Pension Asset Test Changes.

[Renato1]

I've spent the last week reading and hearing how great Scott Morrison and Richard Di Natale were for agreeing to cut part pensions to people with more than $823,000. And I've been hearing what a dill Bill Shorten was for supporting millionaire pensioners. I knew something didn't add up, and it took this article by Pete Smith to get me wondering who exactly is the dill and who is rational.
http://quadrant.org.au/opinion/qed/2015/06/punishing-frugal-pleasuring-greens/

Basically, as he points out, someone with $823,000 winds up with no pension and an income of $33,000 a year from say an Allocated Pension paying 4%.

But someone who hasn't been as frugal and has just saved $375,000 will be on $49,000 a year (i.e. $34,000 base pension, plus $15,000 earned from 4%). He actually forgets to add an extra thousand or so a year taken from the rich to give to the poor from this change, plus access to the Health card which is worth anywhere from $3000 to $5000 a year.

So, if one saves real hard one can wind up $5000 to $7000 a year worse off than a base grade pensioner with no assets, and $20,000 to $22,000 a year worse off than a pensioner who has saved the maximum amount which does not reduce the pension.

Basically, self funded retirees who have under $1,375,000 in assets beyond the family home, are going to be worse off income wise compared to someone with $375,000 (assuming they all agree that it is best to get tax free income from an Allocated Pension, the way the government wants them to). They face the choice of either gambling on riskier investments to try make their pie bigger, or spending really big on bigger homes and better cars to reduce their assets to $375,000 - in order to increase their income.

While none of this affects me, I suspect that there are going to be hundreds of thousands of very unhappy people around who feel they have been very unfairly betrayed. I am wondering if this may be Tony Abbott's smaller version of Work Choices.

Any thoughts?
Cheers,
Renato

[Allan_L]

Thanks for your post Renato.
This is very disturbing as you have pointed out.
Almost unbelievable :mad2:

[xelasnave]

It's hard to talk about this without politics..can we discuss it

[xelasnave]

Would it be a problem if returns were higher

[Hans Tucker]

Under the IIS TOS, no it is a topic that can't be discussed because it is a political topic...but that has never stopped people before.

[xelasnave]

Actually this is economics which is unrelated to politics

[Hans Tucker]

Sooo....Scott Morrison, Richard Di Natale, Bill Shorten mentioned in the original post are actually economists and the end sentence about Tony Abbott is also an economic inference...yeah...right.

Sorry I got it so wrong.

[Kev11]

This is a con - recalculate at 8% (any respectable allocated pension will return at least 7%) and the difference disappears.
Typical propoganda of lobbyists for the wealthy including Joe Hockey: convince middle income earners that they are being ripped off by low income earners not by the rich.
Same people who assert that low income workers would be better off working longer hours for less pay and casual and part-timers would benefit from a lower minimum wage and the elimination of penalty rates.
And the majority of middle Australia falls for it again and again!

[glend]

removed my input

[Hagar]

I really fail to see what all the fuss is about. Government be it Labour, Liberal or the Sex party are going to take from those who have a little or a lot and give it to themselves.

For many years I was unable to join a Superannuation Fund due to health reasons and when I was finally accepted to my industry fund after taking them to court I was slapped with a superannuation tax because I was considered a high income earner. The same tax applied to Pollies on their super but there was one catch, They could elect to voluntarily pay the tax or disregard it without payment.
I doubt many would have paid the tax. This only applied to politicians.

All are equal is nothing more than just lip service and like it or not there will always be those that have more and those that have less and we will always have a government that will exploit this division.

[Eratosthenes]

....the top 1% of Australia's wealthy class control/own almost 50% of the wealth and pay minimal tax via various accounting and legislative vehicles erected - especially over the past 5 decades or so.

Incidentally the "so-called" Australian mining and energy resource sector is 83% foreign owned (mainly in the hands of US multinationals who control about 55%). This lucrative sector is only responsible for employing about 3% of the total Australian workforce. It also pays minimal tax on its revenue and profits and is subsidised by the Australian tax payer to the tune of 12 billion dollars per year.

