How about this misinformation or is it fake news? Is this how can a party which is preaching to the left/left out/left right out sells their message on CGT? Copy writer assumes that the gain is not added to their income but assessed in isolation.
They say "They would then pay tax on that gain at their marginal rate". The example given explicitly states that the taxpayer is already at the top marginal rate.
In the calculation/explanation it states that "....which takes her effective marginal rate on the capital gain from 47 cents to 23.5 cents..."
Basically saying that due to the discount, they are 1. Paying 47 cents on 75,000 = $35,250 instead of 47 cents on $150,000 = $70,500 Spinning it around the other way (which isn't how the ATO calculate it - but happens to net the same result in this particular example due to the usage of the highest marginal tax rate), they are saying the person is paying 23.5 cents on 150,000 = $35,250 Now from the ATO, that calculation is not correct, but in the case of propaganda because the end result is the same, it serves their purpose - which is feed lies. Its like saying if 1 -1 = 0 and 2 - 2 = 0, therefore 1 = 2.
Makes me wonder with Labor when one reads this from their past stuff--ups ,if Shorten will still be their leader prior to this election..
It isn't feeding lies. For the example given, it is completely accurate. For other salaries, the end result is still similar, but the figures may be different. For any smaller salary, the calculations get more complex, as there will be a combination of marginal tax rates. The end result is that the person selling the asset pays less tax than if they had earned the same amount as salary. In some ways, the previous tax regime was fairer, as the person selling could deduct CPI from their Capital Gain. The calculations got somewhat complicated though. The present tax regime came from a recommendation from an independent review under the Howard government.
My beef is the way that it is portrayed, duping people to believe that this is an unfair reduction in tax (it's legislation, so it's allowable). The dummies will read that the investor only pays 23.5% tax whereas they are getting a ginormous discount (50%) then paying their MRT. Someone on a low income making the same $70k may be pushed into a higher tax bracket (but also only paying 23.5%)
The story is correct. So long as you hold the asset for more than 12 months, the effective tax on the total capital gain is no more than 25%, even on the top tax rate. Where is the “misinformation”? Marg
Agreed. The article is quite accurate. How it is interpreted is another thing. Sounds like labor marketing department are doing a great job.
Allowable and fair aren't always the same thing. The CGT discount gives a huge reduction in tax payable above the previous regime. Quite legally. But a person who doesn't get this discount might regard it as unfair.
A person who holds the asset for 10 months might say its unfair. The same person at 20 months says it fair.
So may someone who has scrimped and saved all their working lives to build up a nest egg, only to find out that they don't qualify for a pension. (not that they need it). Or the non-child rearers who complain about money being spent on education of children.
