mick commins

Wannabe Brewer

[christopher joye @cjoye]

Huge day: S&P500 down 2.4%, Nasdaq down 3.8%, NFP big beat (172k jobs added vs 88k expected with upward revision by 93k to prior two months) - confirming Coolabah's 12mth view that the Fed needs to hike by 50-75bps immediately and that the US economy is as strong as ten men. US unemployment is incredibly low at 4.3%. This is being driven by AI capex/inflation/jobs growth, Trump's fiscal stimulus, excessively low US rates via the Fed, and reshoring of supply chains. Last year bond markets were stupidly pricing in 100bps of Fed cuts - which we called out repeatedly - they are now pricing in a full hike from the Fed this year. We have consistently argued they need to price in hikes over 2026/27/28. In US government bonds, 2-year yields up 12bps and 10-year yields up 7bps. Bitcoin down even further to US$60k - we have long argued BTC is a zero... Higher US rates will be very bad for US private credit...

[christopher joye @cjoye]

From a reader...

Dear Sir

Under current legislation, all trusts (not just discretionary trusts) are taxed on accumulated income to which no beneficiary is presently entitled. Such income tax is assessed to the trustee under section 99A of the Income Tax Assessment Act, 1936 (“the Act”). The tax rate assessed to the trustee is at the highest marginal rate, plus Medicare. That imposition amounts to 47% of the accumulated income. The Commissioner retains a discretion to assess such income under section 99 of the Act, (which applies personal rates of taxation) but that discretion is exercised sparingly and only in limited cases, such as deceased estates and bankruptcies.

Again, under current legislation, a share of trust income – to which a minor or a non-resident beneficiary is presently entitled to – is assessed to the trustee under section 98 of the Act and assessed again to the beneficiary with a full credit given to the beneficiary for the tax assessed to the trustee.

The 2026 Federal Budget proposals change the concept of the taxation of beneficiaries of trust estates that has applied since the Federal Government introduced income tax. That is done by treating the trustee as a separate taxpayer on income to which beneficiaries of a discretionary trust are presently entitled to. Now, a beneficiary is said to be presently entitled only on the after-tax net income of a discretionary trust estate. Any credit for tax paid by the trustee, under these new proposals:

is not fully credited to the beneficiary if it produces a cash tax refund to the beneficiary, and

in the case of a corporate beneficiary the tax paid by the trustee is not credited at all.

With all due respect to Treasury officials and the Treasurer, who devised this new arrangement, there is a complete misconception on who is being assessed on income to which a beneficiary is presently entitled to. Unlike companies, where the taxable income of a company is legally and beneficially derived by the company, in the case of trusts, including discretionary trusts, any net income of a trust estate to which a beneficiary is presently entitled to is income of the beneficiary, not the trustee. By taxing the trustee on income to which the trustee is not beneficially entitled to, and not passing the tax paid by the trustee to the beneficiary who is entitled to that income from the trust estate is not a tax, but – in my opinion – an illegal penal confiscation. Allow me to explain:

The Core Problem:
When a trustee is assessed on income to which a beneficiary is already beneficially entitled, without any credit (or a full credit) being passed to the beneficiary, two (2) serious legal problems arise with regard to the Constitutional validity of the legislation purporting to assess:
1. Section 51(ii) — Is it a Valid "Tax" or a Penalty/Forfeiture?

The High Court in Matthews v Chicory Marketing Board (Vic) (1938) 60 CLR 263 confirmed that a tax is "a compulsory exaction of money by a public authority for public purposes, enforceable by law, and... not a payment for services rendered." A "tax" – in the constitutional sense – requires it to be imposed for revenue-raising purposes, not as a punishment or confiscation. See Woodhams v Deputy Commissioner of Taxation of the Commonwealth of Australia (1997) VSC 59 on what constitutes a penalty (and not a tax).

