The extra 15% Division 293 tax slips easily under the radar, and most people do not realise how it is calculated and how the proposed Labor policy might now capture them.
Tag Archives | taxation
Labor’s franking credit proposal will reduce the income of many retirees who do not believe they are wealthy. Here’s an exchange with a reader who just wants an answer to “Is it fair?”
The Labor franking credit proposal creates a group of people who count franking credits as taxable income, and another group that doesn’t. A basic principle of tax should be horizontal equity between investment structures.
In his latest memo to clients, Oaktree’s Howard Marks quotes the popular ‘beer’ example to explain the tax system, and we reproduce it here.
Depending on the type of fund you use and whether you pay for advice, there is a large difference in the size of fees. It might be worth paying for extras but choose the fund and advice level that suits you.
ETFs are popular investment vehicles but can be complex for tax returns. The ATO classifies them as trusts, and investors, administrators and accountants need to know the details.
Many people are reluctant to plan financially for their death, and it’s not simply a matter of passing money to heirs. Far more tax-effective techniques are available which can make inheritance simpler.
A reader of Cuffelinks sent an email to the Shadow Treasurer complaining about the future loss of franking credit refunds. Here is Chris Bowen’s response and a firm stance on the policy.
Labor’s proposal to deny cash refunds of franking credits may become law next year. SMSFs will consider the various alternatives to minimise loss of franking credits, including the use of member-directed investments.
Denying imputation credit tax refunds to the SMSF as taxpayer will reduce its income, causing pension funds to deplete faster, and its members to turn to the age pension quicker. This isn’t an outcome the Government desires.
For a pension fund with a tax rate of zero, it is better to receive an after-tax dividend of $100 than a company retaining after-tax capital of $70. Why aren’t company directors asked about this tax inefficiency?
Accurium’s facts and figures guide compiles current rates and schedules for tax, superannuation, retirement, social security and aged care, updated to 1 January 2018.
The added complexity of the new superannuation rules increases the compliance burden for investors and their advisers, and the requirements around the $1.6 million threshold are especially complex.
Transition to Retirement Income Streams are no longer tax-free, but you can still access your super before retirement if you meet certain conditions, and there are strategies to reduce the tax paid.
The 50% CGT discount has little justification during low inflation and it encourages capital gains over income. The preferable system is the indexation in effect prior to 1999, and it will help housing affordability.
Given the proportion of people over 65 paying income tax has halved in the last 20 years, the structure of seniors tax may be next for reform. Should money be left inside or outside super for those who can access it?