Dividends will flow before Tony’s tax cut

Premium content

To access premium content, please log in or set up a subscription. It's quick and easy.

More from Business Spectator

Comments

Please login or register to post comments

Comments Policy »

Robert, aren't you making an assumption as to how the law will be structured?

If the law is designed such that franking credits attributable to the 30% tax rate are 'grandfathered', then franking at the 30% tax rate is allowed until those franking credits are used up.

This incidentally, is how the law should be structured, otherwise a company tax cut becomes a permanent tax to the extent of unused franking credits.

This makes no sense. Companies are more likely to hold on to their franking credits so they can maintain a fully franked dividend when the tax rate drops to 28.5%.

could it be that u can pay out at 30 franked in one company or 28.5 from another ?
wouldnt what ray hegarty said be the case ?

This damned PPL levy stinks. I hope it will be blocked in the Senate.

Although I am in favour of paid parental leave, it should be for a much lesser period of time - let's say no longer than 12 weeks and the entire scheme needs to be completely restructured.

As a self funded retiree, I am object to being forced to forego a portion of my income - eg a reduction in franking credits, to support young Australians. I have already raised four kids, for the most part as a single mother in full-time emplyment. I have done my share!

I would like to add that I did not have the luxury of spending an entire year with my babies on full pay, but rather, I was back at work within a matter of weeks following their births once my recreation leave and/or long service leave ran out.

Go to the naughty corner, please Trudi.

Agreed. During the campaign my self-funded retiree father sent a message to his local member to express his frustration at this issue. The response included this line...

"This paid parental leave scheme will be good for the economy at large because it will keep productive and potentially productive people more engaged in the workforce."

I asked for a 'please explain' on how it increases productivity and engagement in the workforce when the LNP's policy doubles the existing payment period to 6 months. I received no reply.

Can an economics major please tell me does the LNP policy actually deliver any additional benefit over Labors existing scheme?

Always write to a minister.

They are obligated in law to respond.

Hence the famous ministerial.

shoots

Trudi, I take my hat off, to you for your remarkable strength. However, if the PPL had been available to you, then life may have been easier.

Why do we allow negative gearing, that is of no benefit to the economy, when we could have PPL that may change the lives and aspirations of women. Lets face it, we need more women in management because we men, are not doing a good job.

OOPS Robert !!!!

$100 dividend will be worth $139.7 – a reduction of 3.1 cents or 2.2 per cent.
( may be $3.1 ???)

Let’s base the calculations on $100, with the actual dividend being $70 or 70%, tax of $28.50 or 28.5% and levy of $1.50 or 1.5%.

Someone with a taxable income under $18,200 (and therefore doesn’t pay tax) receives only $98.50 instead of $100. At each tax bracket, the individual will receive $1.50 less than before. At the 19 cents in the dollar tax bracket, the person gets the $70 dividend plus $9.50 (difference between company tax of $28.50 and $19) for a total of $79.50 instead of $81. At 32.5 cents in the dollar, the person gets the $70 dividend minus $4 (difference between company tax of $28.50 less $32.50) for a total of $66 instead of $67.50. At 37 cents in the dollar, the person gets the $70 dividend minus $8.50 (difference between company tax of $28.50 less $37) for a total of $61.50 instead of $63. At 45 cents in the dollar bracket, the person gets $70 minus $16.50 ($28.50 minus $45) for a total of $53.50 instead of $55.

In percentage terms, someone in the zero tax bracket receives 1.5% less (1 - $98.50 / $100). Someone in the 19 cents in the dollar tax bracket receives 1.85% less (1 - $79.50 / $81). At 32.5 cents in the dollar, it’s 2.22% less (1 - $66 / $67.50). At 37 cents in the dollar, it’s 2.38% less (1 - $61.50 / $63). At 45 cents in the dollar, it’s 2.73% (1 - $53.50 / $55).

Considering that some of the shares have gone ex-dividend, the current upturn is rather good. Certainly beats Term Deposits.

My maths may be incorrect however under the 30c rate I would receive a tax refund / offset of $42.8 .Under the 28.5c rate I would get $39.7 therefore $3.1 less. This equates to 7.24% ( 3.1/42.8) which is substantial.