1) Eligibility criteria and withdrawal rates for Youth Allowance. Anecdotally I am aware of too many recipients of YA who would be able to support themselves (with parental assistance) without the allowance. Those students who genuinely need govt assistance find that the YA is insufficient, and the punitive EMTRs don’t enable them to earn enough to live on without working 25+ hours per week. This is less than desirable for full time students.

So, I would tighten the eligibility criteria and reduce the taper rates (it has already come down from 70% withdrawal rate to 60%; I would like to see that go to at least 50%).

2) Salary sacrificing arrangements. There are too many peculiarities with the salary sacrificing regulations. For example, one is able to purchase a laptop with pre-tax income, but not a desktop computer. Employees of some organisations can sacrifice mortgage or rent payments. The system feels ad hoc and distorts consumption choices.

I understand that David, but on that point shareholders sell if the price is right.

Er, not David, but no matter. The price is never right if you can’t replace the asset.

Also, re your link, do you think shareholders would rather the cash, or shares in BHP Tinto? I’d take the shares, personally, especially given the past history of major resources takeovers.

Guy

The ATO has been doing that for some years now. Again, the best thing would be to lower the tax rates.

NG

Fixing non-resident CGT would be an option. At present, it is supposed to tax foreigners on Australian real property, basically. In practice, it effectively doesn’t tax anyone at all.

As opposed to the levels of tax they can get away with paying by bending the rules of our taxation system.

“I think it works by enabling departments to buy ex wholesale tax and then sell cars back into the market at prices which reflect the existence of the tax.”

More so with the previous 20% WST on cars, but a private buyer only gets the benefit of 10% of the depreciation from the new price nowadays. The secondhand business buyer doesn’t, but they get the full 10% input tax credit on that secondhand price.(actually 1/11th of the purchase price) For the private buyer the GST saving can still be substantial when you look at the rapid front end depreciation on a typical Aussie six cylinder
http://www.redbookasiapacific.com/au/vehicle/prices.php?id=65883

Besides which, if you’re nice to your restaurant, they won’t include the booze as a separate line item on your receipt, so you can in practice have an all-booze lunch and still deduct is as a travelling expense (there’s a steak in every glass!)

Also, given the amounts involved, Obs summed that up perfectly with his last sentence.

My idea is hardly new, or mine for that matter, and I don’t necessarily agree with it, but I think there is a lot to be said for simply scrapping all ‘work-related deductions’. I believe it is traditionally proposed to replace them with a uniform $300 tax break for everyone, but I suspect that really it would be better to replace them with nothing at all and just lower the actual tax rates.

This seems harsh on lawyers and the like, but deductions for self-education could be reasonably excluded. Pretty much nothing else should be excluded though.

It would end up being harshest on academics, since they would be forced to argue that they are in business (I’m sure some do anyway!).

But really the objective should be to push on with rewriting the tax law. Trusts are a famous mess, especially the trust losses provisions. Lots of taxation of overseas interests is all over the place as well – something that NG has noted , of course.

Observa
I think you are missing two main factors in your analysis. The first is that the shareholders have to actually sell. The second is the Foreign Investment Review Board.

Not to mention that the easiest way to avoid shifting profits offshore is to lower the tax rates onshore!