staringclown

Will a budget surplus kill the economy?

The budget surplus   9 members have voted

  1. 1. We should have a budget surplus because:

    • The economy is on the upturn
      0
    • Labors' credibility lies firmly with achieving a paper surplus
      4
    • We shouldn't have a surplus else the shock kills the economy
      3
    • Don't care either way
      1
    • Other - please explain?
      1

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64 posts in this topic

How much cheaper would I have gotten my $13,990 white automatic Suzuki Alto GLX?

Perhaps second-hand Japanese imports are more your market. They are cheap but the government introduced more protectionist policies on second-hand car imports a few years ago so the bargains are a little harder to find.

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How much cheaper would I have gotten my $13,990 white automatic Suzuki Alto GLX?

I had a look at the Suzuki UK website and it seems there is no price premium in Australia for the Suzuki Alto. It makes sense since both bottom-of-the-barrel target markets would be skinned as.

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AUSTRALIA'S top earners are set to be slugged more tax on their superannuation contributions as the Gillard Government battles to claw back money for its budget surplus.

The Courier-Mail can reveal the Government will continue its attack on welfare for the rich with a plan to halve the superannuation tax concession for high earning Australians in the federal budget, in just over a week.

The move will stop the mega rich from squirreling away money for retirement at a bargain basement tax rate of just 15 cents in the dollar, hiking the tax rate on super contributions to 30 cents in the dollar.

It will target Australians with incomes of more than $300,000 including super, and will deliver the Government a $1 billion saving.

It's the same group of people who will be hit by the Government's private health insurance hikes and the carbon tax.

http://www.couriermail.com.au/news/national/gillard-government-plan-to-halve-superannuation-tax-concession-for-high-earning-australians-in-attempt-to-put-budget-into-surplus/story-e6freooo-1226341137566

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Considering the tax is paid by the super funds, it is going to be an admin nightmare as the super funds have no idea of what your taxable income is. I expect that the biggest beneficiary of this change is going to be the tax industry - extra jobs at the ATO and more work for tax accountants!

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Considering the tax is paid by the super funds, it is going to be an admin nightmare as the super funds have no idea of what your taxable income is. I expect that the biggest beneficiary of this change is going to be the tax industry - extra jobs at the ATO and more work for tax accountants!

I think it is only extra contributions, not the tax rate on your super income.

These higher earning individuals / families have the choice from here whether to continue to smash contributions into super and pay 30% tax on these contributions or stop now and pay 40% odd tax outside of super.

I reckon they have the 1bn figure wrong, its too low. They are going to get a whole lot more money through the ordinary tax system now and only part of the reason is the 10% difference in tax. The risk of regulatory change within super is now well and truly in peoples minds so you might find lots of others on more normal incomes also declining to contribute additional money to super for the tax saving.

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Considering the tax is paid by the super funds, it is going to be an admin nightmare as the super funds have no idea of what your taxable income is. I expect that the biggest beneficiary of this change is going to be the tax industry - extra jobs at the ATO and more work for tax accountants!

I have been trying to think of a way to make it feasible to implement especially since the actual income after ... isn't known until the financial year is over. The impracticality of it may be the single most important signal that superannuation is counter-productive. Who can live off $250,000 or less for 20 years after the age of 67?

Edited by sydney3000

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These higher earning individuals / families have the choice from here whether to continue to smash contributions into super and pay 30% tax on these contributions or stop now and pay 40% odd tax outside of super.

I reckon they have the 1bn figure wrong, its too low. They are going to get a whole lot more money through the ordinary tax system now and only part of the reason is the 10% difference in tax. The risk of regulatory change within super is now well and truly in peoples minds so you might find lots of others on more normal incomes also declining to contribute additional money to super for the tax saving.

Even on my income I only pay 35% after deductions. The 45% or whatever is only on income above 200K or so and I would suspect most people on more than 300K have a reasonable chunk of deductions because it costs a lot to stay at that level.

Changing the rules on super like this just underlines my theory that it is the dumbest place to put your money ever. The rules can be changed by the people holding your money. I do not trust that kind of system.

So I agree a lot of money will not being going to super. Whether it then becomes part of the normal tax income I would not be brave enough to say. I suspect it probably sent a lot of creative accountants scurrying.

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Even on my income I only pay 35% after deductions. The 45% or whatever is only on income above 200K or so and I would suspect most people on more than 300K have a reasonable chunk of deductions because it costs a lot to stay at that level.

Changing the rules on super like this just underlines my theory that it is the dumbest place to put your money ever. The rules can be changed by the people holding your money. I do not trust that kind of system.