Currently we have BHP being dragged into court for setting up an off shore tax evasion system (scam) in Singapore. Apparently ladies and gentlemen, BHP can internally sell coal for example to a BHP intermediate setup in Singapore very cheaply, to avoid tax liabilities in Australia, and then off sell it to the eventual buyer (China) as global prices. The amount being sought from BHP in this litigation is almost half a billion dollars.

Meanwhile the Australian government forks out 2.5 billion dollars per year to detain refugees and asylum seekers illegally in off shore detention centers, costing the tax payer on average $170,000 per refugee per year - way more than what the dole is in Australia.

Anyone in here have a dwelling under their spouses name that they can claim $270 per night to stay in? Hockey was very clear that the age of entitlement is over.

We live in a strange nation of intense hypocrisy and selective application of basic morals and ethics.

And there is no mass vehicle in the media for some of these problems to be even discussed let alone tackled with sensible solutions.

Unless you want call Murdochs primary attack dog Andrew Bolt, as a credible informer of what matters to people in this country.

:D

[Eratosthenes]

intimately interwoven I'm afraid Alex.

We live in a Corpocracy - a form of fascism.

have you notice how useless the vote is every few years at the ballot box?

Same puppets, same corporate clowns, serving the same masters.

never vote for the major parties (IMO) - it's a wasted corporate nod.

The best short term result for Australia at elections in the current corpocratic environment is a "hung" parliament.

Hung parliaments until a genuine democracy is in operation in this nation where the citizenry are actively participating in important decision making.

:D

[glend]

Removed my input

[RB]

Exactly.

:)

[Renato1]

Recalculate at 8%
Couple with $823,000 gets $66,000pa
Couple with pension and $375,000 gets $35,000 pension + $24,000 from money + $3000 to $5000 from health card = $64,000

Just one problem, we are in a far more volatile world where governments owe over 100 trillion US Dollars. Investment returns are highly variable - back in 2008 and 2009 returns of -15% and -40% were not uncommon. And where interest rates are at historical lows on government bonds, so that it is much harder to get a "safe" investment.

So, even if an Allocated Pension's investment return from a balanced fund earned 8 to 10% last year, 2.5% or so of value would have disappeared from inflation. And if one wants to be able to ride out fluctuations in earnings, one had better only take out the minimum required by law of 4% and leave the remainder there to cover the inevitable years of poor performance.
Regards,
Renato

[Hans Tucker]

If that is the case did Renato really need to drop political names in his OP and then finish with I am wondering if this may be Tony Abbott's smaller version of Work Choices. if he didn't want the discussion to turn to politics.

Why not just quote the numbers.

[Renato1]

That is not accurate. By the Credit Swisse Global Wealth report, the richest 10% of Australians own 50% of the wealth, which is a much better outcome than say the USA, where the top 10% own 76% of the wealth, and the UK where the top 10% own 85% of the wealth. And there are plenty of countries where that percentage is much higher.

As for paying minimal tax, that winds up being incorrect to. Most of the tax revenue comes from companies and the top 35% of taxpayers. Yes, we always used to see articles and news bulletins how people like Kerry Packer only paid 13 cents in the dollar tax. What none of those articles pointed out was the reason he only paid 13 cents in the dollar was because his companies had paid the other 33 cents in the dollar - and that people like Paul Keating had bought in something called Franking Credits to make sure that people were only taxed once on their income, rather than being unfairly taxed twice (which would have made them eventually move overseas).
Regards,
Renato

[sn1987a]

$823000-$375000 = $448000

take $448000 to the casino and put it on black

roughly 50% of people win an extra $448000 to make up the difference and the losers are still better off with $375000

vote me for treasurer
you know it makes cents

:D

[leon]

Yep, we can do that Barry, :thumbsup: you seem to have it nailed :lol:

Leon :thumbsup:

[Renato1]

The problem is that you are discriminating.

