So you're working a job and you get taxed but you also get taxed if you buy or pay for anything with your already taxed money. It should be one or the other but not both.
RAWR.
I Just Realised We're Being Taxed Twice
Zachary on 11/03/2022 - 21:46
Comments
On supermarket receipts that will often put a symbol e.g. # for Woolworths, that indicates which item you've bought have GST. A lot of fresh foods shouldn't attract GST.
@DemocracyManifest: We've had GST for over 20 years and nobody has ever come close to saying we should leverage GST on fresh food
I've heard of delayed fuses but you're taking the p*ss right
Most fresh food does not attract GST as others have said.
You can find more information here
The idea of GST when it was first introduced, was that richer people would end up paying more tax. This is because basic essential items (such as fresh food) are not taxed via GST, while luxury items are. The idea was that richer people buy more luxury items, and therefore end up paying more tax in the form of GST.
Lots of arguing went on, and still goes on, about which food and grocery items are luxury items that should be taxed, and which are not. For example, until 2019, tampons and sanitary pads were taxed via GST. I don't think many people would think of tampons or sanitary pads as luxury items for rich people.
This was a famous interview about the GST when it was first introduced that still gets referenced to this day.
@wizzy: I always thought that if a certain amount of "service" was applied to a product - it would attract GST.
Not sure what that has to do with Luxury but if the above is true - it means that a standalone grown piece of fruit would not have had anything special applied to it so that it could be sold.
Same goes for water, grown organics etc. If it's soda water it would have GST applied to it because it has been processed with CO2. If it was a fruit basket it would have GST because it was put together and wrapped and placed in a basket with a ribbon.
That's my understanding.
@wizzy: But it wasn't cause that sunk Lewson's PM dreams?
https://en.m.wikipedia.org/wiki/Birthday_cake_interview
Was Howard in 2000
https://en.m.wikipedia.org/wiki/Goods_and_services_tax_(Australia)
Can't believe Australia voted for a party that wanted GST, higher income taxes relative to per capita GDP and franking credits
@Korban Dallas: Yes that's true, that interview was actually from before GST was introduced. It was still the interview that everyone remembered though.
@wizzy: A lot of basic items are taxed eg public transport, water and electricity, kmart clothes to keep you warm etc. You won't be able to survive on GST free stuff alone.
Yet people demanded removing GST on tampons and think they are entitled to it but if that's the case there are more items higher on the priority list where GST should be removed.
@FutureTech: Yes, that is true, not all basic items are GST free. I don't think anyone thought it would be possible to live without paying any GST at all.
People are going to have different opinions on how to rank tampons vs public transport etc in terms of priority. Your opinion is not necessarily correct, and neither is mine.
Gov hasnt put any exemption on GST
Yes they have.
GST does not apply on all goods@spaceflight: Ah yes the old "which came first, the fresh chook or the cooked chook?" debate. Thanks John Howard.
Gst is a regressive tax
It is on the assumption that base consumption remains the same.
Is a regressive tax a tax?
Forgot about the cigarettes and VB though.
This only makes sense if you are looking at how much total is paid in tax by the rich. If you look at the total GST paid as a percentage of total income, the richer you are, the less you pay.
That is contrary to all available stats. The rich have money to save and spend on investments (no GST)
The rich save more (not spend) so they don’t pay GST tax on it.
Rich Pay 40-50% tax on interest earned. Governments gonna get ya!
GST is a regressive tax.
Well one other issue is the rich have means to ensure they pay as little to no income tax.
Gst is something they can't escape, or can they?GST is not paid on investments or overseas holidays/assets (rich people have more of these then poor people)
I may be dumb but you seem right honestly
Maybe he had a similar experience to me?
TLDR: So I worked, nearly minimum wage, got taxed, used that money to buy fuel for the company which was taxed twice, then got partial amount refunded, and that was taxed on top.
