Tax the top 1-10% more?

[Handsuper47]

The main issue I see with taxing the rich is what's to stop them moving overseas?

 

[medusala]

What sort of campaigner would move overseas to earn more money and pay less tax?

#UnOzstralian
#traitor

 

[Power Raid]

You need to update yourself because frankly your knowledge of the manipulative ability for tax minimisation is enormous in family trusts. It's why they are so pervasive and growing.

Let me quote from two articles in the Fin Review this year. A publication not exactly known for having egalitarian values.

but you're still not understanding how tax works

companies and trust do not actually pay tax......why?

companies pay 30% tax but because of franking credits the individual receiving the franked dividends gets a tax credit. if the credit exceeds the individuals tax, then they get a tax refund. so companies do not pay tax, rather they pay tax installments on behalf of the to be recipient in milestones and in advance.

trusts pay 48.5% tax on undistributed profits. if all profits are distributed then the trust pays no tax, then the recipients pay the tax.

The issue that you are now moving towards is not related to your call "trusts should be taxed like companies". You are now referring to something that goes to the heart of taxation being the concept of beneficial owner or beneficiary. Good luck changing that. Why? Imagine if you are standing at a bus stop on June 30 and some old lady is struggling to get on a bus with her shopping bag which just happens to be filled with cash. You help her and the taxman crystallizes that moment and you are now liable for the tax related to the money in the bag. Is that fair? clearly no and that is exactly what a "trust" is. A trust is simply the mug holding the $ at June 30, thus pays no tax but the beneficiary is liable.

 

[AM]

I am very familiar with the way the system works. And as a shareholder, how franking credits work.

Family trusts vary in enormously in structure and character, as they do from the many other forms of trusts.

I'm also only too well aware of how difficult it would be politically to change the family trust system so it isn't used to either pay no tax or very little. The same applies to removing negative gearing, re-introducing an inheritance tax, and stopping the superannuation rorts, which were my other suggestions. Although I think the latter is not out of the question. That doesn't mean the suggestions aren't the right, equitable - even decent - things to do.

 

[Power Raid]

I am very familiar with the way the system works. And as a shareholder, how franking credits work.

Family trusts vary in enormously in structure and character, as they do from the many other forms of trusts.

I'm also only too well aware of how difficult it would be politically to change the family trust system so it isn't used to either pay no tax or very little. The same applies to removing negative gearing, re-introducing an inheritance tax, and stopping the superannuation rorts, which were my other suggestions. Although I think the latter is not out of the question. That doesn't mean the suggestions aren't the right, equitable - even decent - things to do.

So you appreciate operating trusts are taxed like companies and undistributed profits in discretionary trusts are taxed at 48.5%?

Please advise how they can be used to pay no tax or very little?


Changing super would be fine but any rich person using super has rocks in their head. Super is more appropriate for the middle class.

 

[AM]

So you appreciate operating trusts are taxed like companies and undistributed profits in discretionary trusts are taxed at 48.5%?

Please advise how they can be used to pay no tax or very little?


Changing super would be fine but any rich person using super has rocks in their head. Super is more appropriate for the middle class.

Speak to your accountant. Failing that read past editions of the Fin Review or check the net, the information is widely available. I don't intend wet nursing you.

 

[Power Raid]

Speak to your accountant. Failing that read past editions of the Fin Review or check the net, the information is widely available. I don't intend wet nursing you.

I am a chartered accountant by training

 

[Maggie5]

So you appreciate operating trusts are taxed like companies and undistributed profits in discretionary trusts are taxed at 48.5%?

Please advise how they can be used to pay no tax or very little?


Changing super would be fine but any rich person using super has rocks in their head. Super is more appropriate for the middle class.

Distribution?
What is a chartered accountant by training?

 

[Power Raid]

Distribution?
What is a chartered accountant by training?

It means I completed my CA but don't work as an accountant


Distributions are the equivalent of a dividend for a trust. If a family trust does not distribute the profits the trust pays 48.5% tax

 

[Maggie5]

It means I completed my CA but don't work as an accountant


Distributions are the equivalent of a dividend for a trust. If a family trust does not distribute the profits the trust pays 48.5% tax

But that is the key isn't it, they do distribute dividends and that is why accountants recommend Trusts. Have known business that have trusts and by they time they distributed profits paid little or no tax.

So do you have more than one degree in another field? I am sure that I read somewhere that your employer paid for your education and that it was in another field or that you received a degree whilst in the Navy. Very confusing background.

 

[Power Raid]

But that is the key isn't it, they do distribute dividends and that is why accountants recommend Trusts. Have known business that have trusts and by they time they distributed profits paid little or no tax.

So do you have more than one degree in another field? I am sure that I read somewhere that your employer paid for your education and that it was in another field or that you received a degree whilst in the Navy. Very confusing background.

Yep if 100% of the profits are distributed then the trust pays no tax. But the beneficiaries then pay the tax. So the tax still gets paid.

And yep two backgrounds. Marine Science and the Navy got me out of Adelaide but I always wanted to be a businessman.

The CA and finance was the bridge to business. The marine science also included O&G which was the link to resources.

I got lucky as I was working for Andersen in Chicago but the Enron scandal found myself licking my wounds back in Oz.

It turned out to be a blessing as there was a need for finance guys who understood resources.

My Chairman was the founding chair of FMG and gave me the idea to finance the restructure AGO from gold to iron ore. Owning 35% of a $4m company through two funds that grew to be bigger than qantas was just lucky.

