Taxation in 1971

I'm reading Noel Whittakers book 'Borrowing to invest' which is a very good book IMO .

Chapter 13 - The tax man favours investors is a bit interesting as it mentions tax rates prior to 1971 . Also this was prior to the franking of company dividends , where you would be double taxed ! No wonder realestate did well a few years later .

It seems hard to believe now that company tax rates were 47.5% and the top marginal tax rate was 67% at that time ! With no CGT at the time no wonder the share market was for speculators !

 

Its interesting to look back at these things. Lots of changes have happened.

 

There was no depreciation on pre-84 buildings (cgt was post 1987)

 

No FBT back then either. Salary sacrifice was the way to go.

Also there were the bottom of the harbour tax schemes which went wild for many years. Great time not to pay tax!

 

I thought it was 1985 ?

 

20 September 1985 at 2.37pm when it was passed in parliament.

1 July 1986 FBT started.

 

@Pursefattener - My clock must have been running a little bit fast.

Thanks @datto

 

1971 - what's CGT???

 

However there were death duties.

Social welfare expenditure was comparatively low - unemployment was around 2% and there were fewer single parent families and old age pensioners.

 

Shops closed 5.30 pm mon to fri and half day sat. Dad was the bread winner and mum looked after the kids to help them keep out of trouble. There was more emphasis on the family back then.

 

1972 -major reforms with Whitlam/socialist government

 

Free Uni, medicare and 17.5% leave loading on your holidays.... Yeha ha!

 

U.S. Dollars were still backed by the gold standard until about this time , I think .

How did death duties affect your estate back the then ?

 

I wasn't dead

 

The Beatles had only just broke up the year before.

 

So back then if you died with out having any estate planning sorted out the Govt would take most of your money ?

 

I don't know how it worked, but it probably wasn't that bad. Probably was a progressive tax on the amount left.

 

I seem to remember Joh Bejelke-Peterson might have been the first to abolish death duties ? I'm not even sure if it was a state matter ..

 

I believe that the fed and state govts can both levy death duties.

But the bulk was imposed by the states. Joh was the first to get rid of them. After an exodus of oldies from the southern states to the Gold Coast they mostly quickly also removed DD's.

 

Estate taxes (death duties)
Estate taxes were first introduced in the form of probate duties (a tax on property passing by will) charged by courts in the early part of the nineteenth century in New South Wales. By 1901 estate taxes had been adopted by all of the colonies. The rates were progressive and based on the value of the estate, with reasonably high exemption thresholds, thus limiting the impact on small estates. The duties were an important source of state revenue from the end of the nineteenth century through the first part of the twentieth century. In general, estate duties were relatively low cost to administer and, when introduced, were more readily accepted than a wealth tax, levied throughout a taxpayer’s life. Gift duties aimed to ensure that estate duties were not circumvented. In 1914, the federal government also introduced a progressive system of estate taxes to help fund wartime expenses.

By the late 1960s and into the early 1970s, state and federal governments were coming under increasing pressure to amend or remove estate duties. Having not been adjusted since the 1940s, individuals with relatively modest levels of wealth were becoming subject to estate duties. At the same time more wealthy individuals were seen to be avoiding the tax through effective estate planning (Groenewegen 1985). With the increasing impost on smaller estates, estate duties became more costly to administer. Rural producers and small business owners also objected to the taxes on the basis that they impeded business succession.

By the 1970s pressure for estate duty concessions had gradually reduced the tax base. In the end, state tax competition led to the abrupt demise of estate duties. After Queensland dispensed with its tax in 1977, there was concern in other states about emigration of residents and capital and the potential impact of the tax on electoral outcomes (Pedrick 1981). The federal government also abolished its estate and gift duties in 1979. By 1984 all estate duties had been removed, both state and federal. This occurred despite various tax review committees recommending refinements to improve the equity, efficiency and simplicity of the tax.

01_Brief_History