Tax inception = taxation?long rant, delete if it's intrusive:
Years ago working for a company, where I needed to pick up some items from a client on an ongoing basis. They usually give us the company car, or if we use our own, pay us for it. Anyways, after not getting paid (bad manager) for using my car, since the company car was sometimes not there or keys misplaced. I grabbed the company car, which gets used by me at 11pm and then the company courier in early morning. And halfway there, ran out of fuel. Honestly was in a rush so didn't check or notice till last minute. So managed to coast slowly downhill into a servo. Looked around for the company card, not there. Anyways, filled up the car because I didn't want to be an arse knowing it needs to be used in the morning. Had to pay with my own card. Next day complained about it. Was told they will reimburse me. After not paying me for two months, I got really agitated, and mentioned it to someone else. Anyways they added the payment to my payslip, it was also $1 short, and that amount was also taxed. And yes, receipt was provided, and that workplace was as much of a joke as you would imagine.
don't give them the receipt until you have the petty cash in your hand. patiently wait for them to get organised on company time.
(profanity) giving them the receipt and getting paid taxable income at some mystery time in the future.
Not 100% sure, but if your payslip shows that you were taxed for that reimbursement you should be able to claim a tax deduction at tax time https://www.driversnote.com.au/ato-mileage-guide/is-reimburs…
If your only managing to get taxed twice your doing well …!
So true
i like to get taxed multiple times so I play the pokies.
put in $100
collect 87%
put in $87
collect 87%
put in $75.70
collect 87%
put in $65.85
collect 87%
…
…
Indeed -
- Taxed on income.
- Buy some goods / services with it, taxed 10%
- Person you buy from factors their payroll taxes, company taxes, property taxes (rates, land tax) and numerous other taxes into what you pay as well
- Buy shares or property with what you have left - capital gains taxes
- Own a car - registration taxes and duties
- Buy a car - transfer duties
- Buy a house - stamp duty, rates, levies - they are all just names for… taxes
- own too much property - land tax
- Rent a house, your landlord factors the above into what you pay
- Use a public service - usually pay taxes (public transport fares, tolls, medical bills, etc etc etc - so many user pays things not included)
- Go on holidays - departure taxes
- Buy fuel - fuel excise (yes, its tax)
- Import goods - Import duty (taxes)
(the above still have GST tax on tax too)
- Buy a luxury car - luxury car tax (+ import duty + GST + Registration + tax on the money you used to pay for it + excise tax on the fuel + tolls for the roads)
- Develop a property - infrastructure contributions (taxes)
- Buy Alcohol - excise (tax)I'm sure I've missed several hundred but you get the idea
are you a tax accountant or lawyer?
Professional Taxpayer
Now imagine you didn't have to pay tax.
- Every road is a toll road.
- Every public service you enjoy now like bus, ferry, train, museum, library, you pay and pay double if not triple.
- Every time you get sick you pay in full.
- Every time you go to the park, you have to buy a ticket.
I'm sure there are several hundred in between… but you get the idea.
Not saying its not needed, just quite surprised OP thinks we are getting taxed twice and thinks that is bad!
However, what about Dubai? No Income Tax for their citizens.
They tax large companies (Oil) which pays for most things, then just some import duties for goods (not also taxed again GST like we are), 10% on hotels/entertainment services (like a tiny version of GST but limited to that to capture tourist spend), they charge for government utilities, and only tax property rates/levies on landlord's investment properties - i.e. rentals (mainly to capture that most expats live in rentals and pass that cost on).
Local everyday citizens get taxed very little - and basically don't get taxed twice on anything like we do except possibly alcohol / tobacco excise as a discouragement.
every road is a toll road
And yet, despite everyone paying lots of tax, the VIC govt still seems to pay handsomely to build roads that are then tolled by private operators?
It's amazing how the LNP thinks billions of tax payer money is there for rorting and corruption -
https://independentaustralia.net/politics/politics-display/m…
https://www.crikey.com.au/2021/10/04/who-would-federal-icac-…
It gets even better, the government taxes you a 3rd time when the central bank prints money out of thin air.
The government then goes and spends all this new money under the pretense of a 'debt', which is really just diluting all the people using the existing dollars that were in circulation
Pretty sure that ponzi scheme is just about over. Hold onto your hats.
4 times if you think about CGT when you spend your taxed income that gained value, which then get spent
or spends it on tanks and submarines.
Or spends it on not buying submarines
cost of five years’ work and $2.4 billion
https://www.aspistrategist.org.au/the-hidden-cost-of-the-att…
u get pissed of that you are double tax, hop into a high yield luxury amg Merc, buy some petrol to head to the shops to buy some booze and smokes to get drunk and high….
welcome to tax
High? Is your dealer charging you $330 a bag? That's very responsible of them declaring income
hmm maybe they're sniffing the fuel?
