19th Feb 2019
Franking credits are being ‘rorted on an industrial scale’
Franking credits are being ‘rorted on an industrial scale’

Franking credits are being “rorted on an industrial scale”, says economist Chris Richardson, who adds that Labor’s franking credits policy won’t fix the system, and suggests that superannuation reform might instead be the answer.

“I think the tax benefit should be there, but it is being rorted – and rorted on an industrial scale,” Mr Richardson told 7.30.

“It’s a tax benefit that’s most valuable if you have lots of Australian shares and you have a low rate of tax.

“Now, that is a basic description of the superannuation system in Australia – lots of Australian shares, low rate of tax.”

Mr Richardson says Labor’s solution to the franking credit conundrum may not be fair for all.

“Given the way they’re doing it, they’re fixing one fairness problem [which] is costing more money than it should. They’re genuinely fixing that,” he said.

“But they are creating some new fairness problems for some retirees at the same time.

“There are still a bunch of people who I think will be unfairly treated.”

The policy Labor is taking to the federal election will mean that those on a full Age Pension or part-pension will still be able to receive the franking credit cash refunds.

But households with one member still working could see those refunds removed. Once both members retire, however, they would then be re-eligible for the refunds.

Some retirees are warning Labor that they will send them a message and change their vote at the next election.

“It would sway the way I vote because if they're going to affect my future, then I need to very carefully consider who I vote for,” said one swinging voter who resides in a Labor electorate.

Shadow Treasurer Chris Bowen is not swayed and says Labor’s policy won’t change.

“The policy we’ve announced is the policy we are taking to the election,” he told 7.30.

“All reform worth doing is controversial, and I understand that people will look at our policies and will make judgements, but we have announced the policy, [and] we are standing by it.

“We know this is the right thing to do. We know this money is important for investing in schools and hospitals, returning the budget to balance.

“We can no longer be the only country in the world that provides tax refunds to shareholders who have not paid the income tax to start with. If you pay tax, we will refund it, but if you don’t pay tax there is nothing to refund.”

However, Mr Richardson claims the franking credits scheme should remain but that changes to superannuation could make the whole system fairer.

“Superannuation funds make out like bandits around this stuff. And particularly so, the sort of family superannuation funds,” he said.

“It costs too much.

“I think the best way to fix it would actually be proper reform of the superannuation system.”

Will Labor’s franking credits policy change the way you vote in the next election? Do you think superannuation could be reformed and that franking credits should remain?

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    COMMENTS

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    20th Feb 2019
    9:43am
    A little common sense on the issue - something Shorten and Bowen clearly lack:

    "How Labor should resolve the franking credits debate?

    The Labor Party is holding tough on its franking credits policy but will no doubt compromise if it believes it could cost them the election, something which has come into the frame after today’s Ipsos poll suggesting a narrowing 51-49 two party preferred vote in favour of Labor.

    Whilst asylum seeker policy is regarded as politically influential, the franking credits policy is also starting to bite in the electorate, although many younger voters are stridently in favour of it.

    The obvious compromise for Labor it to introduce a maximum annual cash payment that any individual taxpayer or SMSF can receive. Pick your number between $2000 and $15,000.

    This would have been a better compromise than the first climb down by Labor which was to fully exempt government pensioners, creating two distinct classes of taxpaying in the one policy area. If uncapped franking credit cash rebates are bad, then part pensioners with an $800,000 share portfolio shouldn’t get them either.

    There can’t be too many pensioners getting more than $10,000 a year so the cleanest solution would be to apply the same cap to everyone, government pensioners included.

    Tim Wilson, leader of the Liberal campaign against the Labor proposal, is right to point out that the $1.6 million transfer cap within the superannuation system, which commenced on July 1, 2017, has significantly reduced the cash largesse going to the wealthier cohort of franking credit recipients.

    Another overlooked fact is Australia’s heavier reliance on company tax and income tax than most countries, because our indirect tax revenue is relatively low courtesy of an underdone GST.

    The latest MYEFO forecasts that company tax will bring in a record $95.5 billion next financial whilst income tax paid by individuals is predicted to hit $230.5 billion in 2019-20 for a grand total of $326 billion out of almost $500 billion in Federal tax revenue. That puts a slight different context on the debate about $5.6 billion a year in cash refunds for those self-funded retirees paying no net income tax. Then again, you can understand the argument that it does seem a bit rough that income tax is generating such enormous sums but many largely elderly retired shareholders are not paying any income tax but then getting franking credit refunds.

    Then again, the total refunds currently paid out are barely one twentieth of the $95 billion the government is collecting in company tax.

    It is likely the proposed change won’t save anything like $5.6 billion a year net for the federal budget because many of the shares currently owned by non-taxpayers will simply be sold to taxpayers and many of the non-taxpayers will live off the proceeds from the sale of those shares and then go on the pension, so it will just change the type of cash payment they are getting from the government without actually saving the budget that much."


    Why should a pensioner couple with $800,000 get refunds while an SFR with just $40,000 more in ASSESSABLE assets - but potentially much less in total if their home isn't as valuable - loses their refunds for life? Anyone who suggests that is reasonable is selfish in the extreme and totally irrational.

    Why should rich retirees who don't invest in shares get a huge tax-free income while battlers with very modest retirement savings who don't understand financial markets well enough to earn income other than from blue chip shares are taxed at a very high rate? Anyone who considers that fair or reasonable has a cog missing in their brain.

    The RIGHT solution, of course, is to tax ALL RETIREMENT INCOME and pay a universal pension to ensure every retiree has an acceptable living standard. That removes all the discrimination and unfairness and adheres to the generally accepted convention that those with the highest incomes should contribute most, and those with low incomes - REGARDLESS how they earn them - should NOT be taxed into unfair hardship.

    Taxing retirement income also removes the need for retirees who don't qualify for a pension, but may be aged or infirm, or educationally deprived, to suddenly become investment or financial wizards in order to survive old age.

    Labor has got it hideously wrong with this policy. It is patently UNFAIR, discriminatory, and won't achieve the stated goal anyway. There are much better ways to boost the budget, and really - they are a no-brainer. High retirement incomes should NOT be tax free. By all means, set a threshold that ensures those with very low incomes neither shoulder the burden of paying tax nor the burden of completing tax returns. But refusing franking credit refunds to poor folk is NOT the right way to fix a problem. If there is rorting, address the rorting. Don't bash the honest battlers who worked and paid tax all their lives and now just want fairness to live out their old age in modest comfort - at least at the same living standard as pensioners enjoy, and without eroding their capital prematurely - because many saved it with knowledge that it would be needed at a later date, and those who went without cruises and restaurant dinners to leave a little to their offspring should be as entitled to their lifestyle choice as those who lived the high life and put their hands out for pensions. It's ALL taxpayer money. Why should some get it and others be denied, just because some chose to use their income in different ways?

    This pensioner elite attitude and the invalid and nasty assumptions that SFRs are all wealthy and can be ripped off MUST END. It's unAustralian, and it's a disgraceful indictment of what this society has become.

