Welcome to Finance and Fury

A plan for structural reforms to help increase Australians’ ability for upward mobility.

The coalition will likely have enough seats to squeeze through a lot of reforms.

Today:

  • Income axes going up aren’t much of a concern
  • What about the taxes you don’t see directly?
  • The effect of these taxes on the economy growth or decline
  • How to reduce your taxable incomes?

Taxes – Government revenue source

  1. Number of taxes – do you know how may taxes you pay each year?
  2. The average Australians pay at least 125 different taxes each year, 99 to Federal, 25 to State and 1 to Local
  3. Total tax collected is approximately $528.5 Bn
    1. Most tax comes from incomes of individuals and businesses – 59% or $312 Bn
  4. Consumption tax like GST makes up 26.8% was supposed to replace state’s stamp duty
  5. Business payroll tax makes up 4.7% or $24.7 Bn charged to companies if they have above a threshold employees/wages
  6. Excises on specific goods – normally ones on top of GST at Government discretion
  7. Sin taxes – consumption tax on goods which are harmful to society
    1. Alcohol – the social cost from loss of labour, healthcare, accidents and crime costs
    2. Tobacco – the effects of smoking are estimated to cost $320 million but the revenue raised is $12 Bn
  8. Does the additional money go back in to addiction treatment programs to help? Or the general spending budget?

Consumption vs Income Taxes

  • Both can’t be kept high
  • If consumption tax increases the cost of living, income tax should be lower
  • Consuming becomes more costly with consumption tax, putting a strain on upwards wealth mobility

 

Statistics on Taxpayers

  • Individuals and income tax reduction plan for 2022 and 2024
  • Helping reduce the burden GST placed onto families from 2001 onwards
  • Original plan to protect works from bracket creeps
  • With wage growth and inflation going up, if the marginal tax brackets don’t increase too you get bracket creeps
  • Abolishing the entire tax bracket 90k – 180k incentivises hard work
  • Despite these changes you will still see the top 5% of workers paying a 3rd of all income tax collected
  • Someone earning $200,000 pays 10 times more tax than someone earning $45,000 per year

 

How to reduce certain types of tax?

  • GST? Stop spending so much. Further excises on your spending only reduce with less spending
  • Income tax? Deductions or salary sacrifice
    • Salary sacrifice puts money into super up to $25,000 cap taxed at 15% rather than marginal tax rate
    • Deductions give back the costs of investments or work related expenses and donations to reduce your assessable income

Give to charity – Donate to my CEO Sleepout https://www.ceosleepout.org.au/fundraisers/louisstrange/brisbane

Negative gearing

  • when you spend more on investments than you earn
  • Borrow to invest – home equity
  • Get your marginal tax rate back and for a lot of people the amount back will decline from 2024
  • Lower marginal tax rates for those earning between $40k-$200k

 

Franking credits – Shares

  • Tax offsets on dividend income
  • Buy fully franked dividend yielding shares, but gets added to gross income
  • Own 1,000 CBA shares. They pay $4.30 per share in dividend so you get $4,300 of income.
  • Plus the franking credit, of $1,843 so total income is $6,143
  • Earning a salary of 100k, assessed at 39% the tax would be $2,396 minus the franking credit of $1,843 so net tax is now $523.
  • Therefore, the marginal tax rate is now 13% instead of 39%
  • But, you will simply pay no tax on dividends if your assessable income is all the way up to 200k, as franking credits offset tax on franked income with a 30% tax rate

 

Family trusts – No changes to distribution rules

  • Still allows flexibility and asset protection
  • Own assets and distribute income to the lower marginal tax rate individual

 

Capital Gains/Losses

  • Gains still get the discount for assets owned longer than 12 months
  • Losses, claim against future gains

If you enjoyed this episode leave a rating, if you want to get in contact you can do so here.

 

Resources:

Individuals taxation statistics – https://data.gov.au/data/dataset/taxation-statistics-2016-17/resource/4161d1b8-f9e3-4f36-b21d-d5d06b43ed2e

 

Australian taxes – http://taxreview.treasury.gov.au/content/paper.aspx?doc=html/publications/papers/report/section_2-03.htm

 

 

 

 

The future of the share market: How central bank intervention will be a dominant factor going forward.

Welcome to Finance and Fury. Investing in the equity or debt markets in the world with greater levels of Central bank interventions – The rebounds of the market – seems to be responding to the Fed and the US Treasury Last week – the ASX recorded its biggest one-day...

How does corporate debt fuel market bubbles?

Welcome to Finance and Fury, The Furious Friday Edition Today – want to look at how much Corporate debt has been fuelling the top end of the share markets growth – signs that if liquidity is withdrawn, companies and markets collapse   Last FF ep – went through...

What factors will make property prices rise in Australia?

Welcome to Finance and Fury On the last episode – looked at signs property prices will be high Today – continue and look at based on these factors - Will property prices keep going up? First – recap of the Tell-tale characteristic to be able to tell if property prices...

How to not get tricked by election promises!

Welcome to Finance and Fury, the Furious Friday edition This is a continuation from this week’s Say What Wednesday episode, in part one on Who to vote for? Check it out here. Part 1: Political culture Tribalism 3 main parties policies and promises Today: How to tell...

Investing in infrastructure as part of a wealth accumulation strategy.

Welcome to Finance and Fury.  This episode will looking at infrastructure as an asset class, to see if it can help to provide some diversification for portfolios and decent moving forward. Infrastructure – physical assets that provide services that are essential for...

Do robots pose a danger to the employment sector and what does future of employment look like?

Welcome to Finance and Fury, the Say What Wednesday edition. This week’s question is from Phuong. “Hi Louis - With strikes happening at Sydney’s port recently and worker asking for pay rises, do you think that Robot will eventually replace human workers? And what are...

How much do you really know about cash and how it works?

Episode 26 How much do you really know about cash and how it works? In this episode we discuss Cash. We will run through what type of asset it is, how the currency system works, and how it can be manipulated! We also discuss: The good old days of the Gold Standard...

The News Media Bargaining Code – the medias way of reclaiming their informational top spot on digital platforms

Welcome to Finance and Fury, the Say What Wednesday edition. This episode is a bit of a special episode –looking at some legislation in Australia that is currently underway – Has to do with the Government stepping in for the Monetisation of the news – which could...

Welcome to GameStop: may we take your order?

Welcome to Finance and Fury. In this episode, we're going to cover the GameStop saga. It's still ongoing at the time of recording this, so new information may be out by the time you listen. I wasn’t going to cover this topic – I saw this first pop up either Monday or...

How to avoid missed investments opportunities experienced by Small Cap Index ETFs

Welcome to Finance and Fury, The Say What Wednesday Edition. Where each week we tackle questions from you – This week's question is from Gab Hi Louis, I have a question I've been pondering lately, around small-cap ETFs or LICs. It seems like the whole reason for...

Pin It on Pinterest

Share This