So I agree a lot of money will not being going to super. Whether it then becomes part of the normal tax income I would not be brave enough to say. I suspect it probably sent a lot of creative accountants scurrying.

I understand what you are saying but when you contribute you are saving at your marginal rate not your average rate.

On underlining the theory, agree 100%. it was always a risk, now people can see what you have been saying for a while. That relying on government regulation in your business (insulation, solar panels etc) or to fund your retirement (super, mining stocks, negative gearing?) is a risky proposition. The future govs of the day will attempt to divide and conquor (over 300k then 200k etc then let a bit of inflation do the rest) but this is one area people are already nervous.

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why ever work as an individual over %30? surely its tile to set up a company, and have all your income going into the company. and paying yourself a $160k a year job, or what ever the 30% threshold is. and having the remainder, of the over 160k, paying company rates, sure `160 wouldnt be thge thresahhold, there would have to be the costs invovled so say 200k , before its prudent to be managing for your own business, not someone elses bushiness.

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why ever work as an individual over %30? surely its tile to set up a company, and have all your income going into the company. and paying yourself a $160k a year job, or what ever the 30% threshold is. and having the remainder, of the over 160k, paying company rates, sure `160 wouldnt be thge thresahhold, there would have to be the costs invovled so say 200k , before its prudent to be managing for your own business, not someone elses bushiness.

This is the kind of reform Ken Henry wanted. To bring company and personal tax so closely into line that no one would bother. Trouble is he also wanted to reduce company tax, and we cannot afford to reduce income tax so I don't know how you could achieve it. GST at 20%:huh:

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GST at 20%:huh:

Maybe not that high, but its coming.

If (if), they get away with all these proposed budget changes, an increase in GST must be on the cards.

People at the time asked whether it could ever be increased. (Lots of chest beating and arm waving - "no way".)Ha!

Just needed the economical environment to shift enough.

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I think it is only extra contributions, not the tax rate on your super income.

These higher earning individuals / families have the choice from here whether to continue to smash contributions into super and pay 30% tax on these contributions or stop now and pay 40% odd tax outside of super.

I reckon they have the 1bn figure wrong, its too low. They are going to get a whole lot more money through the ordinary tax system now and only part of the reason is the 10% difference in tax. The risk of regulatory change within super is now well and truly in peoples minds so you might find lots of others on more normal incomes also declining to contribute additional money to super for the tax saving.

the concessional contributions cap is 25k pa for under 50yrs and 50k for over 50 with balance's less than 500k. after that contributions are taxed at the highest marginal tax rate (plus medicare levy), so contributing more than 25/50k has no tax advantage (accept the anticipation that earnings within super will be taxed at the current lower 15% rate in the future).

i think the 1bn figure is also wrong, but i believe it's way too high unless your theory that people on normal incomes reduce super contributions because of fear of policy change (this would be a gradual change, not a sudden one over one year) is correct.

an employee on 300k would not be voluntarily contributing to super.

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Changing the rules on super like this just underlines my theory that it is the dumbest place to put your money ever. The rules can be changed by the people holding your money. I do not trust that kind of system.

So I agree a lot of money will not being going to super. Whether it then becomes part of the normal tax income I would not be brave enough to say. I suspect it probably sent a lot of creative accountants scurrying.

the whole tax system is subject to change by govt (not just the super fund, which might just be you). the govt could arrive tomorrow and confiscate your gold, tax interest at 90% etc etc. politically super is an easy target for tax changes as most people don't see it as quite their own money. there would be far more outrage to changes of rules for natural persons. in my mind the biggest risk to super change is how you can take it upon retirement. atm you can take it all out on retirement and blow it on hookers and coke in the first couple of years - by the time we retire i see that changing dramatically.

if one is not reducing their taxable income by contributing super then it does become part of one's taxable income. agreed these changes will keep accountants and tax planners busy for a while.

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The trouble with upping the GST and lowering income tax is that it affects low income earners disproportionately. They aren't paying much income tax now so get no benefit. They will have to pay more for goods and services and will be worse off overall. Although some of this spending is discretionary. I'm for reducing income tax as this provides an incentive to work. Sorry to bang on about it but replacing the lost revenue with an increase in the holding cost on assets (eg land) would be an alternative.

Getting rid of upfront costs like stamp duty in favour of upping the holding costs would provide the additional benefit of stabilising the revenue base compared to the declines we are seeing now in stamp duty revenues when the housing market slumps.

