My take is that the Government sneakily gains a large benefit, but still looks like the ‘good guy’ by reducing the tax rate for small business. The government will in fact profit substantially when retained earnings, previously taxed at a higher rate, will be paid with the lower small business tax franking credit rate. This makes the ultimate taxpayer ‘double up’ on the reduction in the rate of tax on the retained profits they were previously taxed at the higher rate.
I have a confession to make. Sometime I do sneaky things too… I make my kids eat meals where I hide veggies. Or make them do a chore and pretend it is a fun game. Or I tell them something that isn’t totally correct but it works in my favour.
My problem is my five year old, who must take after her dad as she is quite switched on (don’t tell him I said that), is starting to call me on some of these things. I wonder how long it will take for the Australian taxpayer to realise the higher cost they are actually incurring under the ATO’s new policy.
So now who reaps the benefits and who pays the costs?