A few years ago, a friend told me about a lurk one of his wealthy business mates was engaged in. They took some of their professional services income, and routed it through a family trust.
Then the trust paid out $30,000 to each of his parents. Because the parents were retired, the trust distributions attracted a low tax rate. The guy then had his parents pay the primary school fees for his two children, and voila! Tax-free private school fees.
This is the kind of lurk that Labor's income-splitting policy is designed to avoid — the use of trusts to capitalise on multiple tax-free thresholds across family members. What Peter Toscan (Letters, February 12) calls a "tax grab" is in fact just putting more fairness into the system. When a regular pay-as-you-go taxpayer can't split their income across family members, why should an affluent professional be able to do it? Our reform does not apply to charitable trusts, farm trusts, disability trusts, unit trusts and deceased estates.
As Associate Professor at University of NSW, Dale Boccabella, has pointed out, "the income tax treatment of trusts is way out of kilter with the tax treatment of other entities and other taxpayers".
In fact, by applying a minimum 30 per cent tax rate to trust distributions to mature-aged beneficiaries, we're simply building on John Howard's changes in 1980, when he raised the tax rate on trust distributions to children.
If we don't close tax loopholes, Australia won't be able to invest in better roads and rail networks. We won't be able to raise literacy and numeracy standards in schools. We won't be able to reduce elective and emergency surgery waiting lists. Do we want Australia to have the biggest tax loopholes in the world, or the best public services? I know which I'd prefer.
Andrew Leigh, shadow assistant treasurer, Canberra
Brad Hinton's letter "Income inconsistencies" (Letters, February 11) contains some interesting thoughts but his final idea – abolishing income tax deductions – needs rethinking.
The Australian income tax is not a tax on income at all but a tax on profit.
The profit is worked out by deducting from the income the costs incurred in earning it. If we abolished deductions, income tax would become seriously unfair. Employees would be largely unaffected (because most of them have few deductions) but businesses would be crushed.
Imagine the effect on a shop owner who was taxed on the $100 earned for selling a widget without receiving deductions for the $50 spent to buy it or for the $20 paid to an employee to sell it.
Greg Pinder, Charnwood
Why policy is unfair
It is disappointing that letters are still coming through with misgivings about my article "Labor is exploiting misunderstandings about franking credits" (canberratimes.com.au, February 7).
Doubts include "the article is flawed because individuals and companies are different entities" and "how can someone who does not pay tax receive a refund?".
If I could just dispel these doubts.
A company pays 30 per cent tax on all profits, whether distributed as dividends or retained. When a company pays dividends to shareholders it becomes individual income for tax purposes.
That is, the company tax is imputed to the shareholders, the imputation effectively rendering the company tax as an investor withholding tax.
That enables the grossed up dividends to then be taxed at the investor's marginal tax rate. The franking credit (or company tax paid and withheld), is then partially returned to the shareholder, depending to what extent their marginal tax rate is less than the company tax rate.
If the marginal tax rate is zero, the franking credit is returned in full. The principle of the imputation system being, therefore, that investors are taxed on company earnings at their marginal tax rate. And clearly, tax has been withheld in respect of a shareholder's dividend, independent of the shareholder's marginal tax rate. They have paid tax.
A taxation system that enables high taxable income investors to utilise excess franking credits while low taxable income investors are unable to fully utilise theirs, is a regressive tax system.
Where is the sense in a system that allows franking credits to reduce the tax payable by some investors, but does not refund those investors who have paid excess tax?
You can't selectively allow some investors to use franking credits and others not. It is unfair and discriminatory.
This is an ill-conceived, inequitable policy proposal by the Labor Party.
Tony Dillon, retired actuary, Melbourne
Protect the elderly
Many years ago we recognised that our children were vulnerable and took steps to protect them. It became mandatory for those involved with them to report any abuse, or suspected abuse.
We are now taking steps to protect those at the other end of the vulnerability scale, our older people.
As we become more co-ordinated in states and territories in defining abuse, isn't it time we took a similar path with older people, making it mandatory for those involved with them to have the same reporting requirements?