A current pensioner couple with nothing by way of assets get $34,000 a year plus up to $5000 equivalent on the Health card, totalling $39,000 year effectively.

To get that sort of income, indexed for CPI or wages for life, would require around $1.2million to $1.4 million, if paid for out of cash from an annuity.

So all those old age pensioners are effectively "millionaires".

Thus those who have actually saved only one million are in effect poorer than the old age pensioners.
Regards,
Renato

[Renato1]

You Sir, are a genius!
Assuming one doesn't want a more expensive, bigger house, one can't really lose with this strategy.
Regards,
Renato

[glend]

Removed my input

[Renato1]

While existing Health card holders with $1.1million in assets get to keep it, future people who are ruled out from the pension under these changes, will not get it.

How well did your balanced fund perform from 2008 to 2011? For a relatively safe investment, one can only really count on something paying 2 to 4 percentage points above the risk-free rate of return (government bonds) in the long term, given the guaranteed eventual ups and downs.

I have seen plenty of people in the past caught out badly by planning their retirement on 10% rates of return in perpetuity. It doesn't work out that way.

Can I take it that the Managed Fund income streams that you mention are taxable? Whereas the income streams from managed funds within Allocated Pensions are effectively tax free. I wouldn't be in a hurry to get out of Allocated Pensions just yet.

$340,000 does not deliver the same as an old Age pensioner couple gets.
Firstly, it does not deliver the effective up to $5000 from the Health Card.
Secondly, the money will be taxable.
Thirdly, there is no guarantee that it can maintain the investment return at 10%.
Fourthly, it is constantly losing value to inflation, whereas the pensioners don't have that problem as their income stream is constantly being indexed upward.
Regards,
Renato

[sn1987a]

http://www.businessinsider.com.au/3d-printed-houses-construction-industry-neighborhoods-2015-3



:sadeyes:

[xelasnave]

You need a bundle to live off interest.
Inflation erodes capital value.
When I was young I nearly took out a life policy for $50k
That would pay off the mortgage and the balance invested would provide income for the family.
If someone had of suggested that reality on retirement Would need a 2mill plus nest egg for it would have been unbelievable.
It is hard to plan.

[Eratosthenes]

There are many statistics that can be quoted (my OP should have read 10% not 1% - thanks for correction) that paint a disturbing picture and trend, such as the poorest 20% of Australians owning only 1% of the country's wealth.

The trend in the US is stark. The 1950s are commonly viewed as the peak in US standard of living. In the 1950s, the top 400 richest Americans earned on average 13 million dollars per year and typically paid 52% in income tax. By the year 2007, the top 400 richest Americans earned on average just under 300 million dollars per year each and paid about 18% tax.

The model in the west is to socialise costs and risk, whilst privatising profits and power. Its one big corporate banking scam - a ponzy scheme.

Social Problems tend to center around distribution and equity - and politically shutting out the majority of the citizenry from decision making processes and our country's vast wealth and opportunities.

This ain't no Democracy we live in folks - it's like Mussolini said "Fascism should be called corporatism because it is the merger of state and corporate power"

I wonder whether Murdoch supports democratic social structures - what does Bolt say in his editorials?

......meanwhile it is predicted that 1% of the worlds population will control abotu 50% of the globe's wealth by the year 2016 - not too far away folks
http://www.abc.net.au/news/2015-01-20/oxfam-say-wealth-inequality-joblessness-on-the-rise/6027744

[PCH]

It's clear from these discussions that hardly any two people think alike. We all have our own thoughts and our own agendas, which is entirely our prerogative. And we all seem to think that we individually have the answer!

So how could we ever reasonably expect to vote in a government that would do what we individually wanted them to, since so few of us agree on what the right path actually is.

It's inevitable by definition that they'll piss off most people, most of the time.

And since they achieve that regardless of who's in, I'm guessing that they must be doing a pretty decent job.

Seriously though, how could they ever possibly get it right for the majority when we happy few, we band of brothers are in such disagreement?