    Thank goodness Labor is feeling the pain. Slipping badly in the polls - as they should, until they revise this sick and disgusting policy. Some of their other policies leave the LNP firmly in the shade, but this policy SHOULD cost them the election if they stick to it. It's blatantly wrong, and to arrogantly refuse to consider the negatives shows lack of leadership ability.
    bob menzies
    20th Feb 2019
    11:41am
    read your comments several time sot make sure I fully understood - there is nothing I can add - except to say you nailed it"! Well written articulate and accurate.
    GreyViper
    20th Feb 2019
    12:03pm
    BRAVO! BRAVO! BRAVO! Well done OnlyGenuineRainey! Finally, a well thought out, well researched, well compiled, and well written article on this disgusting money grab by the Labor party, should they win the next election. The discrepancies, between some people who may receive a part pension and LARGE refunds due to franking credits from share ownership and those who receive NO TAX PAYER FUNDED PENSION and will now have their smaller franking credit refunds taking away from them because they support themselves, are mind boggling! I can only assume that this current front bench of the Labor party do not understand the full implications of this UNFAIR policy. I know that the incoming treasurer has never had a real job, never worked in the REAL world, and has known nothing but politics for his entire working life! I believe that several other members of the Labor front bench may also be in the same position.
    When you consider that without the return of the franking credits, some shares don't return much better than bank interest (BHP 3.64%, Woodside 4.01%, RIO 4.39%, Brambles 3.26%) and you consider the risk to your invested capital, it will not be worth holding these shares and the money will be invested in something else that provides a better return. Therefore, the government will not raise anywhere near the amount that they think they will from this UNFAIR tax. I agree with OGR that a much smarter choice would be to put a ceiling on it and charge EVERYBODY over that ceiling instead of picking on a particular group of recipients!
    As stated above, I can only think that they don't understand the implications of their own policy and so I will be sending this description to my local Labor federal member (with OGR's ok) to help him understand this horrible policy. I suggest all of you who will be impacted by this policy do the same!
    Anonymous
    20th Feb 2019
    12:16pm
    Absolutely 100% correct Rainey. But the intellectually challenged unfortunately will not read and try and understand.
    Or perhaps they just don't want to know
    Anonymous
    20th Feb 2019
    12:16pm
    Absolutely 100% correct Rainey. But the intellectually challenged unfortunately will not read and try and understand.
    Or perhaps they just don't want to know
    GeorgeM
    20th Feb 2019
    12:45pm
    OGR, your quoted remarks do not indicate where the "common sense" came from? But, that is definitely common sense. It also includes a proposed Cap on Franking as an alternative, one idea I myself have mentioned a couple of times.

    Chris Richardson cannot avoid saying "Franking credits are being “rorted on an industrial scale”, however as usual, he talks in riddles, does not want to give solutions and is full of double-speak. For example, he says “Given the way they’re doing it, they’re fixing one fairness problem [which] is costing more money than it should. THEY’RE GENUINELY FIXING THAT,” - that suggests he is betting each way - in case Labor gets into power! He could have suggested the Caps on Franking credits as an alternative solution, but no, that would hurt him and his rich mates!

    I support the Universal Pension for OAPs as you know. However, instead of simply taxing all Retirement Income, there should be concessional caps for taxation on Superannuation income - as that is an Income Supplement the Govt has strongly encouraged and is a good saving scheme. It is a supplementary income source which must not be removed for the sake of keeping an incentive for all to save as a fallback for retirement.

    As far as Labor is concerned, Bowen did say "Don't vote for us" - so all who disagree with his policy must do just that! Teach this arrogant little clown a lesson!
    Of course, I also believe the Liberals need to be taught a lesson for destroying Retirement Incomes of 100s of thousands by their changes to the Assets Test without Grandfathering and based on a Broken Promise.
    Hence, the only choice now for Retirees and Pre-Retirees is to throw both these a...hole parties out (as well as the Greens), by putting all their current MPs last in voting preferences.
    Misty
    20th Feb 2019
    1:06pm
    And you would still end up with one of the 2 major parties GeorgeM, that is the way our voting system works.
    MICK
    20th Feb 2019
    2:21pm
    Well written OGR and I agree with most everything you said.
    Perhaps the only things you left out is that younger voters and some in our cohort who are in a poor financial situation are of the opinion that anybody with 2 razoos to rub together should spend them first and then go on the pension. I suspect that is jealousy and of course it ignores the fact that when those people do go on the pension the burden on taxpayers will increase.
    I would think leaving those of us alone who went without for decades and worked bloody hard would be the fair and right thing to do....with a line in the sand after which the tax system would cut in. Apparently Labor thinks otherwise. As you said it could cost them the election at worst and put them into minority government at best.

    As I've said a number of times on this issue I suspect Labor will pull its head in and do something along the lines we have been suggesting OGR. If not then we'll get another 4 years of unstable government, and as Kerry Stokes was quoted as saying when he and Murdoch met to decide who the new PM was going to be after they got rid of Turnbull "I may have to tolerate a few years of Shorten"....or something to that effect.
    jackie
    20th Feb 2019
    2:32pm
    No one should collect money on taxes they never paid in the first place.
    MICK
    20th Feb 2019
    3:14pm
    And no government should collect tax on the same income TWICE.
    Knows-a-lot
    20th Feb 2019
    4:02pm
    Absolutely spot-on, Jackie and Mick.

    "The RIGHT solution, of course, is to tax ALL RETIREMENT INCOME and pay a universal pension to ensure every retiree has an acceptable living standard. That removes all the discrimination and unfairness and adheres to the generally accepted convention that those with the highest incomes should contribute most, and those with low incomes - REGARDLESS how they earn them - should NOT be taxed into unfair hardship."

    That is the best way forward.
    MICK
    20th Feb 2019
    4:25pm
    That would be fair Knows-a-lot but the top end of town and its media would come after any government which tried it on. It would take a tough PM and a successful policy early on in a term to achieve such an outcome. Once it was up and running and working then the vested interests would have nowhere to go. One can only live in hope.
    Out of interest sake New Zealand does have a universal pension system but our media never runs a story about that either.
    Young
    20th Feb 2019
    9:52am
    I am a part pensioner as is my wife.
    We work for about 3 to 4 weeks a year doing VCE exam supervision.
    We also have a few Aussie shares that pay us franked dividends.Will we lose these dividends worth about $2500 because we do a little work???
    TREBOR
    20th Feb 2019
    10:59am
    A simple exercise of the basic tax rules should determine how much or how little you 'lose'.

    Hard to get some to look at the simple workings of actual income tax without their running around like headless chooks, ranting and attacking others. Loathie? That's your cue..... Enter Stage Right...
    john
    20th Feb 2019
    11:50am
    Trebor doesn't see that , in your case , Young, WHY SHOULD YOU LOSE ONE CENT, FULL STOP. THAT'S THE DILEMMA.
    We have a problem with incomes we have a problem with retirees, some work a little , in fairness there are too many rules and regulation that confuse and the population in general will have some kind of problem understanding this crazy difficult set up with super and AOP.