This would put the onus on those involved with this group to take action, both in nursing homes and in the community, thus giving older people a level of protection not currently available.
We would then be less likely to see a repetition of the events seen on the Four Corners program last year.
Just a reminder that older people form an increasing part of society, and voters.
Audrey Guy, Ngunnawal
Shortage of care places
Residential aged care [in the ACT and elsewhere] is a Commonwealth government responsibility, unless the ACT government decides to become an aged care provider.
Aged care providers, both not for profit and for profit, apply to the Commonwealth government for approval to provide aged care and for funding.
Once that is approved the provider seeks land from the ACT government. The land is provided as a last step in the approval process.
The current lack of aged care places is caused by either a lack of willingness of providers to take up providing new places, lack of staff to do so due to low wages or insufficient funding provided by the government to enable new places to be provided.
It would be good to know which. Either way, we need to ask all candidates standing in the ACT for the federal election what is their plan, if elected, to address this shortage of care places.
I haven't heard of any policies that would stop this shortage of places from any of the major parties or other candidates.
Gina Pinkas, Aranda
Peek into basin plans
I waited 18 months for a response to a Freedom of Information request regarding the planning for apartments in West Basin, only to receive more than 100 pages of mostly redacted and mostly meaningless correspondence from the City Renewal Authority.
But some light cracks did appear. For example, the calculation that the ACT government can obtain 232,000 square metres of saleable commercial and residential floorspace from West Basin if they fill in part of Lake Burley Griffin to create six city blocks of development sites.
The calculations, which were buried deep in the ACT response to the FOI, were for almost 2000 apartments in three- and seven-storey buildings.
About 20 per cent of the gross floor area also would be commercial.
Based on current sales in upscale developments in Canberra this could be worth $2.5 billion in sales, plus rates and land taxes of course.
But to achieve this, 2.8hectares of Lake Burley Griffin has to be filled in, and 6000 square metres will have apartments built on top of the existing lake bed.
What the documents reveal is that the West Basin development really is about the money that can be made from apartment sales. A major side benefit of building a public promenade over the existing lakebed is that it does, of course, make more room for the apartment estate behind.
As a frequent user of this part of West Basin, which is on my doorstep, I would love to see some sympathetic development which provides a substantial public benefit befitting the national prominence of this site, while retaining the landscape values inherent in Menzies' lake, but not at the expense of creating a new urban heat sink over six city blocks.
Mike Lawson, New Acton
All hail hospital staff
My wife and I support the views expressed by H. R and J.Zimmermann (Letters, February 9) in relation to the high standard of care and treatment received at Canberra Hospital.
I owe my life to the skill of the surgical team and the follow up treatment I received during a stay of almost two weeks.
On New Year's Eve, I required ambulance transport to Canberra Hospital after suffering severe abdominal pains and cramps. I was immediately admitted to the Emergency Unit where I was given pain relief medication.
A series of tests established that I had suffered a bowel blockage.
I subsequently underwent major surgery after which I was transferred to Ward 10A.
I was most impressed with the professionalism of the doctors, nurses and ancillary staff during a recuperation which was at times stressful but was eased considerably by their compassion and cheerful attitude despite the long hours they were required to work and, as I understand, the reduced staffing during the holiday period.
I find it rather sad that most of the recent publicity which Canberra Hospital has received has been on the failings of management with respect to bullying and other problems which, while extremely serious, do not recognise the dedication and professionalism of the clinical staff.
In 2014 my wife was diagnosed with ovarian cancer requiring chemotherapy as an outpatient in the oncology unit.
At that time we also were impressed with the professionalism of the clinical staff and can report that subsequent regular tests have not shown recurrence of any cancer.
We consider ourselves very fortunate to live in Canberra with access to what we would rank as world-class health services.
Alan Burdon, Mawson
Governments are elected to develop and prosecute policies which advance the interests of Australia. This means focusing on national issues like climate change, migration, energy provision and pricing, establishing a fair and efficient taxation system, resolving water usage in the major river systems and so on.