PS: 10 extra points for anyone who spotted the Shakespeare quote thrown into the last line :)

[sn1987a]

some questions......

Say someone with liquidated assets just reached pension age and is thrown in jail for stealing a huge amount of money which is stashed/bitcoined/buried overseas and never recovered, do they still get to collect/accumulate the pension?.

How long would a nice harmless old pensioner with good behaviour expect to spend in jail, say on a prison farm with 3 squares a day, free room, utilities and health care?.

No reason, just interested :shrug:

[glend]

Removing my input

[Eratosthenes]

I think that you just highlighted what the problem is in your last sentence.

The polemic has always been between individual needs and collective good and fairness.

A society or civilisation is ultimately judged upon how it treats the needy, elderly and disadvantaged etc....

We could of course allocate numerical importance to each citizen in our collective and those that don't satisfy a minimum level of productivity or royalty or Plutocratic supremacy are executed and used as compost.:question:

[Renato1]

Extremely interesting, thanks.

Can one smoke in plastic houses?

More importantly, despite the well meaning desire to build affordable neighbourhoods - well we have the examples here of what happened in public housing - what happens when vandals decide it's good fun setting fire to the homes?
Regards,
Renato

[Renato1]

We live in a much better country than the USA. Again, by the Credit Swisse Global Wealth report-
Number of Adult Australians owning US$10,000 or less = 6%
Number of Adult Americans owning US$10,000 or less = 29%

The land of the free seems to be very much into the freedom to be extremely poor.
Regards,
Renato

[Renato1]

As I said - this does not affect me, as I will never get an old age pension.

I certainly find it interesting that a policy that is highly inequitable is being highly praised as economically responsible, when I suspect that it will ultimately lead to even more people being on the full old age pension - especially people who don't want to be on the full old age pension.

I think this may have ramifications for a lot of people approaching retirement, and while no doubt they will discuss it with financial advisors at some time - they had better start looking into it earlier than would previously have been the case.
Regards,
Renato

[bugeater]

The big problem is demographics. We have an aging society with a big bulge of baby boomers. So the tax base shrinks and demands from pensions and healthcare increase. It's not pretty. Thank goodness some people had the foresight to see this coming decades ago and actually put the superannuation system in place. Otherwise things would be much worse. But at the end of the day all the younger people in society will be paying tax to fund benefits they themselves will never ever receive...

[Kev11]

This thread illustrates my point. Roughly 5:2 of the view that people with less assets are better off than people with more. Just the sort of "downward envy" that allows the top 10% to keep adding to the 50% of the wealth they already own in a country where every adult has the same vote!

[xelasnave]

Who was it when asked how much money he wanted, as he was already very rich, he replied....Just a little bit more.

I think that goes for most people ...we all wanted just a little bit more.

[sn1987a]

How stupid are the people running the show?, this.... ??! effme I give up, I really do :sadeyes:


http://theconversation.com/factcheck-could-the-china-australia-fta-lock-out-australian-workers-43470

[glend]

Decided to remove my input

[xelasnave]

Much the same here.
Lucky for me I spend very little because there is little I want or need.
But I think I will get another boat...that won't cost much...all good.

[Renato1]

There isn't any "downward envy" - how could you come to that conclusion?

The envy is all upward towards the "millionaire" pensioners who only own one million dollars, and who in income terms are worse off than old age pensioners (who are in effect notional millionaires in their own right).

This is plainly evident with the Greens happily attacking the "millionaire pensioners". Are you saying that the Greens are now trying to make the top 10% more wealthy?
Regards,
Renato

[Renato1]

It turns out that we all want a lot more from the rich.
http://www.theaustralian.com.au/national-affairs/opinion/no-the-rich-dont-pay-a-fair-share-of-tax-they-pay-all-of-it/story-e6frgd0x-1226841174461

Regards,
Renato

[Eratosthenes]

This Trend has been clearly evident in the USA over the past 4 decades. deregulation of financial markets and banks, shifting the US manufacturing base off shore, placing investor rights above all other ideals - including the US constitution (which is currently suspended under various Congressional and Presidential acts)

The question is, why is Australia sluggishly following the US pathway to social destruction when the US itself is looking for ways to get off the current train wreck before it hits the cliffs edge?:question:

[Renato1]

I don't think it really is. At the end of the day, Unions are powerful and very good at spreading the wealth. And their party, the ALP takes power every now and then and does a fair amount of redistribution (under Ms.Gillard, it was the raising of the tax-free threshold to $18,000).