    Many pensioners cannot work a day here or there, many also find that the AOP makes life more difficult because of the standards of AOP under payments, or poverty, in some cases are being regulated by a horrifying system. PEOPLE WORK ALL THEIR LIVES AND WIND UP ON HARD TIMES, WHEN THEY SHOULD BE LIVING EASY, that is what govt policy is meant to do for its people. Make it easy!!!
    As for the comment about younger voters , younger voters need to remember ???
    I was a younger voter once, so they will be older voter one day.
    Perhaps it is the duty of a governmnet to confuse the majority of its people, hah. Of course on this forum we have quite a few experts , but the simple answer is the system is grossly unfair!
    john
    20th Feb 2019
    11:52am
    Yes I know OAP sorry!
    Paddington
    20th Feb 2019
    2:05pm
    No as you are part pensioners you won’t lose the $2,500. Pensioners and part pensioners were told this a while ago.
    Spud
    20th Feb 2019
    2:06pm
    Any OAP who receives a part or full pension is exempt from the changes .
    TREBOR
    20th Feb 2019
    2:18pm
    I see that clearly, john - for those who do their taxes properly and who are properly treated by the ATO under income tax rules...

    What part of:- "cancel franked dividends entirely, sort out your own tax by income tax rules, and those who genuinely fall below a certain income level as laid down will be treated the same, and tax paid as company taxes is NOT tax paid by shareholders".... is so difficult to understand?

    DI IS part of shareholder's gross income - so what is the difference between a company paying tax on your behalf and you then sorting it out, and the company not paying it at all and you sorting it out?

    It's not hard.
    TREBOR
    20th Feb 2019
    2:38pm
    My argument, Spud and Paddington, is that genuine low income retirees who just miss pension are not covered.

    Mind you a cou78ple would need to be getting, well here';s the Centrelink chart...

    21 or older, single $2,004.60
    21 or older, couple living together $3,066.80 combined
    21 or older, couple living apart due to ill health $3,969.20 combined
    18–20, single, no children, at home $1056.80
    16-17, single, no children, at home $954.20
    16-20, single, no children, independent $1,372.60
    18-20, couple, no children $2,692.80 combined
    under 18, couple, no children $2,692.80 combined.

    so I suppose the argument could be made that a couple already on $1500 a week is doing all right and has no need for pension.. however tax needs to be looked at. I'll look at one:-

    "21 or older, couple living together $3,066.80 combined
    = $79,736.80 p.a.

    Split it for tax = $39,868.40 per person.

    ATO Chart:-

    "Taxable income
    Tax on this income

    0 – $18,200 - Nil
    $18,201 – $37,000 - 19c for each $1 over $18,200
    $37,001 – $90,000 - $3,572 plus 32.5c for each $1 over $37,000
    $90,001 – $180,000 - $20,797 plus 37c for each $1 over $90,000
    $180,001 and over - $54,097 plus 45c for each $1 over $180,000"

    Ergo, Tax on $39,868.40 =

    $18,200 no tax = balance of $39,868.40 - $18,000 = $21,868.40

    Tax on $21,868.40 = $18,799 x 0.19 (cents in the dollar)
    = $3571.81 TOTAL TAX LIABILITY.

    If your entire $39,868.40 was in franked dividends, the ATO has received already 30% (or the calculated percentage which varies) = $11,960.52

    So your return from DFI should be $11,960.52 - $3571.81 = $8388.72.

    Of course this will vary according to your income mix, and under no cicrumstances should the ATO suddenly refuse a return of tax paid for genuine income earners.

    Now let's hear all the spurious and mostly personal comments.... **rolls eyes**
    Old Geezer
    20th Feb 2019
    4:19pm
    If you become ineligible for the pension at any time you will lose your franking credits. Estimates have put that figure at 50,000 pensioners are likely to lose their franking credits.
    TREBOR
    20th Feb 2019
    7:01pm
    Yes, OG, and that needs to be considered, since market fluctuations may occur and be temporary - and then the person has to reclaim pension etc and start off again. Bit rough to be so close to the edge on pension and lose it for a few dollars when most years the income is lower.

    FTR - is pension 'lost' or 'suspended' in such a situation? For a working pensioner it is suspended after two years of earning more than the allowed amount.... or it was anyway....

    All the things that need to be set in place to cover eventualities like that are not hard - all it takes is people in the PS who can do the flaking job...
    Anonymous
    20th Feb 2019
    9:30pm
    And if you were just $1 over the assets threshold in March 2018, you lose your franking credits FOR LIFE
    Anonymous
    20th Feb 2019
    9:32pm
    But someone with $1 less, and possibly a house worth 3 times as much - so much, much wealthier in reality, gets to keep their cash credits as well as getting all the pensioner concessions. And this is what Short-on-Brains calls 'a fairer tax system'!!!!!
    TOR888
    20th Feb 2019
    10:07am
    So we are giving cash up retirees tax relief from tax they don’t pay !!!! What a scam and hopefully it will be dead buried and cremated sometime this year..
    Seadove
    20th Feb 2019
    11:06am
    I agree TOR888, this has been going on for so long they think it's a right to get this money. Why have there been so many SMSF starting up over the last 20 years? To take advantage of this rort that Peter Costello (the so called 'best treasurer ever') put in place. Put in place to ensure his rich mates could be rewarded for them being in government. Let the voters decide whether this is fair.
    Jim
    20th Feb 2019
    11:21am
    It’s the usual envy politics pushed by some in the community, and they are not all Labor or LNP voters, the statement that people are getting back tax they haven’t paid is wrong, if you get a dividend that has a franked component that franked component is the tax that is withheld from the investor to be paid to the tax office, so it is tax paid whichever way you look at it, if your income which includes your pension and any other earnings from shares or any other source is below the tax free threshold then you are entitled to claim that tax back, it’s exactly the same for every person that earns an income, you could equally claim that PAYG doesn’t pay tax even though their employee withholds tax to send to the tax office, it’s exactly the same as the withheld tax on shares, and at the end of the year if the PAYG’s income is below the tax free threshold then he gets back all of the tax that has been withheld, how can this be described as unfair, infact it would be quite the opposite, if one section of the community was treated differently to another just because they are retired.
    TREBOR
    20th Feb 2019
    11:44am
    Exactly what I've been saying for ages now, Jim - simple.

    the problem being approached (not addressed) by Labrador with this move is that of how incomes can be arranged to avoid tax - and government respective have built thier own mine field with their superannuation rules and changes.

    In a sense you can't blame people for taking advantage of loop-holes and hidey holes for money so as to not pay tax - on the other hand you need to seriously wonder what the hell government advisors are working with to come up with such flawed premises, and whether or not it is government itself ordering that things be done in such flawed ways, for the benefit of its members and mates.
    dick
    20th Feb 2019
    12:04pm
    You are so wrong TOR 888.. I am a part owner of a number of companies. Those companies make profits and pay tax on those profits. They pay part of those profits to me with the tax taken out... so I have paid tax through my company ownership and the profits received which have had tax prepaid. You are copying Shorten's words... he clearly has no financial understanding or credibility.

