Franking credits - gone?

Discussion in 'Sharemarket News & Market Analysis' started by Alex McDonald, 13th Mar, 2018.

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  1. Angel

    Angel Well-Known Member

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  2. @FruitCake@

    @FruitCake@ Well-Known Member

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    The point I was trying to make is that if your assets generated a total income that takes you below the marginal tax rate, you will be worse off and probably better off earning the same income through a rental property or as a wage.

    Overall I’m just trying to say that Shorten is just outright distorting the facts to make it seem like he’s for “the battler” when he’s not.
     
  3. Francesco

    Francesco Well-Known Member

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    Labor's proposal covers the low-medium income earners and retirees to produce savings touted as $59b over 10 years. If it were just 200,000 normal SMSF retirees affected with average imputation credit refund of $2000 (say), the savings would only be $400m per year. The big bulk of savings from the $5.9b per year would be coming from the pension funds which are managed on behalf of ordinary workers and savers.

    I think many observers have come to the conclusion that the savings proposal rolls back the 'no double tax' principle higher than the personal marginal tax. The savings will come from the workers and especially the lower income strata with marginal tax rate lower than 30%.
     
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  4. Swuzz

    Swuzz Well-Known Member

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    Hopefully they'll end up midifying such that franking refunds are capped at some amount, or drop it altogether.
     
  5. Lizzie

    Lizzie Well-Known Member

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    Yes - I'm with you on that one. Hubby (engineer) has been working with a higher than average income for 40 years, paid into super that entire time - a rarity 40 years ago - and, if we hadn't take charge of his super ourselves pre GFC, he'd basically have half that amount.

    Once again figures quoted by the Labor party are not based in reality
     
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  6. qak

    qak Well-Known Member

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    It would be interesting to know what the total tax take from companies has been over the years since imputation was brought in, and the franking credits claimed since 2000 ... ie what is the net company tax $ paid in Australia and how has that changed over the years?​
     
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  7. unwillingwillis

    unwillingwillis Well-Known Member

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  8. monk

    monk Well-Known Member

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  9. Parkzilla

    Parkzilla Well-Known Member

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  10. Swuzz

    Swuzz Well-Known Member

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    What would be the effect of just making 'franked' dividend income 'tax free'
     
  11. Casteller

    Casteller Well-Known Member

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    That is what it is for non residents. The effect for me is that Spain collects the tax instead of Australia.

    For residents such a policy would greatly benefit the wealthy on higher marginal rates, wouldn't go down well.
     
  12. Swuzz

    Swuzz Well-Known Member

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    Would it be a nett increase or decrease to govt?
     
  13. Zenith Chaos

    Zenith Chaos Well-Known Member

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    Exactly and then what do we think these people will do next? Put yourself in their shoes. They will spend down until they can get a pension. The lack of foresight and the lies are the most frustrating parts of this policy.
     
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  14. monk

    monk Well-Known Member

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    I am in that position but will now definitely work longer & maybe resort to plan B : find a Sugar Mommy!!;)
     
  15. marmot

    marmot Well-Known Member

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    From what we have read in the papers, many self funded retirees dont want to draw down on their super but want to live off the earnings , maybe they want to give it to the kids once they have gone.
    And teachers probably had one of the most generous super funds going around , along with the Telecom/ early telstra and many other government workers.
    A friend of mine retired a few years back at 55 ,after working for Telecom for years in his younger days before getting a gold plated redundancy in the late 90s , refused to close it and retired about 3 years ago, as he said,he would be a fool to keep on working.
    Does anyone still get those really generous super plans these days.
     
  16. Redwing

    Redwing Well-Known Member

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    @marmot

    I recall someone working for the post master general (PMG) in the early days and saying they got a good % of sick days not taken paid out as a golden handshake on finishing up
     
  17. Lizzie

    Lizzie Well-Known Member

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    My brother in law worked for Federal Police before retiring a few years back. He's on a defined benefits pension, which is the golden goose of retirement funds. They tried to get him to convert, before he retired, to a straight super but he wisely refused.
     
  18. Gormie

    Gormie Active Member

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    There is an interesting option for people like me with a SMSF in pension phase and assets just a little above the pension asset test limit for a married couple. The relevant cut off is $837,000 including car and house contents. The strategy is to take a lump sum from the SMSF and buy a new home or renovate the existing home or go on a holiday to get under the pension asset test. Maybe none of the above spending will be necessary if the market keeps going down!
    Dissolve the SMSF and join an industry fund as a pensioner. Invest in fully franked shares and retain the right to claim full franking credits and access a part government pension.
     
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  19. Vicki S

    Vicki S Well-Known Member

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  20. Nodrog

    Nodrog Well-Known Member

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    No need for the first part. Just keep the lot but join an Industry Fund, no need to qualify for the pension. The experts are suggesting that with most Industry Funds ALL Pension members will still get the franking credit refunds because of the mix of members in Accumulation / Pension mode and other tax liabilities to offset franking credits.

    The other option for those with a SMSF pension is to load up on shares / funds paying franked dividends outside of Super then keep non / low franked assets such as cash, fixed interest, AReits, overseas shares, equity income trusts (use options to generate high yield but have less franking) and actively managed trusts whose distributions are mostly capital gains in the SMSF.

    Or you could split the SMSF into some with an Industry Fund Invested in Australian Shares and keep Other Assets as mentioned above in the SMSF. Those who are wealthier could use all three investing in franked shares outside of Super plus an Industry Fund and again the rest in a SMSF.

    Not advice.
     
    Last edited: 7th Apr, 2018
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