And the concept of a living wage has been central to Australian thinking for over a century (that concept seems to have eluded the US) which in turn leads to a high minimum wage. End result - Australia is the richest country in the world on a median basis, because the wealth has been so well spread around.
Cheers,
Renato

[AndrewJ]

We are also one of the most expensive to live in,
so it balances out ( a bit )
Also is that true when net "personal debt" is taken into account?
From what i have understood, the recent rise in housing prices and penchant for putting stuff on the plastic has moved a lot more debt to the private sector vs the Govt.
A lot of people may live in expensive houses, but we dont own em.

Andrew

[Renato1]

Hi Andrew,
Well, everyone keeps saying we're one of the most expensive countries to live in, but I go on vacation to Europe every two years, and I'm darned if I think that it's cheaper to live over there. Yes, it's cheaper in the old eastern bloc countries, but not in the rest of the place. Good value meals in Berlin, but in London and Madrid and Rome I felt I was burning money just to eat. Melbourne is much cheaper.
In places like Italy where they are all mad on designer stuff - there are hardly any discounts like we get over here. They think a sale is 10% off, whereas I think a sale is 60% off.

If one doesn't make the calculation about assets per adult without taking the debt into account, the figure would be meaningless, as the most indebted people would be the most wealthy, and no comparison between countries could be done validly.

The fact that we are the richest country in the world on a median basis becomes pretty self evident when one travels overseas. You run across Australians literally everywhere, far out of all proportion to other nationalities.
Regards,
Renato

[multiweb]

Nope. I think life is pretty damn good down under and buying power second to none. C'mon now... why do you think everybody wants to come and live here? :question:

[Eratosthenes]

I have to disagree on the point of unions having the ALP as a conduit in Canberra. Perhaps in the distant past pre Hawk Keating.

The ALP and the LNP are ideologically indistinguishable with only trivial differences that they parade around to the electorates via the corporate media.
They have the same masters and serve the same globalist banking agenda.

It's a bit like Chomsky said, in the USA "voters have a choice between two business parties" who don't represent their interests.

Currently the USA is trying to dump its trade agreement upon Australia and have half a dozen other nations in our region. And it's done in secret and if signed will mean that corporations, banks and foreign investors can sue for damages and losses against the Aussie tax payer if legislation is introduced which effects their profits. And they seek damages in a corporately set up tribunal which operates outside normal international legal frameworks.

Even the potential losses for making profits in Australia can be litigated in this tribunal. A corporation that merely has the rights to a particular technology or explorations license can claim for damages if laws are introduced in the Australian parliament.

Let's say that the Australian government legislates to ban fracking on the Australian mainland and there is a small foreign company that owns licenses to carry out fracking operations here but they haven't invested in any capital or drilled any bores yet. That company can sue in this biased trade tribunal which will convene in secret to deliberate. The tax pays even if no fracking took place.

Why does the USA impose trade agreements on other countries. It claims to want an open and free trading globe and yet locks in nations such as Mexico and Canada in NAFTA ? Obama is claiming this new trade agreement will involve 43% of the world's markets, involving 7 other nations including Australia. The 7 nations make up about 10% and the U.S.A makes up about 33%, so who do you think this agreement will benefit?

No wonder Buffett is currently eyeing Australia as a nice short term investor market.

If there is a dumber nation in the world today than Australia I would like to know which nation that is.:D

[AndrewJ]

Gday Marc

I agree our lifestyle is very good, and after living in a few OS places, im glad i live here, but that costs.