 

[Maggie5]

Yep if 100% of the profits are distributed then the trust pays no tax. But the beneficiaries then pay the tax. So the tax still gets paid.

Not necessarily, if they have a good accountant and at what tax rate if they do?
Just goes to show, tax rules need to be tightened and loopholes closed.
Meanwhile the good old PAYG cops it in the pocket and pays in full.

 

[Rob]

but you're still not understanding how tax works

companies and trust do not actually pay tax......why?

companies pay 30% tax but because of franking credits the individual receiving the franked dividends gets a tax credit. if the credit exceeds the individuals tax, then they get a tax refund. so companies do not pay tax, rather they pay tax installments on behalf of the to be recipient in milestones and in advance.

trusts pay 48.5% tax on undistributed profits. if all profits are distributed then the trust pays no tax, then the recipients pay the tax.

The issue that you are now moving towards is not related to your call "trusts should be taxed like companies". You are now referring to something that goes to the heart of taxation being the concept of beneficial owner or beneficiary. Good luck changing that. Why? Imagine if you are standing at a bus stop on June 30 and some old lady is struggling to get on a bus with her shopping bag which just happens to be filled with cash. You help her and the taxman crystallizes that moment and you are now liable for the tax related to the money in the bag. Is that fair? clearly no and that is exactly what a "trust" is. A trust is simply the mug holding the $ at June 30, thus pays no tax but the beneficiary is liable.

That is incredibly simplistic. The vast majority of trusts are simply family discretionary trusts effectively controlled by 1 or 2 people.

Bare trusts and other fixed trusts are unlikely to be affected by any change to the taxation of trusts. They certainly weren't the last time that was proposed.

FWIW, the best way to tax wealth is to enforce a universal land tax. Perhaps with a facility for landowners on low incomes to defer paying until the land is sold.

 

[Power Raid]

That is incredibly simplistic. The vast majority of trusts are simply family discretionary trusts effectively controlled by 1 or 2 people.

Bare trusts and other fixed trusts are unlikely to be affected by any change to the taxation of trusts. They certainly weren't the last time that was proposed.

FWIW, the best way to tax wealth is to enforce a universal land tax. Perhaps with a facility for landowners on low incomes to defer paying until the land is sold.

Hear hear

100% with you and a proper property tax

 

[Power Raid]

Not necessarily, if they have a good accountant and at what tax rate if they do?
Just goes to show, tax rules need to be tightened and loopholes closed.
Meanwhile the good old PAYG cops it in the pocket and pays in full.

If distributed it gets paid at personal tax rates.

If PAYG is implemented at corporate tax rates, the tax rate would decrease from 48.5% to 30%.

 

[Maggie5]

If distributed it gets paid at personal tax rates.

If PAYG is implemented at corporate tax rates, the tax rate would decrease from 48.5% to 30%.

Know that, not sure what has to do with my last post.

 

[pazza]

Poppycock. myth

Fact.

A cleaner for example works longer hours on about $26 an hour. Was $14 just a few years ago under Workchoices I. Security guards and those in industries where penalty rates are a must earn something similar and work similarly.

 

[Todman]

Fact.

A cleaner for example works longer hours on about $26 an hour. Was $14 just a few years ago under Workchoices I. Security guards and those in industries where penalty rates are a must earn something similar and work similarly.

Working longer does not mean working harder.

$26 an hour to wander around with a mop and a broom, well paid for little responsibility, they don't contribute to the company bottom line because they are overheads.

 

[pazza]

Working longer does not mean working harder.

$26 an hour to wander around with a mop and a broom, well paid for little responsibility, they don't contribute to the company bottom line because they are overheads.

Cleaning is also incredibly laborious. If they didn't do it..then it would have to be done in-house, which would cost a business even more! Same with security. without guards in buildings, I dread to think what could happen. They work hard and long. They should be rewarded for their efforts..quite frankly the pay isn't worth it.

 

[AM]

Working longer does not mean working harder.

$26 an hour to wander around with a mop and a broom, well paid for little responsibility, they don't contribute to the company bottom line because they are overheads.

No direct labor is considered an overhead. That includes fat cats who sit in their luxurious offices playing with keyboards and/or company directors who extract exorbitant fees for appearing at monthly board meetings

If you think cleaning merely constitutes wandering "around with a mop and broom" you live in a parallel universe.

 

[Power Raid]

Cleaning is also incredibly laborious. If they didn't do it..then it would have to be done in-house, which would cost a business even more! Same with security. without guards in buildings, I dread to think what could happen. They work hard and long. They should be rewarded for their efforts..quite frankly the pay isn't worth it.

I would suggest cleaners work as hard as anyone but value is not measured by "how hard" someone works.

The market values work on the output not the input and the supply demand curve of labour.

 

[Slax]

All I know is that everyone is going to need to get their heads around the fact that tax rates are only going to go up in the future for companies and individuals

 

[pazza]

The main issue I see with taxing the rich is what's to stop them moving overseas?

Simple. Have the Immigration Department do some work deny them leaving.

 

[Power Raid]

All I know is that everyone is going to need to get their heads around the fact that tax rates are only going to go up in the future for companies and individuals

GST and property yes but income no

Company tax will be reduced to 25% as franking credits are becoming a liability

 

[Rob]

All I know is that everyone is going to need to get their heads around the fact that tax rates are only going to go up in the future for companies and individuals

I doubt company tax is going up anytime soon. The worldwide trend is that it's heading the other way.