Booze and tobacco is a big one that people seem to simply disregard because it either doesn’t impact them or they feel guilty and ashamed to speak up against it.
We have have one of the highest alcohol and tobacco taxes in the world and it’s disgusting.
What argument could anyone possibly make for lowering alcohol and tobacco taxes?
I'd support increasing them
What argument could anyone possibly make for lowering alcohol taxes?
Well, for one the tax rate on all types should be consistent. If we're taking alcohol, it should be consistent across drink types.
A bottle of 11% ABV wine shouldn't have a lower tax excise than a bottle of 6% ABV beer.
Have you heard of fuel excise? Quite topical 😂
Wait until you buy a plug-in hybrid!
Wait until you find out about fuel excise and GST.
EDIT: beaten to it LOL.
well spotted Zach - but if you recall when GST was implemented, your PAYG tax was reduced to (more or less) offset the amount you would pay in GST.
or, to put it in a numerical way that is not at all accurate: you used to be PAYG taxed 40%, now you are PAYG taxed 30% and GST taxed 10%.so, it is not "both" as you say.
GST is a very useful tax. The cash economy, the rich, etc, do not pay PAYG (much), but they all need to buy their groceries and big screen TVs…. so at least we get 10% off them rather than 0% as it was before GST
A lot of groceries, mainly unprepared food/staples, is GST free. This was to try and buffer the lower income earners from too heavy an impact of the tax.
so at least we get 10% off them
Dont forget that you get tax as well. However don't worries, the benevolence politician always make sure their paid rise well & above the taxes + inflation no matter the circumstances. Because they love us so much
Yes exactly… I'd support an even higher GST with lower income taxes to be honest.
I think we are one of the only countries where the GST has remained for so long without being increased!
How about your car tax, road tax, service tax, etc. OMG triple/quadruple taxed!
you forgot insurance premiums, medicare levy, water/gas/electrical supply/connection tax,
Medicare levy I am very comfortable with. However public health funds should only be into publicly owned health services. Many regional hospitals are just fronts that outsource critical services to private services.
The need is there, but for some reason it is most ?efficient to pay a multi billion dollar company to provide the service year on year.
Don't forget the tax on a tax. Eg: GST on Petrol Excise Tax, GST on Stamp Duty, etc.
I feel for you, truly… I do. I don't begrudge those who are trying to mitigate their taxes. Good on them.
Wait until you understand that why we need these regressive taxes when we could get it from:
- mining royalties https://www.michaelwest.com.au/mining-lobby-exaggerates-taxe… https://en.wikipedia.org/wiki/Dutch_disease
- online companies https://www.abc.net.au/news/2020-05-18/google-pays-more-tax-…
- religion https://www.nzherald.co.nz/business/lifting-the-lid-on-sanit…That's not counting the backroom deals where rich people pay each other overseas. Want to buy an Australian ship for $1 billion from Gina Rinehart? Avoid tax by doing the transaction in cayman islands!
Or now that they have given themselves QE powers (around Feb 2020) why are they still stealing any taxes at all?
Because it is never enough…
Assuming you agree that taxes are necessary to pay for government services, how would you do it differently?
Earn cashback from every purchase where possible.
Taxes are not necessary to pay for government services.
Government can easily borrow from RBA and that would work if government would spend about 3% of GDP. But the government spends more than 30% of GDP. It can't borrow and introduce all that new money into economy without inflation going ultra high.
So for the new money government introduces into economy, there needs to be a mechanism that will burn equivalent of existing money.
The government could just as easily tell you to burn 1/3 of your income every year and it would achieve the same effect as taxes if people would actually follow through.
Wow you thought of this and no one else has? 3% of GDP that would pretty put an end to things like public hospitals and defence. But who needs those things anyway.
I'm not advocating government should be spending 3% of GDP.
Reduce a lot of tax loop holes that have been used to buy votes, e.g. fully franked dividends allowing people who pay absolutely no tax to get a substantial tax return. Remove negative gearing from owners of multiple IP. Implement substantial taxation penalties on any companies using off shoring of funds to tax havens (have a look at what Apple does with funds heading to Ireland). That would be a start.
