Pellet Price Tracking, page-529

Hi Mac,

Typos aren’t they great? I’ve heard the word “root” in contexts which shouldn’t be discussed here and will surely have my post removed and sent to hotcopper jail by the moderator.

Clearly my post of the doc has moved someone enough to have it removed or perhaps was it the word “Rort” that offended but used by the authors to describe the situation where an Australian on a salary of $60,000 per year would pay income tax of $11,617, someone who inherited $1.2m worth of shares and received $60,000 per year in “fully franked dividends” would pay negative tax of $5,126 – they’d get money from the government.

Work for a living and your take-home pay is $48,383 out of $60,000 before tax, but earn a passive income from franked dividends and your take-home pay is $65,126 out of $60,000 before tax.

The IC rebate is ok IMO it’s the refund causing the problem. This is how it’s explained….. Imagine that you had $1.2m in superannuation and you were pulling out an annual income of $60,000 per year. Tax-free. Now imagine your aunt dies and leaves you her $1.2m in shares that pay fully franked dividends. You would now have two sources of income – tax-free super and negatively taxed dividends. In addition to your $120,000 per year you would also get a cheque from the ATO of $5,125. If your self-managed super fund has shares, you probably get another $5,000 to $25,000 worth of imputation credit refunds. And you get to call yourself “self-funded”!

ps pellet price are holding