Re buying power second to none, not so sure there.
ie why are there so many threads complaining about the costs of buying local, why are people using VPNs to download cheaper stuff from OS.

I never said we were the most expensive, just up there.

Andrew

[Eratosthenes]

....In Australia there are currently over 2.5 million people living below the poverty line, which includes over 1 million children.

We are a country that has been economically and geo-politically blessed with riches - including a 3 decade long mining boom, and yet 1 million children live under the poverty line in this country and almost 40% of the people here rely on social welfare in one way or another. WE have debt on state and private/level that shouldnt be that high. About 95% of this national debt is private/corporate debt.

WE dont discuss these issues on a national level, via an honest and open media.

What we are exposed to daily is how many terrorists there are, and how many asylum seekers we can keep away from our borders - a policy which is not only immoral but violates the very international laws that we are signed up to and pretend to uphold.

As a people we need to discuss what sort of values and morals are important to us and how we go about our daily lives and what sort of communal structures are supported and nurtured. Otherwise what sort of clowns are we and what sort of circus are we setting up for our children to live in going forward?:D

[UniPol]

Looks like the IIS TOS 3.1 has been given the flick :shrug: The Mod Squad must have gone on an extended holiday to Mars :hi: Wonder when they will be back from their sojourn :question:

[Renato1]

There are certain odd premises in your discussion.

That the Unions don't have a conduit into the ALP? The unions created the ALP - there probably wouldn't have been a Fedeartion without the ALP - most ALP representatives in Canberra are from the Union movement or associated with it - the Union movement funds the ALP - the Union movement selects most of the ALP candidates.

And I don't think there is anything at all wrong with that - because for starters, I'm still a Unionist (I pay fees). So I don't understand how you can think the ALP is somehow beholden to Big Business as their masters.

As for the US "imposing" free trade agreements - it is more like people pleading with them to please give them those free trade agreements.

I keep being told about American Imperialism and the American Empire by various people. So, I ask them - could you please name for me the imperial possessions of the USA? And all the can come up with is Hawaii, Puerto Rico and Midway island - which just doesn't cut it as far as empires go. I think Australia with Kangaroo Island, Tasmania, Christmas island has bigger and better "imperial" credentials than the USA.
Cheers,
Renato

[LewisM]

It's the surf and the sun.

Well, the surf. Can't remember last time I saw the sun.

We live in a wonderful country burdened with horrendous costs, due to a multitude of factors.

[Renato1]

If you want to quote poverty figures from the I-Want-To-Live-In-A-Socialist-Utopia Australian Council of Social Services, well, that's fine.

I note that for the last forty years ACOSS have always been calling for big taxes to fix this problem.

But I haven't heard them say anything about the issue in this thread - the so-called millionaires who aren't going to live as well as old age pensioners with out depleting their assets.
Regards,
Renato

[multiweb]

I think which ever way you look at it, our "problems" are really insignificant compared to the real issues they face in Europe, US and all over the world. We've got it bloody good here. Good climate, awesome food is plentiful and cheap, people are fat and some are cranky, but hey, they're not hungry. Nothing to complain about :)

[FlashDrive]

...I love my VPN :whistle:

Col.....;)

[Eratosthenes]

what is socialism Renato?

There are many who dont mind socialist welfare when it is applied to corporations and the banking cartels.

Take the fossil sectors in AUstralia for example - they receive about 12 billion dollars per year in tax payer funded rorts and subsidies. And this obscene hand out is given to a mature industry that is blessed with many economies of scale and market advantages (not to mention the fact that it is also over 80% foreign owned)

So when you say "socialism" you need to define it and also outline where it is applied in our society and who benefits from it.

The system is stacked - its rigged.

This is why we have perhaps the biggest corporation in the world EXXON-MOBIL post 73 billion dollars in PROFIT and pay 2% in tax.

You do not what to know what the tax payer in Australia pays to fund the corporate welfare system.