What has the Morrison government actually done? Certainly no progress has been made on any of these national issues.
In fact they closed parliament early on two occasions to actually prevent discussions about several.
Instead, we now see Morrison funding a second bus tour around marginal electorates, promising tax cuts. These are in reality voter bribes rather than a serious examination of the tax system. We also see a steady loss of senior ministers who hold on to their portfolios, and to their ministerial privileges, though they are to retire at the next election. No further action on the national issues can now be expected from them.
We have a government which is spending its time and energy on electioneering rather than actually governing.
The honest approach would be to acknowledge that they are unable to further their policy agenda and call an election to enable voters to cast their judgment on what has really been achieved under Abbott, Turnbull and Morrison.
Chris Aulich, Giralang
Maintain public benefit
Large areas of public land in Griffith, Lyons and Narrabundah are about to be sold to developers for high-density residential housing ("ACT government to auction former public housing blocks", canberratimes.com.au February6 ).
No mention is made of any parts of these blocks being given over to innovative social and affordable housing projects, despite the ACT government's relatively new Housing Strategy including a new target of setting aside 15 per cent of all government land releases for public, community and affordable housing, including infill development in urban areas.
Nor is there any mention of an expected inclusion of accessible green spaces or community facilities. Yet the population is growing around these areas.
Surely it is time any permanent handover of public land also includes retention of a sizeable component as an easily accessible land bank for public use and benefit.
Community, cultural and recreational spaces and facilities cannot be left up to chance.
Sue Dyer, Downer
TO THE POINT
NOTHING TO FEAR
One of the great mysteries in life is how the conservative side of politics is able to use unsubstantiated fear to frighten their flock when an election is imminent. With the next election just around the corner the fear campaign is being unleashed on their died in the wool followers irrespective of how fanciful their claims are.
D. J. Fraser, Currumbin, Qld
Morrison's running so many scare campaigns that he may start appearing at campaign events dressed in a ghost costume.
T. Puckett, Ashgrove, Qld
LIFE IN THE COUNTRY
We can assume, from Smoky Dawson's Breaking in Brumbies, that breaking in wild brumbies is a core cultural activity for country folk. Obviously this essential thread in the rich tapestry of country life – with associated material culture such as fixing old saddles and ropes – must not be lost and therefore there have to be some wild brumbies.
S. Davey, Torrens
DO YOUR JOBS
Here's a way to save millions of dollars on royal commissions. Get the relevant government ministers to do the bloody jobs they are paid for.
Tom Lindsay, Monash
PM'S SHALLOW BOASTS
Scott Morrison clearly supports mortgage brokers despite their rubbishing by the banking royal commission. Fits with his recent shallow speech at the Press Club, in which he boasted of his spending on flood relief, for heaven's sake; and putting "the government" before doctors on the health of off-shore detainees. A lot of the time Bill Shorten is no better.
Jack Kershaw, Kambah
HEY BIG SPENDER
Great address by our big spending prime minister to the National Press Club. It had all the ingredients. Pity about the missing great wall.
John Rodriguez, Florey
COMMONSENSE A WINNER
The release of Hakeem al-Araibi from a Thai prison is welcome news. It is a victory of community pressure and if I may add, commonsense. The request of extradition by the Bahrain government should have been rejected by Thailand out of hand in the first place.
Sankar Kumar Chatterjee, Evatt
Whatever happens in Parliament, Prime Minister Morrison's public statement that Phelps's bill will undermine national security and encourage people smugglers is absolute humbug.
Trevor Wilson, Chifley
CASH FOR LEFT AND RIGHT
Unions should give money to conservative political parties as well, since some union members must surely be conservative.
Rod Matthews, Melbourne, Vic
Email: firstname.lastname@example.org. Send from the message ﬁeld, not as an attached ﬁle. Fax: 6280 2282. Mail: Letters to the Editor, The Canberra Times, PO Box 7155, Canberra Mail Centre, ACT 2610.
Keep your letter to 250 or fewer words. References to Canberra Times reports should include date and page number. Letters may be edited. Provide phone number and full home address (suburb only published).