NEVA, over their big fat ass dead body is the only way.
e.g. fully franked dividends allowing people who pay absolutely no tax to get a substantial tax return
Fully franked dividends means the tax has already been paid (in what world does it make sense to tax it twice?)
Remove negative gearing from owners of multiple IP
All this would do is make it impossible to invest as an individual, all rentals would then be done by big companies - which would be way worse. Also to negative gear you actually have to lose money.
I don't think you have any idea what franking or negative gearing actually is.As mentioned above the actual tax evasion is mining royalties, overseas companies and religious exemptions. Add to that cash businesses like tradies.
+1
Fully franked dividends means the tax has already been paid (in what world does it make sense to tax it twice?)
Those who pay the tax should be eligible for the tax return if eligible, not some nominated 3rd party, who has not paid tax. If you have paid NO tax, there is no way you should be eligible for a refund. This is simply a tax loop hole, nothing else, to appease wealthy retirees, who have sufficient means to get a nice pay out from the PAYG tax payers.
All this would do is make it impossible to invest as an individual, all rentals would then be done by big companies
Legislation can prevent rentals being done by big companies. But removing negative gearing on multiple IPs, eases the upward pressure on housing and may give some of the poor sods trying to buy their first OOP a chance. It doesn't prevent an individual claiming negative gearing on an IP, just multiple IPs. Doesn't stop anyone investing in property, just means it has to be a sound financial case, not subsidised by the PAYG tax payers.
I don't think you have any idea what franking or negative gearing actually is.
You're welcome to your opinion, but these are some of the structural issues that need to be addressed.
Those who pay the tax should be eligible for the tax return if eligible, not some nominated 3rd party, who has not paid tax. If you have paid NO tax, there is no way you should be eligible for a refund. This is simply a tax loop hole, nothing else, to appease wealthy retirees, who have sufficient means to get a nice pay out from the PAYG tax payers.
This is simply not true. Shareholders buy a piece of the company, the dividend is the shareholders piece of the profit, it is their income and is taxed at their income tax rate. When you have money in a bank account and you are paid interest, that is income and tax is paid at your income tax rate. It is exactly the same situation.
Legislation can prevent rentals being done by big companies. But removing negative gearing on multiple IPs, eases the upward pressure on housing and may give some of the poor sods trying to buy their first OOP a chance. It doesn't prevent an individual claiming negative gearing on an IP, just multiple IPs. Doesn't stop anyone investing in property, just means it has to be a sound financial case, not subsidised by the PAYG tax payers.
To negative gear a single property or multiple properties has no bearing on anything, a loss is a loss, so I don't know what point you are trying to make here. Also, do you actually understand that negative gearing is a real actual monetary loss. Negative gearing and the CGT discount for individuals only exist so that individuals are treated the same as companies, if they didn't exist individuals would be taxed at twice the rate of companies. They are not tax breaks. They allow for individuals to invest in property.
Also investors pay land tax which is a 1.6-2.0% tax on the land value every single year.You're welcome to your opinion, but these are some of the structural issues that need to be addressed.
It is not opinion, it is the way the system is, for a very good reason - tax individuals the same as companies (and not double).
Your options is remove negative gearing, but then you have to change company tax, then you will have to change tax on all investments and so on…change one law, then you have to change another, then because of that you have to change another and the changes will keep going round full circle to you are exactly where you started. It is because negative gearing isn't some special tax break, it is not a tax break at all, it is how tax is done for all investments and all entities. You are asking for a special exclusion just for property and just for individuals - to their detriment compared to all other entities. Ultimately it makes no sense, in any way.
If you want to increase tax on property investors just increase land tax - it was a tax created solely for this purpose. Stuffing around with negative gearing is basically pointless and nonsensical.
change one law, then you have to change another, then because of that you have to change another and the changes will keep going round full circle to you are exactly where you started.
Howard introduced the fully franked tax rort with one piece of legislation, without having to change multiple items in taxation law. Your arguments regarding owning part of the company and thus being eligible for a tax refund is erroneous. Their income is from dividends paid and capital gains from share fluctuations, not a subsidy from tax revenue. Tax payers should be eligible for a tax return on taxes they pay, not that paid by some other entity. To use your analogy, if you have money in a bank, your income is from the dividend (interest) the bank pays on that, linked to their profitable operation. Your bank account doesn't entitle you to a tax refund, in fact it means you may have a tax liability.