(Pension asset test? Perhaps what is needed is legislation that prohibits corporate welfare hand outs - if the corner family owned Bottle shop is subject to tough love and capitalist discipline, so should the Coles and Woolworths bottle shop chains)

[UniPol]

Honestly, how long do we have to put up with this drivel.

[RB]

We're monitoring, it's civil so far so it's ok with Mike.

;)

[UniPol]

Dear, dear, the old softly, softly approach is it?

[LewisM]

I knew I should have been a palaeontologist... :P

[GeoffW1]

Hi,

I like it. If we can always have a civil and dispassionate discussion there should be little need for placing politics off-limits. Certain other topics, maybe still. Roll on calm debate.

Cheers

[Eratosthenes]

I am not sure the subsidies and perks would trcikle down to the Paleontology department of the Peabody Coal Company - could be worth a career change though and you could still keep your astro gear and cameras:D

(also heard a strong rumor that Paleontologists get a lot of field work...away from city lights)

[Eratosthenes]

how long is a piece of string?

Drivel is good for ya mate;)

[UniPol]

You better take up permanent residence in "The Domain" , Sydney and don't forget to take your crate with you.

[FlashDrive]

How far can a ' dingo ' :lol:

How much can a ' Koala Bear ' :lol:

Col.....:D

[RB]

“Before you criticise a man, walk a mile in his shoes. That way, when you do criticise him, you'll be a mile away and you have his shoes.”

;)

[multiweb]

Kick a$$ response, oh no wait, he's probably too far now :p I'm confused now...

[Eratosthenes]

ok

[Renato1]

You can check Wikipedia to find out what Socialism is. No point in me defining it.

I just saw the woman from ACOSS on the Richo program on Skynews. I had to laugh given what I wrote earlier. She wants higher capital gains taxes, she wants higher superannuation taxes, she wants the family home included in the assets test, and she is all in favour of the new pension asset measures.

Subsidies to fossil fuel companies - you are either talking the nonsense Green and ACF stuff or something more sensible as in this article,
http://www.abc.net.au/news/2014-11-11/coal-oil-and-gas-companies-receive-4-billion-dollar-in-subsidie/5881814

So, if companies spend money on research and marketing to target their customers - then that money is a legitimate tax deduction, No arguments from the Greens and the ACF. But if a company is spending money exploring for fossil fuels, so that it can make profits and pay tax in the future, and it gets a legitimate tax deduction for its exploration in an area that the government considers crucial for the country - then that is considered a subsidy and a rort by the Green crowd. That is nonsensical, as far as I am concerned.

Then there is the diesel fuel rebate which the Greens and ACF say is a subsidy and a rort. The government introduced fuel taxes to build and pay for the upkeep of roads. The resource companies, however, given where they operate have to build and maintain their own roads, and for the most part don't use government provided roads. Plainly it is totally unfair to charge those companies taxes on their fuel to pay for everyone else's roads while they still have to build and maintain their own roads. And so, both Coalition and Labor governments think it fair that they get back the tax component of the fuel that they use on their own roads in the form of a rebate. Exactly how is this a subsidy and a rort?

Most commonly, all these outrages (such as that offered by you) about big companies making big profits and paying little tax relate to people not understanding or deliberately choosing to not understand the difference between Cost and Accrual accounting. So, if a company is building a big project which will make them big profits in the future, by accrual accounting - as required in their annual reports - they have to book a profit of the value of what they have built that year, even though it has generated not a cent of money that year. But by Cost accounting, as generally required by the Tax office, they put down what they really got in terms of money in and money out, and pay tax on their taxable income. So it's not unusual for the Annual report to show a big unrealized profit (since the idea is to give shareholders an idea of the true health of the company) and to show also a smaller taxable profit - since that is the money profit it actually made. And there are numerous other differences between Accrual Accounting, Cost accounting and the accounting required by the tax office (which is not exactly the same as Cost accounting).
Regards,
Renato

[LewisM]

I am grimacing at the thought of walking a mile in either of youse shoes....bacterial and fungal infections out the wazoo...
:sadeyes:

I think this thread has run it's course...in several people's stinky shoes