Revenue = $100 and
Expenses = $50
Your profit = $50
You can then subtract depreciation, with the allowance - set at 6 per cent.
So if RSPT allowance = $3
You are left with $50 - $3 = $47
The $47 is taxed at 40 per cent (the super tax).
So $47 x 0.4 = $18.80 and you are left with $ 28.20
The $28.20 is taxed again at 28 per cent (the company tax).
So $21.20 x 0.28 = $7.90 and you are left with $20.30.
That adds up to about a total tax of about 57 per cent.
This line seems to have a typo.
So $21.20 x 0.28 = $7.90 and you are left with $20.30.
Should be $28.20 x 0.28 = $7.90
Full article here
So who is most likely to cop such tax next?
In the spirit of the government's anti-miner spin and given the enthusiasm the assorted financial services ticket-clippers have shown for Kev's tax tinkering, we'll note that in the decade to 2008, Westpac increased its net profit by $3,193 million but the income tax it paid only increased by $720 million - a demonstration of the two-speed economy that exists between financial services and the rest of the nation and a case crying out for a super tax.
Given that a very large proportion of the big banks' profit is derived from government policy channelling mountains of cash their way, never mind the value of the Commonwealth guaranteeing them, it could be argued that bank profits really belong to all Australians, not just their shareholders. Lifting the banks' tax rate from the present 30 per cent to match the miners' 56 or 57 per cent would make a wonderful contribution to working families.
.....
'Our strategist asked Treasurer Swann a question yesterday on this issue and asked why the tax kicked in when returns exceeded the bond rate rather than the bond rate + an equity risk premium of say 5% (otherwise known as a companies cost of capital). Swann did not understand the question no matter how it was re-phrased - in other words the treasurer of Australia does not know what the cost of capital is for Australian companies. This is economics 101!''
Read full article here
Cheers,
Oracle.