GST is even harder to avoid and should be higher. And on virtually every good or service.

 

[22nd Man]

I agree with this post 100%. But I also this topic needs to be linked to population growth as well. As currently we have a perfect storm with record amounts of immigrants entering our shores.

More public housing also needs to directed to regional communities as well to keep these communities thriving.

I always thought public housing was a state government role.

 

[22nd Man]

Also, Babet shouldn't be getting paid by us, and paid bloody well, to be an utter moron while discrediting parliament even further. Absolute oxygen thief.

I like Paton, but not sure if the Cannabis Party is the way to go. Wonder why she didn't run as an independent...

Looking for Dimmas and all the others choofas vote

 

[22nd Man]

I worked a number of years ago for a US MNC and what I saw with them and many others in relation to tax minimisation made me come to the conclusion that if Australia reduced the company tax rate we would probably earn more tax from overseas entities. Large MNCs try to minimise profits in countries that have higher tax rates and they are largely successful despite a lot of effort by tax authorities looking at royalty payments, transfer pricing and thin capitalisation (as examples). Not many MNCs make large taxable profits in Australia.

In regard to dividend imputation one other way of doing it is to make dividend payments by companies tax deductible. Those dividends would then be fully taxed in the hands of the recipient and if the shareholder was a non resident there could be a witholding tax levied.

The term company as a legal person is one that is used quite a lot. For instance the AICD use that term in their education material because it is illustrative that company has some of the same rights as a natural person and can incur debt, be sued etc. It is semantics in the end but makes the point.

Ireland took this approach. And all Australians go weak at the knees about anything Irish,

 

[22nd Man]

Any reporting of income through the tax records is by definition wrong because it is taxable income that gets reported.

I remember when changes to negative gearing were being mooted there was this stat that x% of those claiming interest on a negatively geared property were earning $80k or less. Of course part of the reason was that their income was reduced because of that negative gearing !!

So all,businesses should be taxed on gross sales not after costs?

 

[22nd Man]

I think a lot of people don't think of real estate as an asset. It is a large minority who think this way. Yes, rising house prices do mean you can borrow against equity, but we all realise that you still end up having to pay it back.

But the way the media talk, everyone is obsessed with the value of their house, if they have one. When I get asked what our house is worth my usual reply is that it is worth living in. This exposes an issue - the idea that houses are an investment not a dwelling. This attitude, at least for those who do consider a house an investment as opposed to a dwelling, and also those who promote this way of thinking, has a fair bit to do with the problems we have. Decades ago, say, our parents' generation, it was rare to be looking at the capital gains aspect of buying a house, unless you were very wealthy you bought a house and the only relevance of its market value was if you wanted to move.

Houses need to go back to being a dwelling.

As for the tax review, a lot of it was good but what drives me crazy about the tax reform agenda is the constant argument that we need more consumption taxes. Consumption taxes are regressive. An increase in consumption tax on a purchase is a set amount, so the lower your income the higher the proportion of your income a consumption tax is. Increasing the GST increases a regressive tax.

What we need to do is to get rid of tax breaks for owning capital: this means getting rid of capital gains tax discounts, negative gearing and the like. I would not just get rid of getting franking credits back even if you pay no tax, I would get rid of franking credits. Very few countries have franking credits. Companies a limited liability, in order to have this they are considered legal persons. The company pays their tax, and the person who receives a payout (eg: dividend) is a separate person, so they can pay their tax on the income they receive from the company. I cannot agree with owning capital getting a tax discount over providing labour.

The other travesty of course is the royalties from mining which are much lower in Australia. Companies profit from digging stuff up here, they can pay for the privilege.

DS

If you increase GSt which should occur then increase the tax free threshold. Too many tax arguments isolate one tax and argue why it can’t / should be increased.

 

[Baloo]

So all,businesses should be taxed on gross sales not after costs?

When an Australian entity of a large multinational pays the regional (often Singapore in Australia's case) a ridiculously high "licence" fee, ensuring the bulk of the profits are shipped and taxed offshore, leaving Australia with a few cents in the dollar to tax, then we have a real problem. Dunno what the answer is, but tax on nett sales for MNCs gives them a massive tax advantage.

 

[DavidSSS]

People who “actually” work can also own shares. Being employed and owning share aren’t mutually exclusive.
the great bulk of Australian shares are owned by super funds and they receive the credits too, bumping up the returns of the super of those who actually work.
Or are you arguing no one or no entity deserves this?

At the moment capital gains are added to income and taxed accordingly
My solution would be to tax income on one scale and cap gains on another (or allow cap gains to be spread over the number of years the asset was owned, not taxed in the year the gain was crystallised.

Yes, but the income from capital gains is earned without working.

Capital gains are income, I see no reason shy they should be taxed any differently. Getting a tax concession from income you don't work for is upside down if you ask me. But, I'm not arguing for more tax on capital gains, just the same tax treatment as income earned from work.

As for super funds, they own around 36% of shares so not most, this is a 2021 figure, down from 39% in 2017.

DS

 

[DavidSSS]

When an Australian entity of a large multinational pays the regional (often Singapore in Australia's case) a ridiculously high "licence" fee, ensuring the bulk of the profits are shipped and taxed offshore, leaving Australia with a few cents in the dollar to tax, then we have a real problem. Dunno what the answer is, but tax on nett sales for MNCs gives them a massive tax advantage.