The key issue is whether imposing the full tax burden on a trustee — without any (full) credit mechanism for the beneficial owner — crosses the line from taxation into something more like a forfeiture or a penalty. In these circumstances, I submit the trustee’s right to exoneration and indemnity are in jeopardy and a beneficiary would be entitled to restrain the trustee from using trust funds to discharge a personal obligation, that is not a fiduciary obligation, even if the obligation was imposed by flawed legislation.

2. Section 51(xxxi) — Acquisition on Just Terms

If the Commonwealth imposes a liability on a trustee with respect to property or income beneficially owned by another, and the trustee cannot recover that tax from the trust estate or beneficiary through the tax legislation itself or under the terms of the relevant trust deed, this could constitute an acquisition of property (money) from the trustee without just terms, contrary to s 51(xxxi) of the Commonwealth Constitution.

The High Court has ruled in Minister of State for the Army v Dalziel (1944) 68 CLR 261 and most recently in Government of the Russian Federation v Commonwealth of Australia [2025] HCA 44 that section 51(xxxi) of the Constitution will protect a party whose property is assumed by the Commonwealth without compensation. The term “property” is widely characterised to give the affected party full constitutional protection.

In my view, the proposed arrangements don’t fall into the unintended consequences camp, as is often claimed when some controversy is later discovered after a proper and considered analysis. In this case, the proposed arrangements are fundamental misconceptions, that fail to recognise basic constitutional protections.

[christopher joye @cjoye]

The real equity issue in this budget is that Labor are telling us they need to borrow $267 billion of extra debt over the next four years to pay for their out-of-control spending. That is almost identical to the total value of the headline budget deficits that Labor say they will produce between now and 2029-30.

The fairness issue is that Labor is spending hundreds of billions of dollars borrowed from future generations to buy votes in the present. If it kept government spending as a share of the economy, or GDP, at 2007-08 levels, when Australia was doing very well indeed, the budget would swing from a projected $64 billion headline deficit to a surplus of about $23 billion. Rather than borrowing from future taxpayers, we would be reducing their debt burden.

It is un-Australian to overturn all the rules of the economic and investment game — adversely affecting millions of households and businesses in the process— with zero debate, discussion or notice. The accounting and legal costs alone will impose a small fortune on families and firms. How Labor thought they could get away with this daylight robbery is unclear. It must have something to do with dud polling…

https://t.co/tqOqGI6MEi

[mick commins @MickCommins]

@IncrediblyBozza @ClareONeilMP The Gov’t keeps hiding behind “modelling” — yet look at Snowy 2.0 and the National Disability Insurance Scheme. Massive cost blowouts, delays and forecasts nowhere near reality. At some point “modelling” stops being planning and starts being guesswork.

[Arrow Investor @ArrowInvestor]

How dumb is this tool.

Chalmers asked why are they changing the tax on shares not just property? He says because shares have been under compensated for the past 2 decades.

So he will now compensate them by increasing tax on them?

[Dave Sharma @DaveSharma]

Startups, small businesses and founders — please welcome your newest shareholder.

They’ve invested nothing in your business, but have taken 47% of your upside.

[mick commins @MickCommins]

https://t.co/RVKnhue4iM

[Scott Phillips @TMFScottP]

@Jackat19 Correct.

The issue is general aggregate/average inflation, and that's influenced by overall general demand.

A Budget deficit is, as even government economists will tell you, stimulatory.

They're pushing prices up. It's just maths.

[mick commins @MickCommins]

Imagine claiming to have stopped eight plus wars—then hinting at war because you didn’t get a Nobel Peace Prize. That’s not just irony; it’s a masterclass in conditional morality.

