CapitalQ Fast Business – Edition #003 “Revisiting Imputation Credit Refunds” (Labor’s Contraversial Proposal)

Transcript

Hi folks okay so I’m really sorry I know this video is gonna be quite dark it’s just after sunset and we’re in a bit of a valley here so it’s quite dark

But I wanted to get on and get this video recorded

I also I wasn’t going to it was never my intention that these videos get too hung up on the election

But I’ve had a couple of people email me and some people asked for some clarification around the particular policies that Bill Shorten and Labor are proposing that I have a problem with

I was going to talk about the proposed changes to negative gearing and the capital gains tax discount and I’ll do my best to get to that but I did actually see an article written today online talking about the imputation system and what’s fair and I know I’ve done a previous video about the imputation system which I know a lot of you have watched which I’m very thankful for but a lot of the comments that I’ve seen there or what comments people have made to me directly talks about this fairness issue and the thing is I really feel if you’re getting hung up on what’s fair you’re actually missing the point of I guess what I’m the point I’m trying to get across and my argument

So our imputation system in my view is just this really smooth clean system that really works beautifully at achieving its main aim which is removing the artificial element in business which is the corporate structure

So our imputation system ensures that ultimately the tax on business profits is paid at the rate of tax applicable to the ultimate recipient the shareholder and so if the shareholders tax rate is 47 percent then ultimately the tax will be paid at 47% if their tax rate is sorry that’s not a good angle if their tax rate is below the company tax rate then you know there’s a refund element

And so the ultimate tax is paid at their lower rate and you know for me this is just a really smart and clean and effective way to go and just removes as I say the artificial element the corporate structure

Now the proposed changes they’re predicated as I understand it on the idea that supposedly some rich retirees are getting you know refunds of tax from the government that you know Bill and other people feel they don’t deserve well look that’s fine just increase their tax rate

You know the problem right now is that the problem which is a matter of opinion but if that is the problem then the way to fix it is you increase their tax rate you don’t mess with this really smooth clean system that we have now

Some people have pointed out that we’re the only country in the world that allows refunds on company taxes look my understanding is that that is the case yes absolutely so what that doesn’t mean we’re wrong there’s nothing wrong with being the outlier it doesn’t you know it just means that every other countries system is not as clean smooth and effective at removing that corporate level as ours is

And look you know just keep in mind traditionally it’s been it’s accepted 80% of the population worldwide are wrong about money and finances and you know I’m sure that applies both at an individual level as well as at a government level so there’s absolutely nothing wrong with us being the outlier if anything you know it might be the goal we should be aiming for

The other thing people have pointed out to me is that the refunding of imputation credits is a new thing and that again that is true it came into effect in the early 2000s from the Howard Costello government again that doesn’t make it you know what we’re doing now is wrong what we we’re doing before right you know I think yeah I think it’s been an improvement since then and I see no real reason why we need to go back to the way it used to work

So look the other thing I should probably mention sorry I’m getting eaten alive by mozzies out here I’m on this I don’t know if you can see I’m on a river in Borneo the
other thing worth mentioning is you’ve probably seen in the media Bill Shorten has been I guess you could say sort of  verbally bashing accountants a bit saying we’re
we’re not providing any any good for the economy or for the country all we’re doing is letting is helping rich people pay less tax or rich people get richer

But you know the funny thing is all these policies he’s proposing these changes including you know the carve-outs that he’s had to add to it after the event because he hadn’t thought the idea through in the first place well these things they actually just make us more necessary and and and make it even more the case that people need to come and see us

Even if they’re not trying to minimise tax which there’s nothing wrong with that by the way but if they’re not just just to comply just to just to get things done they have to come see accountants so you know it’s quite hypocritical he’s come out and said that he’s going to cap the tax deduction you can claim for accounting fees at only three thousand dollars and yet he’s bringing in all these policies that are gonna make people have to pay us more

And look you know as an accountant I’d much rather be focusing on helping my clients run better businesses and you know innovate and grow and employ more people which is when the real benefit exists for the country but instead we’re going to get we’re gonna get you know even more bogged down in I’m trying to help them comply with all these new rules and help them deal with them

Anyway that’ll do for now well see I might talk about the negative gearing and the cgt discount next time but I wouldn’t mind getting on to a
topic about business improvements so we will see how we go alright then thanks

bye