    Also Labor says they will use the money to balance the budget !!???? But the Prime Minister has guaranteed that the next budget in April will be in surplus so there is no need to balance the budget because it already has been !!!!!!!!.

    Labor hasn't changed... they did this last time in power.. it tells you that a big spending spree is on the cards and they have to increase taxes to cover what was a balanced budget... lack of financial control.
    Rae
    20th Feb 2019
    12:46pm
    Now TREBOR surely they wouldn't use privatisation to award contracts to mates in exchange for say free travel would they?
    Rae
    20th Feb 2019
    12:53pm
    If it's wrong then it's wrong and pensioners shouldn't be excluded from the fix. Back peddling on that made me realise this was just vote catching and not really designed to sort out discrepancies.

    Companies should not be paying tax on the behalf of shareholders. That is a simple fix Just pay the shares unfranked and let shareholders pay up if they have to.
    TREBOR
    20th Feb 2019
    2:52pm
    dick, dick - your company ownership and your personal income are two separate things... you don't get to bite twice on the cherry - a company has taxes to pay and so does the individual.

    How many times, O lord?

    Of COURSE not, Rae.... that would be the furthest thing from their minds...

    Even a hint of impropriety should mean instant cancellation of contract.....
    Old Geezer
    20th Feb 2019
    4:26pm
    Yes Labor is going to give back $34 billion in franking credits to high income earners and steal $5 billion from low income earners.

    If you have franking credits you have paid tax. There is no other way you can get franking credits.
    Anonymous
    20th Feb 2019
    9:47pm
    Tor888 - NO NO NO. You have it all wrong. Franking credit refunds give retirees relief from paying tax THEY DON'T OWE. The tax is taken from the dividend before they receive it. If they have no legal tax liability, they should get it back. Simple and fair. The system is right as it is.

    OG is right. You simply CANNOT get franking credits if you haven't paid tax.

    20th Feb 2019
    10:12am
    Yes Shitten and Bowels disgusting attack on modest SFR’s has changed my vote
    I will never again vote labor
    TREBOR
    20th Feb 2019
    11:00am
    Your jokes are getting better all the time........... don't give up your day job, though, and we'll call you... next....
    maelcolium
    20th Feb 2019
    11:07am
    Have you changed your handle Lothario?
    john
    20th Feb 2019
    11:58am
    My problem with the ALP , as I am in your boat FLV, is the fact that I operated as an official rep in a union for around 25 years. Basically I have found it corrupt and the rank and file are forgotten there are some criminals working inside the union, every one nearly is in the know! And it is now run like a wealthy business to receive donations from even some super funds and actually pass on lots to the ALP, THE ALP IS NOT THE WORKING PERSONS PARTY NOW , IT HAS LOST ITS WAY, AND ITS TERRIBLE BACKSIDE FOLLOWING WITH GREENS AND INDEPENDENTS LAST WEEK WAS A SHOT AT OUR SYSTEM, NOT A SHOT AT MORRISON AT ALL.

    They were a party to a stunt , and Shorten wants to be PM. What a tragedy he just might?
    Rae
    20th Feb 2019
    12:58pm
    john yes indeed but you should see what those business types in the Business Unions like the BCA, Mineral Council, IPA, AMA are getting up to. They make the Union take look like peanuts.

    The whole Government need reforming. No bribes a Federal ICAC and truly Independent representation in Parliament.

    The Party system ned reforming. It's far too corrupt.
    Misty
    20th Feb 2019
    1:11pm
    Yes he must hane an idendity problem, maybe multiple personalities, as I said before here, who knows who he will think he is next.
    Misty
    20th Feb 2019
    1:18pm
    Yes John what have you got to say to Rae's comment about the other unions mentioned, are you including them also?. During my working life as a School Assistant and a DC Nursing Sister I had many occasions to call on the relevant unions for support, I was retrnched from one school once but becaused of union support was reinstated also we would never have got our working conditions or pay increases if it wered not for the unions. I know there are bad apples in all organisations, just look at all the findings of the various RC, but you can't tar them all with the same brush.
    Paddington
    20th Feb 2019
    2:08pm
    Lothario, you never did lol. Changeof name?
    TREBOR
    20th Feb 2019
    2:55pm
    I know your position myself, john - but my issue with Unions was not that they are/were corrupt - but that they focused on the wrong things - starting back when they 'encouraged applications from women, those from a non-English speaking background, and Aboriginal and Torres Straits Islanders'... funny that. Look at the ACTU now and what it pursues.

    As a Union delegate targeted by management, I was left out to dry while the Union sat on its arse and let things go downhill all the way - and then was given two seconds when I applied for a formal Organiser job.

    They are corrupt all right - just not in the ways people seem to imagine.
    TREBOR
    20th Feb 2019
    4:11pm
    Oh, I dunno - diablo/Lothario,Former Labor Voter seems to have a pretty good grip on it most of the time... with occasional forays into reality.... (dah, da, da,da,da,da,da dah.**hums to self**) ...
    MICK
    20th Feb 2019
    4:30pm
    Whilst we need unions TREBOR my memory of them is they sold out workers when enterprise bargaining was brought in. So many workers left. That left unions in a weakened state, which is precisely what the top end of town wanted. The rest is history and we now have 2 hour a week jobs counted as 'work' in the official statistics, poorly paid millennials who are being done over and a workforce at the mercy of big business which seeks to destitute them. Been watching this unfold for many years. Sad.

    Unions: damned if you do and damned if you don't. What do you do? Trust employers?
    Not a Bludger
    20th Feb 2019
    10:26am
    This labour policy has nothing to do with fairness - it simply a part of the politics of envy and naked push by ex union boss Shorten and his thug mates to shove SMSF monies into industrial funds.
    And, rentseeking economists like Chris Richardson rabbiting on pretending to be unbiased are simply masking Shorten’s extreme left attack on retirees - of which the theft of franking credits is only the start.
    Those approaching retirement should also be very concerned.
    TREBOR
    20th Feb 2019
    11:01am
    All easily solved with the proper application of tax on income - storm in a teacup...
    bob menzies
    20th Feb 2019
    11:48am
    Did you also note Richardson was light on with his alternative plans. I wonder whether Bowen has made a tactical blunder here - as Richo says barely 20% of over 65s vote labor so Bowen made have thought - need some extra money here is an option that won't cost many votes and its a potential big tax grab - go for it - however it is not just the 840,000 affected - its their families and grandkids pushing the numbers closer to 2.3m. Also labor have been getting bad feedback from retired teachers who stated they are labor votes. This is not playing out well.
    The border security policy has also not gone well for labor - heard that their internal polling suggests labor is not doing well north of Brisbane nor Darwin or WA and importantly western suburbs of Sydney.
    Labor is doing exceptionally well in Vic but it may not be enough. Interesting times ahead.
    MICK
    20th Feb 2019
    4:35pm
    I heard that from the Gillard years but if Labor thinks it is only going to lose a few votes it may get a big surprise. I note many on THIS website alone claimed they wanted to vote Labor....until Shorten sprung the franking credits attack on them.
    I still hope Labor gets up if for no other reason than to put the current dictatorship in forming out of business. My real wish is to see a majority of Independents in the parliament working for the country rather than the coal industry or any other vested interest paying into party coffers for the next election. That to my mind has always been betrayal of the worst kind and should result in jail sentences for those who promote this sort of sell out of the national interest.
    Just my thoughts though.
    Denis & Narelle
    20th Feb 2019
    10:31am
    To "OnlyGenuineRainey" finally someone on this website expressing a comment on this subject with some intelligence, compassion and knowledge of the subject.