[Today In History @historigins]

That time Adam Sandler and Jennifer Aniston were shocked by the size of an Australian reporter

[christopher joye @cjoye]

Given the response, I am lifting my column out of the paywall… 1/2

This evil is driven by envy

In the context of the Bondi tragedy, let me start by saying that Australia is not the country I once knew. The Australia I remember during my youth bears little resemblance to the nation that now exists.
I am not sure you can even describe us as a nation – we are more like a heterogeneous agglomeration of vested and frequently colliding interests.
I think there is a fair case to be made that we have traded away our soul. There is no cohesive national identity. There was, once upon a time, a demonstrably visible national character. We knew what it was to be Australian.
We loved our country. Our flag. Our history. Our entrepreneurial and iconoclastic verve. Our disdain of centralised authority. Our willingness to give every person a fair go. Our characteristically intense competitive streak. And our eccentric and larrikin heroes. From Don Bradman to Kerry Packer.
But today it is difficult to discern a unifying crusade or common community. There are, to be sure, redoubts here and there. But across this sunburnt land we have emerged as a nation divided.
Many will claim that their vision of Australia best represents a universal mission. That they know the true Australia. And that there is a silent majority that agrees with them.
But I do not see it. Right now, Australia is a battlefield bloodied by conflicting interests, which this column belaboured seven days ago.
The lucky country has become the lazy land, spoilt by endless resource riches and the seemingly bottomless pit of public money that this has bestowed.
Our wealth has been relentlessly wasted on pet political projects that serve only to perpetuate the reign of those in power. Financially corrupt the voters to win the next election and then rinse and repeat. Until the money runs out.
Australia has become obsessed with the public sector providing answers to its problems. Obsessed with centralised control. Remember the world’s worst lockdowns? Obsessed with censorship: eviscerate parental responsibilities and ban children from access to the internet.
Obsessed with revisionism. We don't even give our kids an opportunity to learn from our historical wins and losses. It is airbrushed in the name of trying to create an alternative political reality.
Obsessed with cutting down tall poppies. That is, we don't just want equality of opportunity, which is a crucial ideal—we increasingly seek equality of outcomes.
A huge amount of the secular racial prejudice projected against Judaism by other creeds and cultures can be attributed to the fact that the Jews have been consistently one of the most successful communities in the countries they have lived in.
The intelligence, innovation, and unmatched professional intensity that Judaism nurtures has been a persistent source of envy and polarisation for as long as the faith has existed.
Whatever academic pursuit or vocation you inspect, you will find Jews dominating. This is true by design because the community defines itself through a purity of purpose that advocates intellectual and professional excellence.
It is a self-selection process that attracts and spawns world-class talent. Yet in a society where you are constantly seeking to manipulate and sate the masses, the ever-tempting reflex is to focus on persecuting the difficult-to-understand anomalies. The exceptions. Those that rank in the 99th percentile. Accordingly, we fall back on handicapping success.
We want to regress everyone back to the mean to create an egalitarian world. The Jews are to blame. It’s the "great vampire squid wrapped around the face of humanity" as Goldman Sachs was once described. Of course, Goldman was founded as a Jewish partnership. Cont’d 1/2 https://t.co/7jgwpw42SM

[Fastbreak Hoops @FastbreakHoops5]

Jordan vs. Shaq pregame in 1996.

[Fastbreak Hoops @FastbreakHoops5]

Michael Jordan hitting his head on the backboard in a game against Duke 😮

[mick commins @MickCommins]

Not only are Mexicans bringing their cattle-they might be bringing their dope

[Scott Phillips @TMFScottP]

See!

it wasn't the tariffs after all. It was those damned migrants and their infected cattle.

(/s)

Tell me again about this bloke's genius?

[mick commins @MickCommins]

Dalmeny whale watching lookout 8/11/25

[mick commins @MickCommins]

A great year for the Roses

[NBA @NBA]

Josh Giddey becomes the 2nd player in @chicagobulls franchise history to record back-to-back triple-doubles!

🔴 29 PTS
🔴 15 REB
🔴 12 AST

The other? Michael Jordan.

The Bulls move to 6-1 on the season 🔥

[mick commins @MickCommins]

@TMFScottP @AlboMP @JEChalmers Do we need wealth fund? Does Norway/Ireand have superannuation fund. Any sovereign wealth fund funded is controlled by the government. And can I say they are not very good at spending it wisely. At least Super we get a say as to how it is spent...

[mick commins @MickCommins]

A quick stop at Corowa Distilling Co. for coffee and breakfast. Never disappoints!