Fully franked dividends are a massive rort to buy the votes of specific group.Negative gearing remains a major stimulus in the housing market. Using existing equity, multiple properties are able to be purchased, one after the other, using the mortgage cost to offset income from rental income, producing equity at minimal cost. This gives investors a substantial advantage in acquiring both finance and thus properties as well as effectively driving up prices, in some cases using interest only loans. The effect it has, is driving up property prices and making it harder for first home buyers to enter the market. I have two family members who work in providing financing for these investments, so I understand the mechanics of this.
I am also well aware of the need for rental housing, the reduction in publicly funded housing and what has happened in Canada. And I still believe that existing negative gearing has a substantial negative impact by driving housing costs up and impacting accessibility for potential first home buyers.To use your analogy, if you have money in a bank, your income is from the dividend (interest) the bank pays on that, linked to their profitable operation. Your bank account doesn't entitle you to a tax refund, in fact it means you may have a tax liability.
You are horribly confused. The bank doesn't entitle you to a refund because no tax has been payed. If you don't give the bank your tax file number they do withhold the tax and you are entitled to a refund. It is actually exactly the same system for dividends, just the government takes the tax first and then you get a refund if you are entitled to it.
It is also exactly the same for PAYG tax, the government collects the tax and then you get a refund if they collect tax they shouldn't have based on your total income tax. Would you be happy to pay PAYG tax and then get taxed another 37.5-47% when you do your tax return?
PAYG, bank interest and dividends are all treated them same - tax is paid once based on income. You are proposing income from shares to be taxed twice.
Negative gearing remains a major stimulus in the housing market. Using existing equity, multiple properties are able to be purchased, one after the other, using the mortgage cost to offset income from rental income, producing equity at minimal cost.
This is not really how it works, negative gearing just means making a loss which you can offset against other income. You can't negative gear if you don't have more income than you need to survive/live. You actually have to pay the loss every year. It's not some magic money tree. Investment loans are always a higher interest rate than home loans - so the equity is not at minimal cost compared to a home owner. Investments properties also attract a 1.6-2% yearly land tax. As above, negative gearing just means making a loss which you can offset against other income, which is how every investment is treated for both individuals and companies - it is the norm, not an exception. If individuals can't offset interest payment on borrowings used for investing, it basically means individuals can't borrow to invest at all because they will be at a huge financial disadvantage compared to companies who can.
Negative gearing is not the problem and removing it causes a cascade of other tax issues. If you want to increase the cost to property investors land tax can just be increased from 1.6-2.0%, say to 2.6-3.0% or more to get the effect you want. Whether that would actually reduce the cost of properties for first home buyers is not a given, either by removing negative gearing or increasing land tax - it may just increase prices. What will definitely decrease house prices is building more properties with good infrastructure. Companies are desperate to build more properties with good infrastructure but red tape makes it a very slow process and can't keep up with demand let alone surpass it. As soon as supply overtakes demand prices will drop.
either by removing negative gearing or increasing land tax - it may just increase prices
If it reduces demand from investors seeking multiple properties, it will have an impact on pricing. That would be a downward pressure.
Having had an IP previously, I'm aware with negative gearing, you can offset only income earned, but that includes rental income. Worked correctly, a property can have little actual cost to an investor and the capital gain, giving increased equity to then rinse and repeat.
And with fully franked credits, the company made the profit, pays its tax, then pays dividends. The shareholders neither generated the profit nor paid the tax.
The dividends they receive are their payment for capital invested/lent. Companies using fully franked dividends are utilising a convoluted process to pass additional payments to investors. I repeat, the holders of fully franked investments have not generated the income and should not be eligible for a tax refund as they did not pay the tax. If the company is paying an excess of tax to be refunded via fully franked dividends, it should be reclaiming the excess tax and distributing the funds, after tax, as a dividend, i.e. taxable income to shareholders. Any other process is simply a rort of the taxation system, subsidised by PAYG taxpayers.the company made the profit, pays its tax, then pays dividends. The shareholders neither generated the profit nor paid the tax
"the company" = "the shareholders". There is no significant difference in this context. The board, CEO and staff are all effectively employees of the shareholders. If profits are distributed as franked dividends, it's considered that the taxpayer did pay that tax on those profits, and therefore refunded if overpaid.