    I am getting sick to death of reading comments on this website that are biased, unresearched and just plain incorrect. Most commentators obviously do not understand the way the franking credit system works or what it is intended to achieve. Talk of it being a rort etc are just plain wrong.

    It should be blindly obvious to anyone with an ounce of common sense that it blatantly unfair to tax a section of the community differently to any other. We have a SMSF and receive no government benefits or discounts. However this Labor proposal would not be an issue for us if only we received a very small amount of part pension. And yes "Young" you will continue to receive your franking credits because, although you are still working, you say you also receive a part pension so your franking credits are safe. That is the essence of why this policy is so unfair.

    Bill Shorter continually preaches his policies provide fairness to all Australia. He eve used the terms fair and fairness 12 times within his 2 minute interview on the ABC's Insiders program the other week.

    I even wrote to our local Labor member 2 weeks ago asking her how this policy could be regarded as fair. To date no reply. I guess because there is no reasonable answer.

    Electors please leave your Labor/Liberal bias to one side and just look at the facts of this matter in a fair and logical way.

    To "Tor888" this is exactly what I refer to - uneducated comments on a subject you obviously don't understand. The company in which I hold shares has paid tax on the profits. They then pass on to me a dividend plus a franking credit amount that I have to declare in my tax return. My taxable income is then calculated on both the dividend and franking credit amount. Just like PAYG taxpayer puts in his tax return his total salary which includes the amount of tax his employer has deducted. If it is then calculated that he has paid too much tax, he gets a refund. However under this policy, I do not get a refund of the tax paid on my behalf, BUT WHICH IS INCLUDED IN MY TAX RETURN AS PART OF MY INCOME, even though I am not obliged to pay any tax.

    Again I plead, do some research of this matter, not just express bias and hurtful comment.
    TREBOR
    20th Feb 2019
    11:05am
    "However under this policy, I do not get a refund of the tax paid on my behalf, BUT WHICH IS INCLUDED IN MY TAX RETURN AS PART OF MY INCOME, even though I am not obliged to pay any tax. "

    That is the problem - I've been saying for ages now - and copping personal attacks for doing so - that DI is part of your gross income for tax consideration, and any return etc should be entirely based on that.

    I've even posted quotes from the ATO that clearly say that a partial or full refund may be applicable - depending on income etc, and I've clearly stated that a blanket policy of no returns at all is wrong.

    Come in Loathie (now Former Labor Voter) - give us your fake on this one.... we all know you'll want to rant and try to obscure the simple issue by attacking the poster, as usual.
    TREBOR
    20th Feb 2019
    10:53am
    Easy - frank no credits - company pay its taxes, individuals pay theirs... no problem.

    Frankly speaking that is the only solution, along with a complete overhaul of the current superannuation system, and the ATO.

    Obviously if someone on a genuine small income is not receiving at least a part return of tax paid in advance, something is rotten in the handling by the ATO.

    I believe this whole issue has been made confused so as to allow constant loop-holes and getaway cards... take it back to the basic and the problems all disappear.
    Anonymous
    20th Feb 2019
    10:56am
    And how will the dividends received be treated Trebor?
    As tax free income or be taxed again in the hands of the investor ???
    TREBOR
    20th Feb 2019
    11:08am
    Company dividends are not income taxed on the company - companies pay their taxes and dividends are a deduction - the income a shareholder derives from them properly constitutes part of their gross income.

    Currently the tax pre-paid by the company is included in shareholder's gross income, as required, and tax determined on net income derived from gross minus deductions, so there is really no need to frank dividends at all.

    When are you going to stop avoiding that simple reality?

    Read Denis and Narelle above.. pretty simple, eh?
    Anonymous
    20th Feb 2019
    11:14am
    I honestly could not understand your gobbledegook
    You lost me on "companies pay their taxes and dividends are a deduction"

    Please do yourself a favor and enrol in a Uni Corporate Tax 101 course
    If youre ineligible due to poor qualifications, such as dropping out of school at grade 3 , try alternate pathways such as TAFE or mature special case disability admission
    TREBOR
    20th Feb 2019
    11:50am
    Obviously you have no real understanding of dividend imputation in reality or of many other things... any 'gobble-de-gook' is in your mind with its inability to follow simple things... perhaps on purpose?

    You remind me of a 'professional student' in the room when I was doing Economics at UNSW, who sought to constantly confuse the simple issues being taught.

    Your post shows clearly that either you do not understand what you are talking about, or that the rules need to be changed to suit reality.

    The ATO clearly states deductions.

    Let's make it simple for you:-

    A company is a separate legal entity set up to earn income.
    The company pays company taxes on its net income.

    Shareholders are separate legal entities who buy shares to earn income. They are not 'company owners', they are investors, and thus do not pay the company taxes. The company does.
    Shareholders pay income tax on the income derived from their shares, after deductions.

    Franking dividends is only the company paying income tax in advance for the shareholder, it is not part of company taxes. It is a deduction for the company, not tax paid by the company, and effectively reduces company tax.

    Shareholders who receive franked dividends are obliged to include that amount in their gross income for tax reckoning.

    Since company taxes have no relationship to shareholder's income tax, there is no double taxation.
    Anonymous
    20th Feb 2019
    11:58am
    "Franking dividends is only the company paying income tax in advance for the shareholder, it is not part of company taxes. It is a deduction for the company, not tax paid by the company, and effectively reduces company tax."

    wtf ?????
    KSS
    20th Feb 2019
    2:40pm
    "Franking dividends is only the company paying income tax in advance for the shareholder,"

    Trebor you are confused. You say it yourself, the company has paid tax on behalf of the shareholder. So the shareholder has no tax liability on the dividend they receive. The shareholder declares the dividend as income AND the franking credits are offset against any other tax liability the shareholder has (just like they offset any income tax deducted by their employer from wages or salary). If the total tax paid (by the employer or company or even the taxpayer in advance) is more than the tax due they get a refund. In some cases they get a refund because they don't have enough in the income column to be taxed in the first place. When the taxpayer is no longer earning an income at all, or their income is below the taxable threshold, they get a return of the tax paid on their behalf - whether by an employer, themselves or the company whose shares they hold i.e. the franking credits.

