Scott Morrison on Mortgage Brokers...

I am hearing rumours that the banks, etc will be spending/have spent $1B on lawyers, accountants, etc for the RC.

This will lower their profits by $1B and hence their tax liability.

At 30% tax rate, that is another $300M missing from the Government coffers .

$75M + $300M => $375M ‘cost’ to the taxpayers.

 

lol love your work!

 

I see what you are saying but have banks ever really paid significant tax anyway? If anything it’s a positive to Australia from income tax on the extra lawyers and accountants

 

who are they paying to do this extra compliance and the systems to support it: other businesses and people.

 

True, just had a look at my Industry Super fund and it's sitting under just 10% weighting....so not too heavily weighted that way.

 

Yes, but the money paid to barristers, accountants etc will be taxable, in many cases at a higher rate than the bank would pay (and that's before franking credit refunds)

 

You are kidding, right?

In 2016, Australian banks contributed more than $14 billion of total tax revenue.

That equates to 62.5% of the $22.4 billion in total income tax paid by all ASX200 companies. That is nearly two-thirds.

Here's how much the major Australian banks contributed to tax revenues in 2016

And that equates to 15% of the total corporate tax collected from ALL Australian companies (around $95B from memory)

You are kidding again, right?

How many lawyers and accountants do you think pay their full tax?

Taking one high profile firm, say Slater and Gordon. In FY16, they made nearly $1B loss .

When it comes to profit, I am banking on the banks .

When it comes to tax revenue, so is the Government and the Australian people .

 

Not the ones I know and love ...

I would expect them to use every legal means at their disposal to optimise their tax liabilities .

 

My bad putting banks in same boat as many other big businesses

 

I think they are all in the same boat ...

 

Mmmmm...must have been a good year for them (although you source is a bit suspect).

You're paying more tax than some of Australia's biggest companies

More recent data would indicate they pay less that less that 45% of the top 20 companies and even less when accounting for ASX200. Mind you that's kind of expected given the envious position they have as an almost oligopoly in AU

 

Another dodgy source:

Corporate tax transparency report for the 2016-17 income year

Shows the bank industry pays the highest tax (in $ terms) and the trend is upwards

 

Both true, in pure dollar terms but a reduction as a percentage of the overall corporate tax take ...that year you first quoted must have been a bad year for others or just really good for the banking sector. As for dodgy, it was more referencing the Banking association report rather than the raw figures

 

Hmm in general measuring a company's contribution to the economy via the corporate tax revenue they generate is a bit misleading. Plenty of very large contributors pay little corporate tax, given the nature of the business/timing/intangible nature. Mature businesses (post mature?) typically are bigger tax generators than businesses actively expanding/growing. E.g. plenty of tech companies in early phase startups are in big growth phases but won't pay corporate tax for years. This happens a lot during election cycles, where news reporting gets a fair bit biased (business bashing really). It's quite hard to measure what a 'fair contribution' actually is. Measuring on direct tax revenue misses the larger contributing factors. E.g. CBA employee 50k plus Australians directly. Those Aussies directly pay ~$1.5bn+ in personal taxes, which then collects GST revenue, etc etc etc.

 

... and you quoted our ABC .

Thanks for the laugh .

 

Totally agree.

But I was debunking this statement:

The answer, of course, is that the banks do

 

$15k payment to the lawyers per day maybe,

 

from individual investor point of view, yes, you are correct.

from a collective point of view (majority of borrowers, the mortgage broking industry..), it is not, it has profound impact on us ( not only brokers).

 

Good point Eric. I was though talking purely from an investor's pov.