The page you are looking for is temporarily unavailable.
Please try again later

Money Comments: How some of the wealthiest Australians pay 'negative' tax

05:48  14 march  2018
05:48  14 march  2018 Source:   brisbanetimes.com.au

Sir Elton John's dog has died

  Sir Elton John's dog has died Sir Elton John's beloved dog Arthur - who reportedly served as the best man at his 2014 wedding - has died at the age of 14.The 70-year-old music icon has revealed that his pet pooch Arthur - who was his best friend and even reportedly served as the best man at his 2014 wedding to David Furnish - has tragically passed away at the age of 14.

The complexity of the Australian tax system hides many sins, one of the most inequitable of which is the fact that some of Australia ’s wealthiest citizens pay negative tax . The ATO actually hands other people’s money to some of the wealthiest people in the country.

The complexity of the Australian tax system hides many sins, one of the most inequitable of which is the fact that some of Australia ’s wealthiest citizens pay negative tax . The ATO actually hands other people’s money to some of the wealthiest people in the country.

Paul Keating thought that companies and shareholders paying tax was © Wayne Ludbey Paul Keating thought that companies and shareholders paying tax was "double taxation".

The tax treatment of earnings generated from owning shares is complicated. Because it is complicated most people think it is boring. Because it’s boring we don’t discuss it much. However Australia’s dividend imputation system is important, unique to the world and comes with approximately a $30 billion dollar a year price tag. So whatever you think about Bill Shorten and Chris Bowen’s announcement it is a good thing they have got us talking about one of the least understood aspects of tax policy in Australia.

Nisbet storms home to steal NZ Open

  Nisbet storms home to steal NZ Open Australian golfer Daniel Nisbet has fired a nine-under 62 final round to snatch a two-stroke win at the New Zealand Open in Queenstown. Australian Daniel Nisbet has won the New Zealand Open with a storming finish, firing a final round nine-under 62 to snatch a two-stroke win from overnight leader Terry Pilkadaris in Queenstown.Nisbet hauled back compatriot Pilkadaris, who had held a five-shot lead after three rounds, with a superb back nine which included an eagle at the par-five 10th.He finished with a course record 27-under 260 across four rounds.

One lucky non-taxpayer actually received .5 million in " tax credits" in a single year. I broke my brain yesterday trying to grasp how dividend imputation works. If you're having similar trouble, this column by @BenOquist is super helpful.

The complexity of the Australian tax system hides many sins, one of the most inequitable of which is the fact that some of Australia ’s wealthiest citizens pay negative tax . The ATO actually hands other people’s money to some of the wealthiest people in the country.

The complexity of the Australian tax system hides many sins, one of the most inequitable of which is the fact that some of Australia’s wealthiest citizens pay negative tax. The ATO actually hands other people’s money to some of the wealthiest people in the country. Indeed, while Centrelink chases some of our poorest citizens for seven-year-old debt, one lucky non-taxpayer actually received $2.5 million in "tax credits" in a single year.

So what on earth is going on? The answer revolves around what had, until yesterday, been a little-known feature of the Australian tax system called "dividend imputation".

When a company makes a profit it pays the 30 per cent company tax rate on that profit. In most countries, after the company pays tax it distributes dividends to its shareholders who, in turn, pay at least some personal income tax on those dividends. But Paul Keating thought that companies and shareholders paying tax was "double taxation", so in 1987 he introduced "dividend imputation credits", which simply meant that any tax paid by the company could be "credited" against any personal income tax payable.

Tas premier lauds 'emphatic' poll victory

  Tas premier lauds 'emphatic' poll victory Tasmania Premier Will Hodgman has hit back at suggestions from his political rivals that the Liberal party bought its way back into a second term of government.

Comments [Op-Ed] - EDITORIAL: Pass these laws in Illinois to give immigrants some relief | Chicago Sun-Times.

Revenue is what pays for services, don't let Australians pay the price. How some of the wealthiest Australians pay ' negative ' tax .

The franking credit is essentially a note that comes with the dividends that says company tax has already been paid on the dividend, giving you a discount on that income at tax time.

Whether Paul Keating’s system of dividend imputation is "fair" or not has never been widely debated in Australia for the simple reason that so few people understand how it works. But what really does not pass the fairness pub test was Peter Costello’s subsequent decision to allow people with "spare" tax credits to swap them for cash.

Before you can understand the full horror of Costello’s changes it is important to remember that he also made income from superannuation funds entirely tax free once you turn 60. That is, if you are over 60 with $10 or $20 million in superannuation, you could literally withdraw millions of dollars per year and pay not a single cent in tax on it. Paying no tax would mean tax deduction credits would be of no use. For example, a very wealthy individual drawing $1 million per year from their superannuation and paying no tax – not even the Medicare surcharge – who received say a $10,000 dividend cheque that comes with $3000 worth of "tax credits". Now imagine the frustration of our retired millionaire who, because they pay no tax, has nothing to offset their credits against.

Housing costs: Young, poor pay the price for NIMBYism, says Grattan

  Housing costs: Young, poor pay the price for NIMBYism, says Grattan Younger, low-income households are bearing the brunt of a housing affordability crisis, largely caused by community opposition to development, according to a new report from the Grattan Institute.Those are the key findings of a new 176-page report by the Grattan Institute think tank into the vexed issue of worsening housing affordability.

Get second residency and pay no tax in these 20 countries. Expatriation. By the way, don’t forget to always fill out your Australian Income Tax forms each year you are overseas, and don’t do what some have done: put their Australian home address as their Learn how your comment data is processed.

Comments & replies. Recent weeks have seen a spate of stories about wealthy individuals trying to reduce their tax bills (much to George Osborne's surprise). The latest features a film investment scheme, Eclipse 35, on which HMRC refused to pay tax relief – bad news for some famous names

Luckily for them, Peter Costello changed the law in 2000 to allow any surplus credits to be swapped for cash meaning that rather than paying no tax, they get paid $3000 by the taxpayer.

Only four other OECD countries have a full dividend imputation scheme like Australia’s: Canada, Chile, Mexico and New Zealand. Finland, France, Germany, Italy, Norway used to have such a system but dropped or reduced it to a partial system. Spain, Turkey and UK had partial imputation and dropped that, too.

It is, of course, true that some Australians will be adversely affected by changes to the dividend imputation scheme, but they are by definition those who are paying little or no tax at present. Regardless, the benefits flow overwhelmingly to the wealthiest Australians. Australia Institute commissioned modelling showed that 75 per cent of benefits of dividend imputation flowed to households with incomes in the top 10 per cent. Almost half the benefits go to individuals earning over $180,000, who make up only 2.2 per cent of the population.

Australia is one of the lowest-taxing countries in the OECD. If we are to have to fund the services, schools, hospitals and infrastructure expected by the community we need a sustainable revenue base. Indeed many in the corporate sector know that ultimately businesses can only really flourish if there is a decent society in place. To pay for that decent society and its infrastructure we can either raise tax rates or close concessions, deductions and loopholes. Our dividend imputation system – that is unlike anywhere else in the world – would be a good place to start.

Ben Oquist is the executive director of The Australia Institute.

'There's a line to draw': Muslim officer rises above online abuse .
A Muslim woman police officer who was the victim of vicious trolling says online abuse only spurs her to work harder.The post congratulating Leading Senior Constable Maha Sukkar was inundated with hundreds of violent, sexist, racist and xenophobic threats and slurs, all of which were quickly deleted for breaching the organisation's social media terms of use.

—   Share news in the SOC. Networks

Topical videos:

This is interesting!