Franking credits - gone?

Thanks dunno. I've sent it to three labor senators for NSW and to Chris Bowen as well .

 

Interesting. Just got a reply from Chris Bowen's email address. Most likely one of his assistants just copies and pastes same response to all letters of such kind. See below.

"Labor’s reforms to excess dividend imputation credits will remove a fiscally unsustainable tax arrangement that is seeing billions of dollars in lost revenue, making it harder for the government to fund important services and return to surplus.

Dividend imputation worked perfectly well between 1987 and 2000 when cash refunds weren’t sent to people who didn’t pay income tax. Labor will return to that system. While I understand not everyone will like it, it is necessary and Labor is prepared to be honest about our plans in advance of an election and not surprise people afterwards.

Budgets are about priorities. And to get the budget back to surplus difficult decisions need to be made. And yes, making the public case to take something off someone can be difficult, but federal Labor believes that the policy case for reforming refundability and excess imputation credits is a strong one, that it’s absolutely the right thing to do.

We have said that we’ll consult with the Australian Taxation Office, Treasury and tax experts on the implementation of this policy. However, we have no plans to make changes to the announced policy.

Warm Regards,
Chris Bowen MP
Federal Member for McMahon"

 

what stupidity? priorities does not mean you take money from a group to make it look more balanced.

 

Isnt that exactly what progressive taxation is?

 

but this is not progressive taxation. shorten is targeting a subgroup who earns their money using a certain channel.

for instance if you earn 18K fron rents you don't pay any tax but if you earn the same amount from franking credits you do... that is unfair.

 

if Labor get their way and remove franking credits, does anyone know what kind of timeframe we'd be looking at for that to happen? my knowledge of the Australian political system is poor, but i'm assuming they'd have to win an election and get into government first and then start rolling out their ideas. so would that make it late 2019 at the earliest? maybe wouldn't take effect until 2020? I really need a crystal ball here

 

It’s election promise so it will go through to the senate prior to FY19-20. Whether is passes there or not is up to the minor parties. I think it will tacked into a few things like neg gearing and trusts.

 

Election should be about this time next year. Likely before the May 2019 budget.

 

great, thanks. lets hope they don't win or their anti franking plan doesn't get off the ground

 

Targeted taxation of self sufficient but hardly wealthy minority to create class politics that Shorten thrives on for success. Targeted few will end up on a poorer retirement funded by taxpayers sooner rather than later and Shorten will pretend he did it for the poor working class. Just getting the goofballs to implement this will probably waste half of the revenue....b. b. B.. B. But it will create jobs at the ATO.

 

and the social services too

 

Petition to stop change in franking: Maintain the current dividend imputation system — Wilson Asset Management

 

Four SMSF strategies if imputation credits rules change - Cuffelinks

 

The following article was written by Noel Whittaker awhile back, I think it’s a worthwhile read for some possible strategies:

Labor's dividend imputation changes a 'tax on widows'

 

SMSFs, member-direct and Labor's franking - Cuffelinks

 

I would be careful with the idea that franking credits could be retained by moving back to a pooled super fund.

The guy referenced in the article with the remarks in italics is on the ball.

It’s a complete hypocrisy to allow franking credits to be refunded to some based on their marginal tax rates and deny it to others. At the end of the day, Labor would cope too much heat with something that this blatantly favours industry Super Funds over SMSF's and they would lose too much revenue to an easy strategy.

Yes the accounting for pooled funds currently allows the super funds to avoid the waste of credits and then their internal distribution of those savings can be directed back towards zero marginal tax members, (that’s what happens now in a lot of cases) but it’s just as likely that some little slice of legislation that nobody understands will be included to prevent this with the new legislation or the fund itself could say that savings on tax arising from the accounting standards for pooled funds should be shared equally amongst all members once they don’t have to direct it solely to zero marginal tax payers to compete against SMSF’s.

 

Agree. Plus if we moved to a Pooled Fund there would be 4 separate accounts for wife and me being pension and Accumulation for each of us. Too messy and results in multiple account fees. I figure in our case best to focus more on franking credits outside of Super and tilt to other less tax effective assets in the SMSF with the overall portfolios giving us the desired asset allocation.

Overall regardless of what happens this has been a good thing for us as it forced us to consider our investing and fund Mgr structures in terms of protecting against future legislative risk.

 

Ditto.

 

Interesting as usual some of the comments following the article such as this one:

Also in our case we have quite a lot invested in Term Deposits split across different institutions to get the Gov’t Guarantee. Term Deposits held by a member in a Pooled Industry Fund don’t get this Guarantee. And from memory when I checked Hostplus recently the only Bank you could choose a Term Deposit from was Members Equity.

If, and it’s unlikely we would do it, should Labor scrap franking credits we could just move our Accumulation account balances (excess over pension limit) to an Industry Fund then invest fully in Shares / LICs with maximum franking. That is, segregate Accumulation to take advantage of franking which can’t be done to the same effect if held in a SMSF receiving pensions where the proportioning rule applies. How ATO would look upon this of course needs to be considered. But it would appear to be difficult for ATO to argue against this given the Super system allows members free choice to invest in any / multiple funds.

 

I haven’t checked the figures but interesting comment from Cuffelink’s article:

Four SMSF strategies if imputation credits rules change - Cuffelinks