Nana tax

Our governments are evolving in the wrong direction and we will all end up paying for it.

I've worked enough gigs in government to understand.

This is my metaphor story:

Ten people are asked to take a row boat into the water. Nine refused so the diligent (think Frank Grimes) one starts taking the boat by themselves. The nine remaining people jump into the boat while the diligent one, albeit exasperated, continues with his burden. Due to the weight of the boat the diligent one is slowed down considerably and unable to see clearly so asks for directions. Guided without concern from the nine, the boat arrives at the wrong place and because the people were in the boat, it is damaged and the boat is now late. The big boss asks why and his favourite provides an articulate but completely false explanation of how the diligent one was to blame for the delay., incorrect location and damage.

The favourite becomes the new boss of the 10, his friends who supported him get the next level of management while the remaining ones who kept their mouth shut are the level below, leaving the diligent one unrewarded for their efforts.

A new project to repair the boat and get it to the right location is run by the favourite. Although the budget is equivalent to the cost of buying and delivering a brand new boat, work commences. The diligent one questions the purpose and offers alternatives, but is shut down very quickly. The diligent one leaves and they hire a few more people as replacement. After the project has overrun by a couple of years and the money spent is twice the original budget, the boat has moved in the wrong direction and the boat is still damages the big boss asks what happened. The favourite blames the diligent one, who left before work commenced, as well as the weather, and a couple of people with whom they don't enjoy a regular coffee.

The big boss agrees, renames the project eBoat and triples the budget. This boat never gets delivered and the favourite replaces the big boss when he gets promoted.

 

somehow irrelevant to the issue. This Costello hand out went from $500mil when introduced to over $5B nowadays (more tax free(loaders) retirees), unsustainable trend.

 

Who will Labor's franking credits policy affect?

 

Obviously, the “diligent one” was an external consultant .

Your post reminded me of a meeting I once had with an Executive Director in the Queensland Government.

We had started on a new contract with this Government Department and I requested a performance review meeting to ensure they were happy with our work to-date.

The ED said (and I quote):

“I keep the credit, you keep the cash”.​

Not the sort of feedback I was expecting .

But this quote became my business mantra for the next 20 years (until I sold the business).

 

And if left unchecked its going to get a lot bigger.
Aussies love there freebies and getting a cash refund for a tax that you never paid is probably one of the better ones.
The other issue is you are also up against the accounting industry and financial planners that have been flogging it like a dead horse to their clients and making good money out of it .They now have their clients on their backs to make the problem go away.
It makes a mockery of the term "self funded retirees" that just cannot tear themselves away from the public teat and still have an expectations that people still in the workforce should fund their retirement.

 

Given that any tax distorts what is being taxed ISTM:

1. The current tax treatment of dividends encourages companies to pay out more dividends that might be prudent rather than retaining earnings to reinvest (assuming the management have the knowledge and opportunity to grow the business)

2. The current tax treatment of dividends encourages eligible investors to invest in high yielding shares with the risk of undermining their capital (contrast Telstra and CBA which are now lower than five years ago, with Amazon and Cochlear which pay nothing and 1.54% but whose share price is a multiple of five years ago.

It's notable that in UK former Chancellor Gordon Brown clamped down on the tax treatment of dividends paid to pension funds and has ever since been reviled for doing so, but the following Conservative governments have done nothing to reverse this.

 

I have always struggled with the question “Which is better, High Growth or High Income?”

For us, property is easy because it is the platform we are using to increase our Net Worth. So, it was always High Growth and we just had to make sure we had enough cash/income to handle the negative cashflow.

For shares, I thought it was best to go for growth while in accumulation phase, but now we are in pension phase, income is a bigger focus. I don’t like selling as it decreases NW due to CGT.

So, our share portfolio has both High Growth and High Income. As examples, the growth and income percentages for some of our shares (since our first purchase) are:


High Growth:

REA 27% 6%
COH 15% 4%
DMP 12% 4%​

High Income:

ANZ 2% 9%
CBA -1% 8%
WOW 5% 7%​

If I owned a time machine, I would go back and only buy;

MQG 22% 10%​

... or even some:

WES 10% 11%​

I realise it is a First World problem. I am not losing any sleep at the moment as the dividends we receive exceed the mandatory 4% pension we must pay ourselves.

It would be a lot easier if I could get s mirror that predicted the future with 100% accuracy. Anyone know where I can buy one?

 

From fhe same place that sells skyhooks.

 

Music shops?

 

The problem is that dividends (along with capital gains) are lumped in with the rest of your income and taxed at your marginal rates etc.

The US taxes capital gains at a flat rate. Divdends ditto.

We are one of three countries with a dividend impuation system. Please name the other two.

 

Malta and NZ.

I thought the US dividend tax rate is tiered based on personal income tax brackets.