ex tax accountant here. Sorry, I don’t think you understand this issue at all nor how our tax system works.
1. Australia has one of the highest effective tax rates in the world (hugely uncompetitive globally - that’s another issue). 2. Our tax system is supposed to work like this: we tax you at the ultimate owner (ie recipient) level. 3. Franking credits, is where day BHP, has already paid 30% in tax, regardless of the owner (shareholders) personal tax rate. 4. When paid as a dividend 30% tax rate has already been applied to the owners cash they received (dividend). 5. Like a normal wage earner, if you had too much tax withheld (PAYG) when you lodge your tax return then you get a refund. Thus if your total income was say $40,000 for the year including dividends and franking credits you would get a small refund. $20,000 you’d get a full refund of the 30% tax paid via the franking credit as you shouldn’t pay any tax. 6. So using the above example would it be fair if your employer held $6,000 of tax and only gave you $14,000 cash and subsequently you were not allowed to claim back that $6,000 as a refund? Because that’s what union bill is doing.
ok now debunking ‘the rich’.
1. The rich are in the top tax bracket. Ie 46.5% in personal name, 30% in companies. So their is no refund there under shorten or current rules. They pay a ton of tax and that amount won’t change under either government. Fair enough too. Among the highest in the world. 2. Next, super. Due to concessional limits even the super rich don’t have more than a few million at best. Yes, their are a few funds who have 10-100m. These are literally a few handfuls due to penny dread listed miners and tech start ups turning into major businesses. Isolated examples. 3. Point 2, re franking refunds. The libs, and rightly so, introduced a cap of $1.6m on balances in pension mode (you know tax free) that would be taxed. So only the first $1.6m gets a large franking refund. However that’s assets, not income. So you’re talking about a $33k refund from franking on $1.6m asset. then the remaining balance above that is taxed at 15%. Maybe, just maybe they should put the tax rate at 30% or simply cap franking credit refunds at 30k. Would fix this and not disadvantage everyone else.
now for the discrimination and union favouritism from bill:
1. Unions are exempt from this franking policy, shock horror. They are tax exempt entities and billy will allow them to get full franking credit refunds on the $100s of millions in stocks they own.
superannuation and unions
1. Bill is allowing his union executive mates who run the pooled industry funds to still get franking credit benefits through pooled investment trusts. HOWEVER NOT self managed. Utter discrimination. 2. These funds donate millions to unions. 3. These funds employ union members in executive and board positions. Huge $$$. 4. Industry and retail superfunds cannot compete self managed funds in retirement phase. They lose large funds under management from it and are scared their gravy train under threat. So I’d argue this policy was partly decided on that basis - helping union friends. 5. Self managed super tends to be lib voters.
the above information is merely my analysis, and shouldn’t be taken as legal or tax advice or used for any other purposes than a discussion on a stock forum board. I haven’t proof read any of this and it’s written on an iPhone - apogilise for any grammatical errors etc
BHP Price at posting:
$35.39 Sentiment: Buy Disclosure: Held
(20min delay)