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politically super is an easy target for tax changes as most people don't see it as quite their own money.

The reason it is an easy target is that it offers the most delayed and invisible effect through its 40 year lock-up period. It would be a lot harder to change the tax on people who are already drawing down on super than it would be on people who just started paying into super. The make-up of it always creates one target group as the weakest group. Who will be next? I'd prefer to be in the group which is outside the super group and which goes about life unnoticed.

Edited by sydney3000

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Drought subsidies on interest rates for farmers ending as well. The drought has ended but farmers want the subsidies to continue. We seem to have created dependencies on subsidies across so many industries.

Straight after watching the farmer story I saw the Green building industry representative crying about losing their own subsidy in the budget.

The subsidy for automotive manufacturing looks like it will have to be spread to parts manufacture as well now with CMI going into administration. Where does it end?

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why ever work as an individual over %30? surely its tile to set up a company, and have all your income going into the company. and paying yourself a $160k a year job, or what ever the 30% threshold is. and having the remainder, of the over 160k, paying company rates, sure `160 wouldnt be thge thresahhold, there would have to be the costs invovled so say 200k , before its prudent to be managing for your own business, not someone elses bushiness.

the marginal personal income tax rate increases to 37%, from 30% at 80k. after that point it's beneficial to swap to a company, as long as you don't want to spend more than 80k.

BUT your income may still be classified as personal services income at taxed as an individual.

eg - TOR.

80% of his contracting income is gained from IT services to goose ltd. the ATO will treat him like an individual.

10% of his income is gained from zaph industries, 40% from pushing tin, 20% from savage trading, and 30% from elf industries. this will be a genuine company.

100% of his income is gained from zaph industries. but he takes a lump of metal and plastic, packages it up with advice and sells it. once again not personal services income

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GST at 20%:huh:

if abbott gets in, ops when abbott gets in GST will rise, probably just to 12.5% to start. it's easy to raise GST with an equal first year fall in income tax. each additional year the tax take is linked to CPI.

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The trouble with upping the GST and lowering income tax is that it affects low income earners disproportionately. They aren't paying much income tax now so get no benefit. They will have to pay more for goods and services and will be worse off overall. Although some of this spending is discretionary. I'm for reducing income tax as this provides an incentive to work. Sorry to bang on about it but replacing the lost revenue with an increase in the holding cost on assets (eg land) would be an alternative.

Getting rid of upfront costs like stamp duty in favour of upping the holding costs would provide the additional benefit of stabilising the revenue base compared to the declines we are seeing now in stamp duty revenues when the housing market slumps.

if the peasants can't afford cake they can always eat bread.

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The reason it is an easy target is that it offers the most delayed and invisible effect through its 40 year lock-up period. It would be a lot harder to change the tax on people who are already drawing down on super than it would be on people who just started paying into super. The make-up of it always creates one target group as the weakest group. Who will be next? I'd prefer to be in the group which is outside the super group and which goes about life unnoticed.

exactly. that's why negative changes to super or retirement come with a good decade implementation period. if you're more than ten years away from the change who gives a phuck?

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an employee on 300k would not be voluntarily contributing to super.

I know a few on 150k who do.

Putting to one side those nearing retirmeent, I guess on 300k you would not care about the 5k odd saved per annum in income tax by contributing with 25k as the limit in voluntary contributions knowing your cash was locked away for so long?

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I know a few on 150k who do.

Putting to one side those nearing retirmeent, I guess on 300k you would not care about the 5k odd saved per annum in income tax by contributing with 25k as the limit in voluntary contributions knowing your cash was locked away for so long?

25k is not the voluntary cap but the contribution cap.

the contribution cap consists of employer contributions and contributions before tax (ie salary sac conts.)

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25k is not the voluntary cap but the contribution cap.

the contribution cap consists of employer contributions and contributions before tax (ie salary sac conts.)

I did not know that!

So these guys will not even have a choice? I actually thought this new increased rate of tax was only on voluntary contributions but it is on all contributions so these guys will have to pay it. I also thought caps were on volunatary contributions.

Now I understand why you werer so sure of the, on 300k you would not make vol contributions, if you earn over 270k you would not be making contributions as your employer contributions take you over the cap already.

So here is yet another quirky tax level where earning 299k will put you a few thousand dollars better off p.a. than earning 300k.

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if the peasants can't afford cake they can always eat bread.

You sir will be the first against the wall come the revolution. :D

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So here is yet another quirky tax level where earning 299k will put you a few thousand dollars better off p.a. than earning 300k.

I wish I was in the position to receive this punishment.

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