    Mr Shorten is not making this situation 'fairer' at all. People who have a taxable income including from share dividends will not be affected by his policy. They will still get their franking credits to offset tax. he came late to the party to 'grandfather people on pensions so it won't affect then either. Its people on far lower incomes - perhaps just a dollar more than the part pension threshold who will lose here and in the main that is people who put their superannuation in a self managed fund. Losing the ability to offset franking credits and obtaining the current refund of tax paid on their behalf will render them worse off not only then now, but conceivably worse off than a pensioner.

    How is that fair?
    GreyViper
    20th Feb 2019
    2:47pm
    Trebor, you went to uni and studied economics? Did you pass? Have you ever studied a company balance sheet? You state "Company dividends are not income taxed on the company - companies pay their taxes and dividends are a deduction." can you point out to me on a balance sheet where dividends are listed as a deduction? Dividends are a distribution of profits after all tax liabilities have been met! I've looked through several annual reports and nowhere can I see shareholders dividends listed as an "Operating Expense".
    "the income a shareholder derives from them properly constitutes part of their gross income" ("their" being the company). Sorry. Not correct. Dividends are paid out of NET income after tax and expenses.

    "so there is really no need to frank dividends at all". Well, yes there is, because then I get a credit for the tax already paid by the company on my behalf and can claim that against my other tax liabilities and, if I have none, I get it refunded!
    "Obviously you have no real understanding of dividend imputation". And you do? not by what you have written on this page, you don't! I agree with FLV, what you write is Gobbledegook with a capital G!
    "The company pays company taxes on its net income". Wrong again! A company pays taxes on its Net income AFTER deduction of Operating Expenses and Impairment Charges!
    " They are not 'company owners'. Another incorrect statement. Here is a quote taken from the Investopedia web site.
    "
    Shareholder
    Reviewed by Will Kenton
    Updated Dec 14, 2018
    What is a Shareholder?

    A shareholder, commonly referred to as a stockholder, is any person, company, or institution that owns at least one share of a company’s stock. Because shareholders are a company's owners, they reap the benefits of the company's successes in the form of increased stock valuation. If the company does poorly and the price of its stock declines, however, shareholders can lose money.
    Do you notice the part that says "Because shareholders are a company's owners"? That is exactly what they are! When you look at a company Balance Sheet it talks about Shareholder's Equity and this equates to almost the full worth of the company apart from a small part attributed to Non-controlling Interests. Shareholders OWN the company!

    "Franking dividends is only the company paying income tax in advance for the shareholder, it is not part of company taxes. It is a deduction for the company, not tax paid by the company, and effectively reduces company tax". More incorrect statements.

    "What are Franking Credits?

    Franking Credits also known as Imputation Credits are a type of tax credit that allows Australian Companies to pass on tax paid at the company level to shareholders." Can you see the part that says "to pass on tax paid at the company level"? Do I need to go on? You clearly have NO IDEA what you are talking about and I can't believe that you studied economics? It just boggles the brain. I suggest you read the information contained on this web site. It might help you understand!

    http://frankingcredits.com.au/
    Anonymous
    20th Feb 2019
    2:55pm
    All you’ll get guys is more gobbledegook from Trebore
    TREBOR
    20th Feb 2019
    3:01pm
    Not at all - company taxes are not taxation paid by the company on behalf of a shareholder.. the two are totally separate.

    Company tax is company tax - tax withheld on behalf of shareholders is another matter entirely, and only impacts on company taxes as a deduction, by reducing company tax liability.

    It is therefore meet that the shareholder pay tax owed, rather than this becoming a double deduction.

    Everything you say clearly shows the need to settle this pack of lies once and for all that are being abused, especially the dire confusion that somehow company taxes paid are shareholder's taxes paid when they are nothing of the kind. No wonder the Libs went out of their way to so confuse this simple issue for the benefit of their mates.

    As for gobbledy-gook, Loathario - it's all in your head.... you just choose not to see simple realities. Your stupid and insulting remarks will one day lead to your being banned from here.

    Get a grip on yourself, man - people are watching...
    Anonymous
    20th Feb 2019
    3:02pm
    I am a shareholder in a family owned , oops sorry run company
    According to Trebore , I and my family don’t own the company , some other entity does , only Trebore knows
    TREBOR
    20th Feb 2019
    4:14pm
    **rolls eyes** company ownership is separate from the individual taxpayer.... now don't try to twist my words.... both are separate legal entities, capisce?

    You're the one wanting to claim that because it is a SEPARATE LEGAL ENTITY family owned company, you as an individual income recipient from it should not be paying taxes and neither should the company...

    If that is the case, you are a thief, sir!!
    MICK
    20th Feb 2019
    4:39pm
    To end the argument TREBOR and others I suggest companies will change how they pay shareholders in future. If they decide to pay out higher dividends to shareholders and pay less tax themselves then poor earning shareholders will effectively end up with the same outcome as using franking credits. Of course high earning shareholders would be liable to pay tax on the higher dividends. Is that not a win/win???????
    Maybe it'll play out like that. If so Shorten will save face assuming he gets in after shooting the party in both feet.
    GreyViper
    20th Feb 2019
    6:06pm
    TREBOR, you keep going on about "Company tax is company tax - tax withheld on behalf of shareholders is another matter entirely, and only impacts on company taxes as a deduction, by reducing company tax liability". If you're so clever and EVERYBODY ELSE is wrong, kindly point out to me where "tax withheld on behalf of shareholders" appears on a company balance sheet or income statement? If what you say is true (and it's not!) it would appear under operating expenses but it's not there on any of the balance sheets that I've ever looked at!
    Please, share with us the benefit of your great wisdom and point out to us where "tax withheld on behalf of shareholders" appears on a company balance sheet and income statement? I await the benefit of your great knowledge with anticipation!
    TREBOR
    20th Feb 2019
    7:11pm
    **rolls eyes** what part of 'Economics and Accounting go hand in hand at UNSW as part of the same course" do you not understand.

    Doin't play the label game with me GV - I've told you before - a company MAY take a deduction for franked component of dividends - if so it will appear on their paperwork... how they label it is irrelevant. It is still a deduction for paying the franking component of dividends, and is not part of Company Tax.

    That's why it's called Company Tax, Don-kay - because it's Company Tax! And its only relationship with franked component of dividends is that is can be a deduction to reduce company liability to Company Tax.

    Once again - the whole argument can be resolved by abolishing dividend franking entirely and leaving everyone, including companies, to work out their now simplified tax with the ATO.
    TREBOR
    20th Feb 2019
    7:15pm
    ..I can just imagine all those lovely little Asian chicks employed under affirmative action, the occasional Pislander or Muhamed Al-Akbar struggling to deal with a "oh, we paid franked dividends, but wish to only claim part of it as a tax deduction for the company, and the rest we leave to the shareholder, who may or may not pay any tax as a result..."

    Dear old Grey Viper - just look on the franked component as being tax withheld from your earnings to be included as part of your gross income along with your dividend, and it is so much more easy to get your mind around.

