Thread by @SensCommunPeu

@Linda36993618 @Kosmic_Quokka @Espy1aj71 @TimWilsonMP 1/ Read the tweets I made. I will explain. If you are a tradie & do a job, client pays $1000 into your bank account for that business transaction. Tax has to be paid. At what rate? A company rate (30%) or your personal rate? Read on.

@Linda36993618 @Kosmic_Quokka @Espy1aj71 @TimWilsonMP 2/ let’s pretend the bank can pay tax on YOUR MONEY on your behalf, direct to tax office, at company rates. 30%
You would get 700. Not 1000. ATO gets 300. BUT when you do your tax return you MUST record $1000 income (not just the after tax 700 you got paid).

@Linda36993618 @Kosmic_Quokka @Espy1aj71 @TimWilsonMP 3/ now if your personal tax rate is 50% you would owe the ATO $500. You have already paid $300 (the franked Credit) But still owe the ATO another $200. So you would now pay $200 to the ATO to meet your $500 tax obligation. However what if your personal rate was 19%? Read on

@Linda36993618 @Kosmic_Quokka @Espy1aj71 @TimWilsonMP 4/ if your rate is 19% you obligation to the ATO was only $190. You have already paid $300 via the company who paid the ATO $300 on your behalf already. So that means you overpaid your tax. The ATO owes you $110 So you get a refund of $110. All fair and correct. Read on

@Linda36993618 @Kosmic_Quokka @Espy1aj71 @TimWilsonMP 5/ how do you prove what was paid by the company? You get a notice: -
- Dividend $1000
- Franked Credit (prepaid tax) $300
- Balance paid $700
That’s how the ATO works out if you have more tax to pay, or are entitled to a refund. ITS NOT A RORT.

@Linda36993618 @Kosmic_Quokka @Espy1aj71 @TimWilsonMP For dick smith to get $500k franked credits means the company has ALREADY PAID 500k in tax to the ATO on Dicks behalf. ATO happy coz they have the money quick. Small matter to adjust to Dicks personal income bracket on personal return. NOT A RORT. Correct tax is still paid.

@Linda36993618 @Kosmic_Quokka @Espy1aj71 @TimWilsonMP @threadreaderapp unroll this please mate