It is beyond dispute that Bill Shorten is correct when he states that a cash refund of franking credits on investments should be claimed only by a taxpayer.
What is in dispute is the timing and manner in which he intends to legislate changes to current taxation laws on those credits.
His planned legislation must be changed to exempt all shares purchased prior to 30 June, 2019. This will give retirees the same privileges that he has stated that he will grant to those affected by his changes to taxation benefits relating to negative gearing and capital gains.
To deny this, will mean that he will be declaring that property developers are more worthy citizens than retirees and deserve privileges that are to be denied to retirees.
Once this injustice is corrected, it will be vital that he also takes decisive steps publicly to help to halt the vitriol to which retirees are being subjected on this matter via social media.
Trolls constantly declare that retirees are dishonest thieves of public money and leaches on society. The hatred that they convey is appalling.
These primitive critics should note that,
*When current retirees were young, they did not receive the franking credits that young taxpayers enjoy today.
*Nor did they get a Superannuation Guarantee.
*They simply saved carefully, a sensible act for which they will now be punished.
*Many thousands of retirees have based their long term retirement incomes on the continued receipt of franking credits as this benefit was the law of the land when they did their planning and still is at this moment. They have not been cheating the system.
*The revenue that the Government will lose by grandfathering Franking Credits that are received on investments held prior to 30 June 2019, can be replaced quite easily by taxing the big end of town which is overpopulated by long term tax evaders.
May sanity and decency prevail.
Everald Compton
PS. I must publicly acknowledge that I am a self funded retiree who benefits from the receipt of franking credits.
I am fortunate that I am in a position that I can live comfortably without them.
I am also able to use some of the capital in my self managed Superannuation Fund if necessary.
However, many thousands of retirees with a low capital base cannot do likewise. They will be forced to become part pensioners.
PPS. I totally disassociate myself from the campaign which is being run by Scott Morrison in which he describes the removal of franking credits as a Retirement Tax. His claim is a total fabrication of the truth.
PPPS. It is fascinating to note that almost 100% of retirees are taking Bill Shorten’s Franking Credits policy as an event that definitely will happen. Whether they like it or not, they are certain that he will become Prime Minister in May of this year and will act on it immediately.
PPPPS. I will campaign strongly, throughout the election campaign and right through until legislation passes the Senate, on the principle of having franking credits ‘grandfathered’ as at 30 June, 2019 without campaigning against Bill Shorten personally. My basic concern is that the current plan for its implementation represents an injustice for people who have not broken any taxation laws.
I don’t agree that “It is beyond dispute that Bill Shorten is correct when he states that a cash refund of franking credits on investments should be claimed only by a taxpayer.”. My belief is that since tax has been paid by the dividend payer on all dividends, whether the the receiver is a 0% pension phase SMSF, or a high earning individual with a 45% tax rate.
The budgetary effect of giving a $1,000 cash refund to the SMSF is the same as giving the 45% taxpayer a $1,000 offset (or tax “discount”), off an otherwise fully payable tax bill. The refund is $1,000 going out of the ATO : The offset is $1,000 of otherwise fully receivable tax not coming in.
So since tax has been paid on all dividends, and since Labor will continue to give the value of the tax paid by the dividend payer to use as their own and to apply it to their own personal tax bills, I believe that discontinuing cash refunds in these circumstances is decidedly unfair.
There is no fairness in the copmpany WE ALL own pays tax on ALL dividends, and Labor want to hang onto the cash refunds ($ 6 BN), but allow the tax offsets ($34 Bn)
“Grandfathering” is a cop out, it just passes the problem down the line. Labor’s policy is unfair and should not proceed.
The only fair solution would be to allow FC cash refunds AND tax offsets as we do now, but at lower than face value, say 90 cents in the dollar. That way probably more would be raised and the entire load would not be carried by low income earners and retirees with SMSFs.
Tue 26 Feb 2019
Dear Everald
I hope that this article has been forwarded to the relevant politicians.
Regards.
Peter
You speak such common sense and wisdom Everald, this is something so lacking in society and politics in this country today. For all our sake I hope you have plenty more years left to keep these discussions going that need to be heard by our politicians. I am close to retirement but also have not had the benefit of long term super accumulation or large share portfolio so most of our financial security is tied up in our house and the thought of having to sell it to provide some sort of pension for myself and my wife worries me for our future.
I like your approach Everald.