One of the more unlikely outcomes of the recent federal election, apart from the surprise return of the Coalition government, is that many Australians who had never heard of franking credits are now aware of them.
You can receive a tax credit by buying shares in Australian companies that pay franked dividends. Dividends paid to shareholders by Australian resident companies are taxed under a system known as imputation.
Reporters need to economise on words, so they use shorthand: words like “dividend imputation”, “franking credits”, and yes, “retiree tax”.
SMSF members could be forced to take on more risk, should the ALP be successful with its plan to scrap cash refunds from franking credits.
In this article, I dig into this subject in more detail, particularly for those who hold their shares directly in their own names, to show what the ALP proposal really means and how it would operate.
The Australian Labor Party’s proposal to deny a cash refund on excess franking credits from Australian shares has very similar effects to the destructive and self-defeating consequences of the federal government’s 2017 changes to the Age Pension asset test.