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JCoure

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13/02/19

15:18

Post #: 37425034
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Originally posted by willial: ↑

ALP will be taxing your Nana

Posted on1:32 pm, January 30, 2019bySinclair Davidson
I have an op-ed in the AFR this morning on the proposed policy to end fulling paying out excess franking credits.
Some 6.1 per cent of taxpayers appear to earn excess franking credits – less than the 8 per cent Labor claims. That could be good or bad for Labor’s expectations as to revenue.
So the next question is, who are these 6.1 per cent?
Women make up 56 per cent of taxpayers earning excess franking credits but only 48 per cent of the sample data.
Of those women, 68 per cent are over 60. Labor wants to tax your Nana.
What do I expect the happen?
What could these women do to “avoid” the tax on their livelihoods?
I expect that many will sell down their share portfolios to qualify for the pension (or for more of the pension) and use the proceeds to renovate their homes.
I doubt that this is the policy intent, but it does suggest Labor will raise a lot less revenue than it imagines, and that the social costs of this policy are higher than they anticipate.
Everyone speaks very highly of Chris Bowen and I’m sure he means well and is a nice guy and all. But there is a track record here. This is the man who brought us FuelWatch, GroceryWatch, and the changes to taxation of employee share schemes – eventually having to admit that there were two instances where rorting had occurred.
Now there is a lot of ‘confusion’ about excess franking credits being refunded. Even from people who know better. Craig Emerson – who has a PhD in taxation from the ANU – wrote this on Tuesday:
Opponents of the no-refunds policy have claimed the removal of cash refunds would tear up the dividend imputation system. They whitewash from history the fact that Keating’s imputation system never allowed for cash refunds; it is a Coalition contrivance that enables well-off retirees with low or zero taxable incomes not just to pay no tax but to receive cheques funded by other taxpayers.
When you receive your tax refund it is not being funded by other taxpayers. It is the return of money that has been overpaid. When I go to the supermarket and buy $10 worth of goods and pay with a $50 note, the change I receive is not being paid for by other customers, or the shareholders of the company.
The excess franking credit refund occurs when companies have paid too much tax on behalf of particular shareholders. Australia’s dividend taxation system has the effect of turning company tax payments into a withholding tax. In precisely the same way that PAYG is a withholding tax. If your employers has withheld too much tax, the ATO refunds the difference.
Then there is some confusion at the RMIT-ABC Fact Checking unit. To be fair, I know that they are genuinely ignorant of how the tax system works. They have investigated this statement:
Will the changes mostly hit low and middle-income earners, with 84 per cent on taxable incomes of less than $37,000? RMIT ABC Fact Check investigates.
A pronouncement of “Misleading” is their expert opinion.
The “Fact-Check’ unit interrogates documents prepared by the Treasury and Parliamentary Budget Office that rely in data from 2014-15 and find:
As can be seen, according to Treasury’s analysis, 86 per cent of the individuals who received refunds had taxable incomes of $37,000 or less.
Okay – so the claim was 86% not 84%. But really? The “Fact-Check” unit then proceeds to question whether taxable income is a meaningful measure. Yet the claim itself is true. They are able to pronounce “Misleading”.
Using the latest ATO data I can report, using my proxy for excess credits, that 90.32% of those being adversely impact by this proposed policy have a taxable income o

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