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Uncategorized

Its got nothing to do with tax but these numbers do my head in…

According to a recent report…

You need to have wealth (house, car, super… Less debts) of $4,400AUD to be in the top 50% of the world’s adults by wealth. 

To get in the top 10% of the world’s adults by wealth you need to have $94,000AUD in assets. 

To be a part of the 1%, that the occupy movement wanted to get rid of, your net wealth needs to be just over $1 million AUD. 

The average Australian adult has wealth of over half a million AUD dollars. This puts them in the top 5% of adults by wealth.

I have taken my two sons to 2nd/3rd world villages and they sponsor kids in other countries like this. But they still think most kids live like they do, with the same access to opportunities and resources that they have. 

And the fact that these number just seem wrong to me probably means I am just as deluded as they are – except I don’t have the excuse of still being a child…

Categories
Income Tax

Why am I defending Malcolm?

As anyone who knows me knows, my political leanings are to the left (Chris Bowen for PM with Andrew Leigh as Treasurer).

But I want to kick the Labor party, and especially Senator Sam, for their unprincipled “Cayman Island” tax attack on the Prime Minister.

While coaching Little Athletics today I hear a Dad say he would never vote for the Prime Minister because he has money in the Cayman Islands. This Dad has been fooled by Senator Sam’s lies… Let me explain.

As a member of Parliament Malcolm Turnbull put his investment under the management of others so he would not be deciding to buy or sell shares in companies that might be effected by things he votes on. Ethical!

He was the Communications Minister so he could not invest in an Australian balanced equity investment as he would indirectly own Telstra share so he gave the investment management to an overseas manager. Very Ethical.

He invests into the overseas investments as an Australian resident, and has not set up an overseas entity so is not warehousing low taxed income overseas but is paying tax on the gains in Australia. Very, Very Ethical.

If he had have put the money in a US investment house, the US government would keep a 10%-15% withholding tax on much of the gains and this would be a foreign income tax offset in his Australian return (the US get 15% and Australia gets somewhere near 34%, being 49% less 15%). But he invests through the Cayman Islands where there is no withholding taxes so Australia get the full 49%. He intensionally did this to not reduce tax (it does not change the tax he pays in total) but to make sure all the tax is paid in Australia. Very, Very, Very Ethical and Patriotic!

Senator Sam and the Opposition Leader trying to fool people that the PM has been anything but amazingly ethical and above board is the work of moral (and intellectual) pigmies! Very, Very Unethical. But not unexpected from Senator Sam.

Categories
Funny Stuff

Volumetric taxation

Estimates of the effective rates on excisable products in 2014–15 range from as low as $1.71 per litre of alcohol for low-strength non-commercial beer to $79.38 per litre of alcohol for spirits and ready-to-drink beverages. Estimates of the effective rates for wine range from $2.99 per litre of alcohol for a $15 four-litre cask through to $45.52 per litre of alcohol for a $40 bottle

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From the Parliamentary Budget Office.

Every independant policy thinker says alcohol should be taxed based on the amount of alcohol in the product… In Australia we still have a long, long, long way to go.

Categories
Funny Stuff

Tax weirdness Down Under

I was recently asked by the Institute of Chartered Accountants in Scotland about weird taxes in Australia… And here was my response

The seafarer’s tax offset

This little present by the previous Labor government to the Maritime Union allows those who employ seafarers a 30% tax offset for the salaries they pay. The rationale for the introduction of this tax offset was to “stimulate opportunities for Australian seafarers to be employed on overseas voyages and to gain maritime skills”. Since its introduction, it has been claimed by fewer than five taxpayers. Right now there is a bill before the Senate to repeal it. But it will get blocked as in Australia you can’t even take away handouts that no one uses.

Salary-packaged cars

The reason we have tax concessions that encourage people to salary packaged cars is because back in 1986, when Australia introduced a fringe benefits tax to tax benefits provided to employees by their employers, it was too difficult to track car expenses. Also, Government wanted to continue to encourage the thriving Australian car manufacturing industry. We still salary-package cars today when it’s a piece of cake to track car expenses, and the car manufacturing industry in Australia is almost gone and will definitely be gone by 2017. So we are spending $800 million a year to fund an industry that hardly exists today and will not exist in 2017.

Queen bee levy

Australia has over 125 different taxes, and some of these taxes are as ridiculous as the queen bee levy. Up until recently, if you sold a queen bee for over $20 you had to arrange a 10 cent payment to the Government. A really big money earner for the Government!

Aussie alcohol taxation

Unlike many countries that use volumetric taxation, where you tax the product based on how much alcohol is in it, Australia has a unique system where it taxes beverages based on how “Aussie” they are. Australians like drinking beer so beer is taxed substantially less than spirits, at almost half the rate. But for some reason Brandy is taxed substantially less than other spirits – I never knew Brandy was an Aussie favourite! Probably remembering the colonial days.

Wedding bells

While it is on its way out in April next year, right now doctors at public hospitals can use the tax system to effectively pay for half of their kids’ weddings. There is no tax on entertainment benefits that public hospitals give to their staff. Therefore, a doctor just asks their employer to reimburse them the cost of their kids wedding (which is entertainment) and says that the employer can reduce their pre tax salary by the same amount. The employer pays the doctor the same amount as they would have if the doctor had not salary packaged the wedding, and doctor gets to pay for the wedding out of pre tax salary. So now we know why doctors families have the most expensive weddings!

For technology’s sake

Small businesses can give staff several electronic devices, like a phone, tablet and a laptop, in a signal year, as is often the case when a new employees starts, without paying any Fringe Benefits Tax. But don’t think about doing this if you are a medium or large business! As these devices have “substantially similar functions”, the tax system says that if these medium and large businesses provide more than one of these to an employee each year there should be FBT payable. Welcome to your new employer. Would you prefer to have either a phone or a computer to read your emails for your first year, because for tax purpose we can’t afford to give you both… Quite 1980’s.