    Better still - join the rush to abolish franked dividends.
    Anonymous
    20th Feb 2019
    8:12pm
    And Thebore resorts to racism as a last resort to justify his stupidity
    Just when you think he cannot sink any lower ...
    MICK
    20th Feb 2019
    8:32pm
    Come on guys. Lets not start behaving like prize jerk Lothario. We can do better than that.
    TREBOR
    21st Feb 2019
    10:00am
    Commenting on reality is now 'racism'? Nowhere near as bad as a total hypocrite who blasts pensions and other social security recipients and then skites about how he gets freebies and doesn't pay any tax.
    TREBOR
    20th Feb 2019
    10:57am
    "“We can no longer be the only country in the world that provides tax refunds to shareholders who have not paid the income tax to start with. If you pay tax, we will refund it, but if you don’t pay tax there is nothing to refund.”

    What is wrong with this statement is that it is tax paid on behalf of the shareholder and should be treated the same as PAYE tax for reckoning. A blanket approach such as that does not work, since in effect, the shareholder HAS paid tax via the company paying it in advance, same as PAYE.

    Either these people, on both 'sides' of this essentially non-question, do not understand simple things, or they deliberately ignore realities.

    As for super - I believe we've found the answer here already for them.....
    Anonymous
    20th Feb 2019
    11:00am
    I don't think you understand the imputation system either
    If you overhaul the imputation system, then you need to do the same with all other aspects of company and personal tax
    Reduce company tax rate to 20% for a start and certain threshold for dividends should attracted favorable tax treatment
    Anonymous
    20th Feb 2019
    11:00am
    I don't think you understand the imputation system either
    If you overhaul the imputation system, then you need to do the same with all other aspects of company and personal tax
    Reduce company tax rate to 20% for a start and certain threshold for dividends should attracted favorable tax treatment
    TREBOR
    20th Feb 2019
    11:12am
    Company tax is fine at 30% - their option is to pay income tax.... which would be far higher.

    There is zero benefit to be earned from reducing company tax, since that is only paid on net income anyway. Some fear-mongers and propagandists seek to infer that companies are taxed on their gross profit - when no such thing occurs.

    If they were treated the same as any other income earner, many of their deductions would not exist, so they already have a preferential run, and capping company tax at 30% is a luxury deal given their net profit. Certainly a far better deal than Joe and Jo Toiler get... and Joe and Jo do';t get the deductions, either.

    Maybe companies need to get their own houses in order and stop whining.
    Jim
    20th Feb 2019
    12:07pm
    I don’t think anyone who clearly doesn’t understand the franking credit issues are ever going to change their minds, so the reason for making it an issue has worked, ie envy politics, equally those who do understand how the system works are never going to change anyone’s mind on the fairness or unfairness, the debate has been going on for too long and to date I haven’t seen many contributors change their minds, but one suggestion in particular I believe has a lot of merit, companies pay the full dividend and let shareholders look after their own tax liabilities, this isn’t going to put any more money into the system, because anyone who is not liable for tax won’t pay any tax, in fact they will have the extra money from their dividends earlier because they won’t have to wait until the end of the tax year to get the tax back that they shouldn’t have paid in the first place, the loser will be the government because they won’t have the use of any tax that has been paid. I have relo’s in the UK who own shares, they don’t receive franking credits as far as I am aware, they do have a system that is described as taxed at source, not really sure what that means, what they do have is their first £6000 from investments is tax free, then everything after that is taxed, that’s my understanding with limited knowledge of their system.
    Anonymous
    20th Feb 2019
    12:12pm
    Yes Jim, countries that have dome away or amended their imputation system have also made other changes to compensate, like Singapore, the US UK and many in Europe

    Also don't forget they have universal pension


    When their imputation systems were amended, new tax free thresholds or tax concessions for dividend income were simultaneously introduced.
    Corporate tax rates were also cut enabling companies to pay higher dividends


    Idiots who support labor's policy haven't a clue what they are supporting. Lemmings
    TREBOR
    20th Feb 2019
    3:06pm
    Ah - so now you're a champion of universal pension under strict rules on other income taxation, Loathie?

    Are you consistent with anything?

    "new tax free thresholds or tax concessions for dividend income were simultaneously introduced."

    Ah - I see - the first to scream 'unfair and unequal treatment' when told your freebies will be gone, but now you say that somehow dividend recipients should have personally acceptable tax thresholds etc enjoyed by nobody else? One rule for the scum worker and another for the heroic shareholder? Different tax rules for income earned?

    Every little thing you utter clearly supports the need for massive tax change here....

    As a side-note - do you actually understand what you are putting out here?
    TREBOR
    20th Feb 2019
    4:15pm
    I understand full well how you and your kind have distorted the imputation system for personal greed, Loathie....
    TREBOR
    20th Feb 2019
    7:18pm
    I don't think you understand anything apart from your pissy little backyard family company and its strange structure of a few family 'shareholders' - Loathie.... obviously you have no idea about any REAL company that has hundreds and perhaps thousands of shareholder..... and as for taxes - the ATO wouldn't waste the time on your family's PLBYFC. Not enough money to be gained.... but a talented ATO employee could design a system to bring you to heel, if ever permitted to do so.
    TREBOR
    20th Feb 2019
    7:20pm
    A 'company' can be formed with one major shareholder and one minor one - the latter holding one share - and thus permitted to call self 'company director'.

    How many 'shareholders' does your PLBYFC have, Loathie? I'll go for NONE...... so in discussion of shareholders generally you don't count.....
    Julian
    20th Feb 2019
    11:19am
    The massive current and future welfare bill has to be paid from somewhere. Either borrow more money or take it from people who have worked ,scrimped and saved all of their lives to either be financially independent or minimise the burden on the system.
    TREBOR
    20th Feb 2019
    11:54am
    "The massive current and future welfare bill has to be paid from somewhere."

    Make that :- The current government running bill has to be paid for from somewhere.

    Why are you cherry-picking social security? Do you somehow imagine that Social Security is the only cost on government? Apart from that, Social security has been funded from an income tax component and other levies as required for many decades now...longer than most people living.... and is thus essentially self-funding.
    Julian
    20th Feb 2019
    12:05pm
    There was a particular tone of sarcasm in my comment. That said, from memory, about 35% of government spending is directed to welfare. While the opposition primes itself for victory, the people smugglers are taking bookings. See the connection? More gimmigrants, more welfare....more debt.
    Misty
    20th Feb 2019
    1:27pm
    Another deluded person who believes the Coalition spin on Border Control, what rubbish, what do you think we pay our Border Patrol to do?, sit back and watch the boats sail in REALLY, and you believe this rubbish.
    Julian
    20th Feb 2019
    1:34pm
    Who is deluded??

    This has nothing to do with border patrols. Obviously the facts get in the way of your agenda.

    Where does the money for welfare come from?? Taxpayers.
    TREBOR
    20th Feb 2019
    3:07pm
    Ah - I see Julian - my apologies for not noting your sarcasm... we have too many here who actually believe what you said.. as if it's real.
    TREBOR
    20th Feb 2019
    3:07pm
    Most illegal immigrants arrive by plane..... FACT.

