Friday, March 28, 2008
Graduation photos
If you're looking for graduation photos, scroll down after the article about Easter.
Why Easter is like Company Tax
When I say the word “imputation”, what do you think of? ‘Franking credits’ or ‘Jesus’? Well, it can be both!
The company tax system passes on ‘franking credits’ to its shareholders. Shareholders are effectively given an income tax credit for the income tax paid by the company in which they are a shareholder. Let’s say Company XYZ makes $100 profit. It pays $30 company tax (company tax rate = 30%), leaving $70 profit after tax.
Imagine now that Company XYZ has one shareholder, Tim. Company XYZ pays Tim a $70 dividend. Attached to that dividend will be a $30 franking credit. Some people call it an imputation credit. In Tim’s individual tax return, he’ll include the $70 dividend as assessable income, AND the $30 franking credit as assessable income. That totals $100.
Assume that Tim has lots of other money coming in and that his marginal tax rate is 30%. The tax on his dividend and credit is $30. Since Tim has a franking credit $30, it will reduce the tax payable on the dividend back to $0. That is, the company has effectively paid Tim’s tax bill on his dividend.
To put it another way, the tax the company has already paid through the company tax system has been IMPUTED to Tim instead. That is, the company tax has been CREDITED to Tim. That’s why it’s called the imputation system.
In some ways, the company is really the shareholder’s representative when it comes to paying tax, despite the fact of it being a separate legal entity. The company tax system merely brings forward a tax payment to Consolidated Revenue rather than waiting for a shareholder to pay the tax when they lodge a tax return.
Okay, so what does this all have to do with Easter and Jesus and stuff?
Firstly, a quote from the Bible:
2 Corinthians 5:21 (NIV)
“God made him (i.e. Jesus) who had no sin to be sin for us, so that in him we might become the righteousness of God.”
When Jesus died on the cross, he was actually acting as our substitute and representative. On the cross, he dealt with the problem of our sin (i.e. our rejection of and rebellion against God). That is, he paid the penalty of our sin (i.e. death and God-forsakenness). In other words, our debt is transferred to him, and he pays it.
The second part of that Bible quote is about us becoming the “righteousness of God”. What this means is that we have our previously very bad relationship (remember the rebellion?) restored. That is, because of Jesus’ death on the cross, we can have a right relationship with God. The presumption is that Jesus was sinless and already had a right relationship with God; “him who had no sin”.
This status of a right relationship (i.e. ‘righteousness’) is credited to us, or imputed to us. That is, we have the status of being righteous, when we well know that we are far from righteous. Everyone has rebelled against God in some way. (Romans 3:9-20)
Company Tax = Easter
In many ways, the company tax imputation systems provides a useful illustration to explain some key points about Easter and the meaning of Jesus’ death on the cross. Those who don’t pay the liability are treated as though they have paid it. This is only possible because someone else has paid it on their behalf.
Company Tax ≠Easter
There’s one important thing that company tax won’t tell you: Jesus didn’t stay dead. The big idea behind Easter is that Jesus rose again (i.e. the resurrection). Do you really think we’d have a 4 day long weekend in honour of some 33 year old ‘moral teacher’ that died and stayed dead? If we did, we'd never go to work.
The company tax system passes on ‘franking credits’ to its shareholders. Shareholders are effectively given an income tax credit for the income tax paid by the company in which they are a shareholder. Let’s say Company XYZ makes $100 profit. It pays $30 company tax (company tax rate = 30%), leaving $70 profit after tax.
Imagine now that Company XYZ has one shareholder, Tim. Company XYZ pays Tim a $70 dividend. Attached to that dividend will be a $30 franking credit. Some people call it an imputation credit. In Tim’s individual tax return, he’ll include the $70 dividend as assessable income, AND the $30 franking credit as assessable income. That totals $100.
Assume that Tim has lots of other money coming in and that his marginal tax rate is 30%. The tax on his dividend and credit is $30. Since Tim has a franking credit $30, it will reduce the tax payable on the dividend back to $0. That is, the company has effectively paid Tim’s tax bill on his dividend.
To put it another way, the tax the company has already paid through the company tax system has been IMPUTED to Tim instead. That is, the company tax has been CREDITED to Tim. That’s why it’s called the imputation system.
In some ways, the company is really the shareholder’s representative when it comes to paying tax, despite the fact of it being a separate legal entity. The company tax system merely brings forward a tax payment to Consolidated Revenue rather than waiting for a shareholder to pay the tax when they lodge a tax return.
Okay, so what does this all have to do with Easter and Jesus and stuff?
Firstly, a quote from the Bible:
2 Corinthians 5:21 (NIV)
“God made him (i.e. Jesus) who had no sin to be sin for us, so that in him we might become the righteousness of God.”
When Jesus died on the cross, he was actually acting as our substitute and representative. On the cross, he dealt with the problem of our sin (i.e. our rejection of and rebellion against God). That is, he paid the penalty of our sin (i.e. death and God-forsakenness). In other words, our debt is transferred to him, and he pays it.
The second part of that Bible quote is about us becoming the “righteousness of God”. What this means is that we have our previously very bad relationship (remember the rebellion?) restored. That is, because of Jesus’ death on the cross, we can have a right relationship with God. The presumption is that Jesus was sinless and already had a right relationship with God; “him who had no sin”.
This status of a right relationship (i.e. ‘righteousness’) is credited to us, or imputed to us. That is, we have the status of being righteous, when we well know that we are far from righteous. Everyone has rebelled against God in some way. (Romans 3:9-20)
Company Tax = Easter
In many ways, the company tax imputation systems provides a useful illustration to explain some key points about Easter and the meaning of Jesus’ death on the cross. Those who don’t pay the liability are treated as though they have paid it. This is only possible because someone else has paid it on their behalf.
Company Tax ≠Easter
There’s one important thing that company tax won’t tell you: Jesus didn’t stay dead. The big idea behind Easter is that Jesus rose again (i.e. the resurrection). Do you really think we’d have a 4 day long weekend in honour of some 33 year old ‘moral teacher’ that died and stayed dead? If we did, we'd never go to work.
Thursday, March 27, 2008
They grow up so quickly....
*sniffles*
Today's grads and cadets who have finished their respective development programs. Special Guest: The Commish.
The shot with five people is the cadets with the Commish.
Apologies for the graininess. I turned off the flash and the camera automatically cranks up the ISO, hence the excessive digital noise.
I used Picasa to tidy it up a bit.
I HAVE REMOVED THESE PHOTOS. IF YOU WANT A COPY, EMAIL ME.
Today's grads and cadets who have finished their respective development programs. Special Guest: The Commish.
The shot with five people is the cadets with the Commish.
Apologies for the graininess. I turned off the flash and the camera automatically cranks up the ISO, hence the excessive digital noise.
I used Picasa to tidy it up a bit.
I HAVE REMOVED THESE PHOTOS. IF YOU WANT A COPY, EMAIL ME.
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