Tax planning 2020

[marty998]

It’s a round about now most of us would be looking at taking steps to ensure we got the most out of the federal budget (unless you’re a SINK or DINK, in which case there are never any lollies in the goodie bag).

With the budget delayed to October, it’s unlikely there will even be backdating of specials to the 2020 year, since most people will already have lodged their tax returns.

I don’t have a clue whether I will owe tax or be due a refund (probably come out square on $48,000 odd of tax paid). But I’ve got my depreciation schedule done for my new property which should help.

What other strategies are you guys implementing at the moment in the final weeks of June?

[mjr]

This will be my first financial year of no employment income - will be making a personal tax contribution to lower my taxable income to $18k and pay no income tax for the time since I started working !!

Unfortunately, with the dividend cuts, my taxable income will probably be too low for me to benefit from the full $25k - I have to wait for the estimated distribution amount from vanguard in the dying days of June to work out exactly how much to contribute,  SMSF though, so I can leave it until 30 June and still be sure it's received by the fund in time

[Bloop Bloop]

Anyone reckon they might rush through stage 2 and stage 3 in the budget?

Everyone else seems to have gotten a cash splash. Would be nice for taxpayers to get their round.

[marty998]

And how much will that add to the debt?

Voodoo economics is alive and kicking.

Cormann was a classic yesterday. Exasperated when asked about debt and deficit he said “what else would you have us do?” Basically threw out the Liberal Party playbook of the last 20 years.

Those nutters at the IPA have been very very quiet lately.

[Bloop Bloop]

It's a lot less to add to the debt than all these stimulatory measures

And it gives people their own money back.

We can pay it all back with a decade of austerity.

[marty998]

Well the problem is that it isn’t going to be all the stimulatory. Because higher income earners don’t spend it, they’re more likely to invest it in shares or property.

So not only will there be higher debt/deficit, it won’t do that much for the real economy. Austerity will basically double down on that bad bet (see Europe).

We might celebrate a bigger personal bank balance with those tax cuts, but there’s not a lot of point to that right now at least not from my perspective. The past 6 months I’ve had pay rises and net worth growth of over $100k. People like you and I are doing it just fine in comparison to everyone else. Privilege is the word you don’t want to hear but it does apply.

Please stop seeing yourself as persecuted for paying tax.  Most people would happily trade places to pay tax instead of collecting unemployment measures because the government has closed their industry.

[marty998]

Lodged my tax return. Cracked the 50k tax payable line.

I feel like a shitty life achievement had been unlocked there.

Lodged the parents returns, they got a franking credit refund for the last time ever (shares sold last July). Bastards get to earn shitloads in super and never pay income tax ever again, and never even lodge a return again. As self funded retirees they also got 2x $750 stimulus cheques each and their net worth is quite a bit higher than mine.

Inter generational warfare is most definitely a thing,  and old people are definitely winning. They remind me of it every time I see them haha.

[Bloop Bloop]

Well the problem is that it isn’t going to be all the stimulatory. Because higher income earners don’t spend it, they’re more likely to invest it in shares or property.

So not only will there be higher debt/deficit, it won’t do that much for the real economy. Austerity will basically double down on that bad bet (see Europe).

We might celebrate a bigger personal bank balance with those tax cuts, but there’s not a lot of point to that right now at least not from my perspective. The past 6 months I’ve had pay rises and net worth growth of over $100k. People like you and I are doing it just fine in comparison to everyone else. Privilege is the word you don’t want to hear but it does apply.

Please stop seeing yourself as persecuted for paying tax.  Most people would happily trade places to pay tax instead of collecting unemployment measures because the government has closed their industry.

I don't think I'm persecuted, Marty. I'd just like a bit of fair analysis from the media and from politicians. I don't envy the poor or the ones who lost their jobs but I do think the lazy middle class in this country has it so fucking good and yet they don't even appreciate it.

Coronavirus hits? Oh, let's throw away some money as "stimulus". Yeah, don't just give it to the poor, give it to the un-deserving middle class too. Give everyone a bit of stimulus. But not those who pay the most tax.

But then when tax time comes around, god forbid we proceed with the tax cuts that we'd already planned. The ones that address bracket creep, the elephant in the room.

But you know what, maybe it's infecting me too. I dropped my hours and income this year so that I'm just about hovering at the top tax bracket. I'm happier for it and I can still scrape by on a measly $180k a year.

If I could design a tax system I'd put a 90% estate tax (no need to transfer wealth to your kiddies - they never earned it), use the receipts to make 16 years of education free for everyone who wants it, and drop income tax down to a flat 15% rate. I reckon it could all be easily funded by the big punitive estate tax :-) And that'd be damn fair. Fairer than the current system which punishes enterprise and also, strangely, rewards intergenerational laziness.