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

 

 

 

 

Should we be getting charged up for Electric Vehicles?

Welcome to Finance and Fury, The Say What Wednesday Edition Today’s question came from Matt and Lucas Labor’s plan for 50% of new cars to be electric by 2030 plus introduce a carbon emissions target for new cars. The Greens have one-upped this. Today we break down the...

How to be wealthy; Germs, Monopoly, and Competition Vs Cooperation

Episode 2 How to be wealthy; Germs, Monopoly, and Competition Vs Cooperation. Hey guys, and welcome to Finance and Fury. Today the misunderstanding we're going to be tackling is how to be wealthy. There seems to be a lot of “rich-hating” going on around at the moment,...

The Great Debate! Managed Funds vs ETFs vs LICs…what they are, how they work and what’s best to invest in

Episode 9 The Great Debate! Managed Funds vs ETFs vs LICs...what they are, how they work and what's best to invest in. The debate! (it’s not time for a math debate, there will be numbers) Please do listen to our episode “Pay yourself” first The choices are: Managed...

How controlling your time is your path towards freedom?

The ability to get more achieved - learn how to control your time, not just manage it. This is what this episode will focus on, or put bluntly, it’s about Getting Shit Done!   What is time? Time is the indefinite continued progress of existence and events that...

How I buy shares – the horror stories and the happy endings, plus technical vs fundamental analysis

Say What Wednesdays How I buy shares - the horror stories and the happy endings, plus Technical vs Fundamental Analysis Welcome to Say what Wednesday Today's question is from Emma. She says, “I'm new to the podcast so not sure if you have covered this in the past. I...

The 4 reasons when not to buy property

Welcome to Finance and Fury Today’s episode is with Jayden and we will be talking about why property might not work for you, or when you shouldn’t buy property. We have talked about using property to build long term wealth using leverage. However, there are some...

Focus on what you can control and reduce your stress levels

Welcome to Finance and Fury – Focus on what you can control Australia has been cancelled – IMO - The largest overreaction in history – the world of medical martial law Working from home, no public gatherings, not even meant to shake hands - Panic is the disease – The...

Take control of your money – nobody else is going to do it for you

Episode 30 Take control of your money - nobody else is going to do it for you Welcome to Finance & Fury! On today’s episode we take look at the best ways to secure your financial future I’m going to share the rules I follow – And how to not be a victim It isn’t...

Say What Wednesday: The perfect investment mix

Say What Wednesdays The perfect investment mix Today’s Say What Wednesday question is from Linus. Linus asks, ‘I was just wondering what you think the ideal weighting of Australian (ASX200) ETFs, similar international ETFs and Bonds is in an investment portfolio? Love...

Why aren’t conservatives conserving anything?

Welcome to Finance and Fury, the Furious Friday edition Today we will be talking about conservatives and why they are not conserving anything anymore. In particular, the new form of conservatives the neo-con conservatives and the noble lie or the big lie. Remember the...

Pin It on Pinterest

Share This