The practical impact of removing refundable franking credits is that all companies would cease to offer franked dividends, and restructure offshore to pay unfranked/untaxed dividends to best suit the owners. Do you think moving companies overseas is a good outcome?
I would add to that list the CGT 50% offset
The 50% CGT offset is there so individuals don't pay twice the CGT of companies. Removing it for individuals would just mean individuals are taxed at twice the rate of companies and therefore investing as an individual would basically be impossible, or financial suicide. Again it isn't a tax break, it a necessity because of the difference between the company tax rate and the individual/personal tax rate.
@dave999: The company tax rate is 30% and most people's marginal income tax rate is 32.5% or 37% for those earning up to 180k. That's not even close to double.
@harthagan: Company tax rate can be 25% and the top marginal rate of tax is 45% + 2% Medicare levy (so 47%). So basically double. We are mostly talking about wealthy people when talking about multiple properties & CGT bills. If you are paying CGT you will almost certainly be in the top tax bracket for that year at a minimum.
@dave999: I never said anything about multiple IPs. But even then, someone can easily sell one of their apartments for a tidy profit and still fall under the top marginal tax rate, particularly if they were negative gearing
Also I never limited my comment to only property. CGT in Australia applies to the sale of many other things like shares, metals, cryptocurrency, NFTs, collectable cars or other collectable items that generally appreciate in value with time.
@harthagan: Nothing you have said contradicts what i said, "The 50% CGT offset is there so individuals don't pay twice the CGT of companies. Removing it for individuals would just mean individuals are taxed at twice the rate of companies and therefore investing as an individual would basically be impossible, or financial suicide. Again it isn't a tax break, it a necessity because of the difference between the company tax rate and the individual/personal tax rate."
At the moment less wealthy pay around 16%-23.5% CGT on capital gains, wealthy people pay 23.5% CGT on capital gains, and companies pay 25% CGT on capital gains. If you remove the 50% CGT reduction for individuals less wealthy pay around 32.5%-37% CGT on capital gains, wealthy people pay 25% CGT on capital gains (as they will just move to a company structure), and companies pay 25% CGT on capital gains.
How is that possibly better, unless you really want to increase taxes on less wealthy people. The 50% CGT reduction is not a loophole - it is treating companies and individuals the same, removing it would be a loophole, to the detriment of individuals.
@dave999: That's your interpretation based on flawed assumptions as I pointed out already. And it's a gross exaggeration to make a blanket statement that individuals would be paying double the company tax rate otherwise
That's your interpretation based on flawed assumptions as I pointed out already
There is no interpretation or assumptions, just raw numbers. You haven't corrected anything I have said. You got the company tax rate wrong and have admitted that any significant CGT would push individuals into the higher if not highest tax bracket for the year of the capital gain.
And it's a gross exaggeration to make a blanket statement that individuals would be paying double the company tax rate otherwise
I spelt out what the consequences are: "At the moment less wealthy pay around 16%-23.5% CGT on capital gains, wealthy people pay 23.5% CGT on capital gains, and companies pay 25% CGT on capital gains. If you remove the 50% CGT reduction for individuals less wealthy pay around 32.5%-37% CGT on capital gains, wealthy people pay 25% CGT on capital gains (as they will just move to a company structure), and companies pay 25% CGT on capital gains." The exact opposite of a blanket statement, for significant capital gain it is basically double (47% for individuals, 25% for companies - but anyone in this situation would just set up a company). For small capital gain it is less than double if you are in a lower tax bracket (32.5%-37% for individuals, 25% for companies - probably still be worth setting up a company).
If there is something incorrect actually point it out, rather than say you have when you have not. I'm happy to be corrected because that would mean I have learnt something new, and can probably profit from it, but you have given nothing.
Wealth Tax
This is the most obvious double taxation.
And one of the major reasons real tax reform doesn’t happen. We are distracted by superficial statements with no defined mechanism with laid out financial benefit/costs. Unlike a strict domestic taxation of international businesses, or the limitation of company expenses that exceed standard rates for particular services/goods.
No, you just tax wealth.
Correct. The GST is supposed to collect money from the poor people and the cash economy in essence, but obviously takes it from you