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Income Tax 101 brought to you by Mr Joyce (the other one)

By Terence Mills

Alan Joyce, CEO of Qantas and not the partner of Barnaby Joyce, gave us a 101 lesson in taxation and basic economics this morning.

I’m still trying to get my head around it but the gist of it is that if in your daily endeavours you can ensure that your expenditure exceeds your income, you will pay no tax: everybody understands that, Mr Joyce helpfully pointed out, and who needs schools and hospitals anyway? Even better, you can carry forward any losses into future years to minimise tax obligations for those years.

My partner – my real partner, that is, not the odd arrangements that the other Mr Joyce has – was listening closely to this and instantly pointed out the error of my ways. You do realize, she admonished, that we have been paying tax from our first dollar earned under the Pay as You Go tax system and, despite our family enterprise not making a surplus of income over expenditure, we are still pay tax, something that would alarm Mr Joyce (both of them probably).

So, as my life partner pointed out, we were paying 37 cents in the dollar tax on a losing family enterprise whereas, if we were to transition into a company our tax rate would go down and, even better than that, if we could deliver a loss on our family budget, we could avoid paying any tax at all and we could probably also claim depreciation on the ancient dog that shares our woes. But, I asked innocently, how do we achieve this nirvana that the Joyce’s and that nice Mr Morrison point to? You just keep spending until you are in deficit, silly she pointed out.

Mr Joyce – the one who is not bonking present or past staff members – as far as we know because it’s all personal innit? – did confuse both of us, despite the fact that we are now directors of this dodgy family venture, when he explained why his salary had increased massively while his employees were rewarded either with redundancy or zilch and they still had to lift their productivity. As Mr Joyce patiently explained to Fran Kelly, his remuneration rocketed to $25 million because the Qantas share price increased under his stewardship and the profitability of the company improved significantly but he emphasised not sufficiently to deliver a taxable income or any corporate income tax obligations: and that folks is why companies need a cut in corporate tax rates, he told us.

I don’t think I trust any of the Mr Joyce’s – but henceforth I will be known as managing director of Terry2 Inc.

9 comments

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  1. Ricardo29

    Well said, Terry2, I will be having the discussion tonight with my long term partner, aka wife, and not in either of the Joyce senses, about how we can get onto this tax free status. I thought I might set myself up as a gas exploration company, apparently I can get 19.5% tax offsets per annum for any exploration, and then can continue to offset that against any future losses I might sustain, even unto the seventh generation. This, I understand, is why would-be frackers in the NT want to explore. They don’t actually need to find and pump the gas, just the exploration alone keeps them profits free, and therefore taxless, for quite a long time. Anticipating that a gutless Labor Government will approve Fracking, I will register as an explorer tomorrow. Of course the fact that I am over 70, and have stopped working (sorry Mal, Scotty) means I don’t have a lot of taxes to offset but, hey, every little helps and besides, when those company tax benefits come in, I will be even better off. Bugger the aged pension, I confidently expect the Government will be paying me the sort of money they gave Foxtel. Whoopee.

  2. jimhaz

    [the gist of it is that if in your daily endeavours you can ensure that your expenditure exceeds your income, you will pay no tax]

    As per Alan Bond and Christopher Skase (and the other famous criminal, Trump) – borrow borrow so that interest payments as expenses cover any tax that would have to be paid.

  3. Andrew Smith

    May also indicate that QANTAS has taken a bad pasting over some previous financial years with losses that can be carried over to future years?

    It does not excuse any corporate entity that may or may not game the tax system; it does allow smaller companies to survive into medium long term after commencing operations e.g. (re)investing for the future or getting through bad times.

    Apparently QANTAS have not been investing in new aircraft versus paying dividends:

    ‘Qantas Airways has put off buying new aircraft for too long and could be speeding towards a spending cliff as its fleet ages, according to S&P Global Ratings. The airline has run up record profits in the past two years after successfully pulling off a turnaround plan following its disastrous $2.8 billion loss in 2014.’

    https://www.brisbanetimes.com.au/business/companies/qantas-could-be-flying-towards-fleet-renewal-spending-cliff-says-s-and-p-20180215-p4z0gd.html

  4. Wam

    if you have no power to claim deductions you pay tax so remove the irish prick’s deductions. Make certain his gift of shares are not franked and he pays capital gains tax.
    Instead of cut just raise the tax free thresh hold to $22000 and give everybody a couple of hundred cash to splash???

  5. Matters Not

    Listened to the Qantas Joyce this morning while he took Fran Kelly on an extensive Gish Gallop. He came preloaded and poor Fran simply drowned. He had a dream run. Presumably the ABC, in particular Radio National, will bill Joyce for the free advertising of his clear ideological argument(s).

    Is Joyce a jewel citizen? Or does he simply get paid that way?

  6. Ria Young

    How about if families paid a tax on savings, as opposed to income, which is what companies do. They pay on taxable profit (after all sorts of subsidies and deductions not available to domestic entities). Then, if we ger into debt we can claim that against future earnings. Families are in the business of rearing future generations of workers.

  7. ERIC L WATKINSON

    Alan, Barnaby and William(Lord Haw Haw), I am starting to wonder about people with this family name, though I suppose there was James as a slight offset

  8. Matters Not

    Just for the record, Joyce

    has seen his total salary close to double from $12.9 million in 2016 to $24.6 million last year thanks to a huge jump in the value of shares provided as part of a bonus scheme.

    A doubling of his effective salary from $12.9 million in 2016 to $24.6 million last year. And he is leading the charge to lower the tax rate. Worse still, some people actually buy that crap.

    And many do because they seriously entertain the notion that because if one other can do it, then so can I.

    EMMA ALBERICI. There’s no case for a corporate tax cut when one in five of Australia’s top companies don’t pay it.

  9. OPPOSE THE MAJOR PARTIES

    Ricardo29. If you intend to be a mining corporation then there is an even better rort you can exploit that is a special all Australian rort. So by exploiting it you will be dinky di as well as save big dollars. This special aussie rort is the ‘no liability company’ developed in Australia under Australian law specially for mining companies. That means none of the share holders or even the corporation itself can sustain any liability to creditors such as investors or suppliers in the event the business goes belly up. The trick is to raise a bucket load from investors, order all your gear and materials on the tick, pay yourself a fortune, find nothing by your exploration endeavors, go broke, pay no one what you owe them and head to the Caymens for that well deserved holiday.You won’t owe anything to anyone and no one can get anything out of you because you are a special no liability aussie mining company. Two criteria need to be met under these little aussie rort marvels:1. needs to be a mining company and 2. need a geologist on the board. Better get back to uni for that geology degree.
    https://en.wikipedia.org/wiki/No_liability

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