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Money Labor could end tax dodge to fund tax cuts

05:49  14 march  2018
05:49  14 march  2018 Source:   msn.com

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Bill Shorten says Labor could give low and middle-income earners tax cuts as part of a plan to stop wealthy investors from getting taxpayer- funded refunds.

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Wealthy investors will no longer get cash refunds if they pay no tax, under a Labor plan that could fund future tax cuts for low and middle-income earners.

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Labor will also give all businesses an instant ,000 asset write-off to encourage new investment, making the government's tax break permanent. Treasurer Scott Morrison says Labor 's plan to wind back Howard-era rules allowing investors to claim tax imputations from dividends is "theft"

Tax - dodging can be split into two distinct types, tax evasion which is an illegal avoidance of due taxation and tax avoidance, which is a method of avoiding due taxation previously expected, meaning that government cuts end up destroying much more economic activity than previously estimated.

Labor will also give all businesses an instant $20,000 asset write-off to encourage new investment, making the government's tax break permanent.

Treasurer Scott Morrison says Labor's plan to wind back Howard-era rules allowing investors to claim tax imputations from dividends is "theft", but Mr Shorten says the loophole is "absurd".

"If you have accumulated $4 million in superannuation, congratulations," Mr Shorten said in a speech in Sydney on Tuesday.

"But I just don't believe you need help from other taxpayers to turn that into $8 million."

The original scheme was introduced under Paul Keating to make sure company profits aren't taxed twice - once with corporate tax and again via personal income tax.

But in 2000 John Howard allowed investors to get a cash refund from the government if their tax imputation was more than the tax they owed.

Over 200,000 pensioners to lose money if Labor abolishes cash refunds, Chris Bowen says

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Every penny raised from cracking down on wealthy tax dodgers will fund tax cuts for middle and low earners under Liberal Democrat plans. By contrast, it has been revealed that Labour tax plans will leave people £340 worse off a year.

As a result, they can occur in a Fund even in a period when the Fund ’s total return is low or negative. To comply with IRS requirements, the Dodge & Cox Funds normally distribute net capital gains annually. At the end of each tax year, the Fund accumulates the gains and losses for all securities

"They're getting a refund on tax they haven't even paid," Mr Shorten said.

"I think most Australians will be surprised to know (about it)."

Bill Shorten says Labor could give low and middle-income earners tax cuts as part of a plan to stop wealthy investors from getting taxpayer-funded refunds. © AP Photo/Eugene Hoshiko Bill Shorten says Labor could give low and middle-income earners tax cuts as part of a plan to stop wealthy investors from getting taxpayer-funded refunds. Self-managed super funds are major beneficiaries of the scheme, with some investors paying zero tax but still getting cash refunds of as much as $2.5 million a year.

Mr Shorten said getting rid of the loophole would allow Labor the option of offering tax cuts to low- and middle-income earners as part of its pre-election platform.

But Mr Morrison said low-income earners and pensioners would be taxed twice under the Labor plan.

"If the Labor Party are prepared to deny you what is effectively a tax refund, because you've overpaid your tax, where will they stop?" he told reporters.

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Some companies dodge their taxes by setting up subsidiaries in neighboring states with corporate income tax havens, like Nevada and Delaware. And it’s worth noting that the tax cuts Walker rammed through during his first month in office “will reduce general fund tax collections by .2

As a result, they can occur in a Fund even in a period when the Fund ’s total return is low or negative. To comply with IRS requirements, the Dodge & Cox Funds At the end of each tax year, the Fund accumulates the gains and losses for all securities sold by the Fund during the year and any loss

Labor says Australia is the only developed country in the world with a fully refundable imputation credit scheme.

The policy would apply from July 1 next year under a Labor government and charities and not-for-profit institutions, such as universities, will be exempt.

The Parliamentary Budget Office estimates the policy will impact just eight per cent of taxpayers, including about 200,000 self-managed super funds.

Shadow treasurer Chris Bowen says the changes have the approval of the original system's architect, Mr Keating.

The Australian Shareholders Association said the changes would hurt those who invest in Australian companies that pay dividends.

Mr Shorten said the instant write-off for new business investment would drive asset investment and job creation.

"We're saying to Australian business 'if you spend, we will reward you'," he said.

The Australian Food and Grocery Council welcomed the instant write-off as a way of addressing declining investment in the sector.

PM 'close to striking deal' on tax cuts .
Malcolm Turnbull all but gave a guarantee wages will rise if company tax cuts are passed. The Prime Minister said the cut would lead to more investment and more productivity."There is no question you will see a rise in wages with a reduction in company tax," the Prime Minister said.The comments came as the government furiously negotiated with senate crossbenchers to pass the cuts before the May Budget. © MARK METCALFE/AFP/Getty Images Prime Minister Malcolm Turnbull has pledged that companies will deliver pay rises if his big business tax cut passes the Senate.

Source: http://au.pressfrom.com/news/money/-57902-labor-could-end-tax-dodge-to-fund-tax-cuts/

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