I recall reading that some European countries have a limit on how much a company can deduct from their income as a proportion of revenue. Might be worth looking at. The "licence fees" and borrowing off a sibling company in a low tax jurisdiction are both rorts which somehow need to be closed down. Of course, if countries stopped trying to compete on the basis of low tax rates we wouldn't have this problem. We all benefit from government infrastructure and services but some refuse to pay for them.

DS

 

[Sintiger]

So all,businesses should be taxed on gross sales not after costs?

The context was the reporting of stats about income and the difference between quoting gross income and taxable income. It wasn’t a judgement about how people are taxed.

When politicians talk about “ x number of people earn more than $80,000 a year” they are talking about gross income but they use stats that are based on taxable income and that’s misleading.

 

[Michael]

GST is even harder to avoid and should be higher. And on virtually every good or service.

And GST could be a useful tool to remedy inflation

 

[MD Jazz]

At the moment capital gains are added to income and taxed accordingly
My solution would be to tax income on one scale and cap gains on another (or allow cap gains to be spread over the number of years the asset was owned, not taxed in the year the gain was crystallised.

You mean "Net" capital gains are added to income and taxed accordingly.

Most often, net capital gains are 50% of the capital gain.

Sometimes they are 25% of the gain.

Sometimes they are $0.

Have seen examples of people making over $5M when selling businesses (that cost nothing to start) and having no tax after the various discounts/retirement exemptions. Some of that gain can be deposited into super and the earnings on the income generated by the fund is tax free.

At least they introduced a cap on the balance that had this tax-free status on earnings.

Almost always, people whinge about paying any tax on capital gains.

If the taxpayer receuives the money from the gain why should the tax be spread out and not paid in the year it was earnt? The ATO already has the highest level of unpaid tax debt in history, that would only make it worse IMO.

Not sure what the answer is but IMO the Capital gain tax rules are already too generous.

 

[Baloo]

Not sure what the answer is but IMO the Capital gain tax rules are already too generous.

If I read it right, capital gains tax on share trading don't get a discount. Losses in share trading can only be offset used to offset gains in share trading, not other forms of income. The capital gains are tax at your current income tax rate.

For the pampered property investor, capital gains tax is discounted, and you can offset the losses in property against different forms of income.

Why are these two forms of investing treated differently? Property investors have come to believe their investments should only appreciate, that losses in property investing are near unheard of. Yet they also expect returns as good as, if not better, than riskier investments, like shares.

 

[MD Jazz]

If I read it right, capital gains tax on share trading don't get a discount. Losses in share trading can only be offset used to offset gains in share trading, not other forms of income. The capital gains are tax at your current income tax rate.

For the pampered property investor, capital gains tax is discounted, and you can offset the losses in property against different forms of income.

Why are these two forms of investing treated differently? Property investors have come to believe their investments should only appreciate, that losses in property investing are near unheard of. Yet they also expect returns as good as, if not better, than riskier investments, like shares.

If you hold a CGT asset for more than 12 months you get a 50% discount - shares are not excluded from this.

 

[Baloo]

If you hold a CGT asset for more than 12 months you get a 50% discount - shares are not excluded from this.

Ah, ok, thanks for clarifying. Makes life tough for day traders then.

 

[MD Jazz]

If I read it right, capital gains tax on share trading don't get a discount. Losses in share trading can only be offset used to offset gains in share trading, not other forms of income. The capital gains are tax at your current income tax rate.

For the pampered property investor, capital gains tax is discounted, and you can offset the losses in property against different forms of income.

Why are these two forms of investing treated differently? Property investors have come to believe their investments should only appreciate, that losses in property investing are near unheard of. Yet they also expect returns as good as, if not better, than riskier investments, like shares.

Share "trading" is different from passively holding shares and selling them. Profits from share "trading" or speculating are deemed income and not capital. Losses from share trading are not capital losses biut income losses. Being able to offset them against other income is determined under a set of rules.

The losses you can offset from property ownership are income losses. eg Income is rent less the costs of ownership.

Capital gains or losses are only generated from property if you sell it.

I think you are confusing the capital/income aspects of ownership.

 

[MD Jazz]

Ah, ok, thanks for clarifying. Makes life tough for day traders then.

If day traders make income losses they can offset those losses against other income as long as they meet certain criteria.

 

[Baloo]

OK, so what determines with a gain is income or capital? The length of time you hold a stock? <12months it's income, >12 months it's CG?

 

[Brodders17]

You may be right Brodders. I am no expert on the NDIS.

One thing I have learned in dealing in the public sector is that sometimes well meaning politicians just get beaten by the bureaucrats, they can’t move them. I wonder whether the NDIS is in this basket, it’s just too bureaucratic !!

Shorten was "dumped" into the disability role originally, probably to dampen his early leadership aspirations, but credit to him, he listened, learnt and was one of the early drivers of the NDIS. Since returning to the portfolio though he has listened to the media too much, and undoubtedly some numbers people within the department. He now aims for easy targets too much and some of his proposed changes will have a very damaging effect on those the scheme supports.

And yes, like everything government there are smart people working there who have the right ideas about what needs to be done, and then there are career bureaucrats who get promoted above there level because the do "public service" well.

 

[Big Tiger]

And this is why we have payroll tax. Employees can't avoid tax, and as a result, companies can't hide employees. Payroll tax gets a lot of criticism, but the reason it exists is that it is damned difficult to avoid.

DS

It's an insidious tax and a ridiculous cost on business. Why should I pay additional tax for the "privilege" of hiring someone? It's ridiculous and your reasoning for it is pathetic.