longweekend58 wrote on Aug 7
th, 2013 at 11:06am:
Verge wrote on Aug 7
th, 2013 at 10:41am:
longweekend58 wrote on Aug 7
th, 2013 at 9:53am:
philperth2010 wrote on Aug 7
th, 2013 at 7:19am:
reduced taxes increases economic activity - that's a proven. this could end up paying for itself in ironically increased tax revenues and higher employment and income taxes.
this ladies and gentlemen is what a REAL economic stimulus is all about - not throwing money around and hoping some will land in good places.
Not when the tax cut is being offset by a "levy" to fund an unnecessay increase in government expenditure.
Abbott has only done one thing, increased government expenditure in the form of paid parental leave over and above the existing scheme.
no company will be worse off and most will be better off. I find it hard to see that as a negative particularly when the intention is to reduced company tax rates further. This is just the first step. AS a company owner, I am pleased. Of course I need to make a profit first
The benefit to small business will be one that will be enjoyed, but it is a bit double edged for the following reason;
Eg
Longy Pty Ltd makes a profit for the year of $150,000, and a tax bill of $45,000. Director Longy decides that since he had a good year, and to get the profits out of the company he pays himself a dividend of $50,000. This dividend comes with a franking credit of $15,000.
Under the coalition proposal on the same circumstances Longy pays only $42,750, but what that means is the franking credits will reduce by the same percentage as well.
So when you lodge your own personal return you wont have the extra franking credits when then means the tax payable by the individual shareholder becomes more.
The objective of a small business company that makes profits is to ultimatley have all those profits returned to the shareholders (usually mum and dad). The lower tax means lower franking credits so there is no nett benefit as Mum and Dad have had less of their personal tax bill picked up by the company.
For big business the nett effect will be zero, but the shareholders will receive less of a benefit, as our franking credits have been cut by 1.5% but the government gets to keep all of its 1.5% levy.
true and an insightful response. But t is only true if the profit is paid out in income and dividends. in this case it is ALWAYS the marginal rate that is in play rather than the company rate. in that reagard absolutely nothing has changed. it is and will always be nothing more than a lower tax on retained profits.
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