    Boats are a tiny minority.
    Adrianus
    20th Feb 2019
    11:26am
    "“We can no longer be the only country in the world that provides tax refunds to shareholders who have not paid the income tax to start with. If you pay tax, we will refund it, but if you don’t pay tax there is nothing to refund.”"

    This disgusting rhetoric from the person who was immigration Minister in 2010 when bodies were washing up on the shores of Christmas Island.

    Well who the hell paid the tax?

    The company you say?

    Well who the hell owns the company?

    Awe gee, it must be the shareholder.

    What lies will Bowen and Shorten tell to justify their ideological nonsense.?
    Anonymous
    20th Feb 2019
    11:30am
    The sycophant will say whatever to please his puppet masters - the union thugs
    He has a permanent spot under the table at the union leadership meetings
    Anonymous
    20th Feb 2019
    11:30am
    The sycophant will say whatever to please his puppet masters - the union thugs
    He has a permanent spot under the table at the union leadership meetings
    TREBOR
    20th Feb 2019
    11:54am
    Let's make it simple for you:-

    A company is a separate legal entity set up to earn income.
    The company pays company taxes on its net income.

    Shareholders are separate legal entities who buy shares to earn income. They are not 'company owners', they are investors, and thus do not pay the company taxes. The company does.
    Shareholders pay income tax on the income derived from their shares, after deductions.

    Franking dividends is only the company paying income tax in advance for the shareholder, it is not part of company taxes. It is a deduction for the company, not tax paid by the company, and effectively reduces company tax.

    Shareholders who receive franked dividends are obliged to include that amount in their gross income for tax reckoning.

    Since company taxes have no relationship to shareholder's income tax, there is no double taxation.
    Jim
    20th Feb 2019
    12:26pm
    Agree Trebor it’s not double tax, but it could be described as double dipping if the tax withheld as franking credits is not allowed to be claimed by the investor, whichever way you look at it the investor is being charged usually 30% on their return of investment if there is a franked credit then the franked dividend and the dividend have to be declared as income, even though you haven’t received the franked dividend, I think your suggestion of not paying a franked dividend has a lot of merit, the investor would then be liable for their own tax liability at the end of the tax year, the winner is the investor, they will get their increased income twice a year, the loser is the government they won’t have the use of the withheld tax, if it has been paid that is! Doesn’t seem like a sensible move on the economy.
    Adrianus
    20th Feb 2019
    1:40pm
    HA HA HA!!! TREBOR and Jim, you guys crack me up.
    Love to have a beer with you two and listen to you both talk about franking credits. He He He. What a hoot that would be. :)
    Where do you get all this information?
    I underestimated Shorten's and Bowen's depth of knowledge of the Labor voting base.
    Adrianus
    20th Feb 2019
    1:40pm
    HA HA HA!!! TREBOR and Jim, you guys crack me up.
    Love to have a beer with you two and listen to you both talk about franking credits. He He He. What a hoot that would be. :)
    Where do you get all this information?
    I underestimated Shorten's and Bowen's depth of knowledge of the Labor voting base.
    Jim
    20th Feb 2019
    2:18pm
    I would have thought my comments mostly backed your point of view, Adrianus, I know Shorten well and have had dealings with him when I was a member of the AMWU, the man is a traitor to the union movement and will be the same as the head of our country, I think Shorten’s popularity speaks for its self, I don’t think his preferred Prime Minister status has come close to anyone from the LNP so I think most voters Labor or LNP know he’s a dud, but largely the Libs have destroyed themselves, we will just have to hope that not too much damage has been done by the time the country and Labor realise what a mistake we have all made, we can live in hope.
    TREBOR
    20th Feb 2019
    3:10pm
    Yes, Jim - that would be most unfair - which is why I posted my thing about a couple just outside receiving a pension, and under certain circumstances, entitled to part or full refund of DI, depending, of course, on their income mix.

    If they only have, for instance $1000 income from shares franked - they would actually owe tax if their income is from other 'investments' such as poprerty ... depends on how their income is derived.
    TREBOR
    20th Feb 2019
    3:11pm
    From the tax department, Adrianus.. from the Tax Department.... read what they have to say about franked dividends.
    Adrianus
    20th Feb 2019
    4:09pm
    There is no tax department. It stopped being a department over 50 years ago.
    Adrianus
    20th Feb 2019
    4:09pm
    There is no tax department. It stopped being a department over 50 years ago.
    TREBOR
    20th Feb 2019
    4:17pm
    ATO then - no off you go...... get to the point....
    MICK
    20th Feb 2019
    4:41pm
    Adrianus: you forgot to use the 'school halls and pink batts' line. Silly you. LNP stooge!
    john
    20th Feb 2019
    11:38am
    Another expert suggesting superannuation fiddling is the way to go. If you are not a financially savvy person and don't always understand what is going on and how franking effects you or does not effect you, the mention of the piddling around with superannuation is rather a big fat worry.
    As governments have fiddled the books and changed the set up of Super on numerous occasions.
    It suggests to me that governments control over super laws and the way they are pig headed greedy and unable to satisfy OAP people who may not have the nous, and keep them at a level, all sounds like manipulation of finances and someone somewhere gets wealthier out of it, than others ( the others being the majority).
    Complicated and unbelievable hoop jumping through!
    There must be a simple answer in this wealthy country, whose got it?
    Thoughtful
    20th Feb 2019
    1:49pm
    Many on this site actually. UAP taxed at normal rates. Scrap all the other tax rebates including SAPTO. Stop franking credits.
    Anonymous
    20th Feb 2019
    1:50pm
    Stop the OAP
    TREBOR
    20th Feb 2019
    3:12pm
    Stop the Franking.....

    Up there, Loathie - you just lauded other countries with universal pensions... TF is wrong with you, boy? Can't keep it straight in your trolling?
    Misty
    20th Feb 2019
    6:56pm
    Must be one of his multiple personalities taking over Trebor.
    TREBOR
    20th Feb 2019
    8:19pm
    That sort of name-shifting is a sign of an immature personality... olbaid/diablo, Lothario (snuckles), and now this.... could be a borderline with deep-seated insecurities......
    Olive jam
    20th Feb 2019
    11:50am
    Loss of franking credits will affect my income adversely.
    However it will not change my vote.
    Anonymous
    20th Feb 2019
    12:05pm
    So you will vote LnP then
    Lescol
    20th Feb 2019
    12:11pm
    Loss of franking credits will affect my income adversely and it WILL change my vote. Shortens dream wont get through an independant senate. cheers
    dick
    20th Feb 2019
    2:10pm
    I don't believe you... to lose income on investments that you have scraped and saved to build up.. seriously Olive Jam.!!!.. I bet you don't receive franking credits which will result in lost income or else you would change your vote.
    Many labor voters are now former labor voters and it is showing in the polls.. Shorten and Co have blown their walk in chances.. it will now be a real battle for the unpopular Shorten to win.
    MICK
    20th Feb 2019
    4:44pm
    We like many other will also be affected Olive. I will still need to vote Labor in the upcoming election as my plan is to make sure the current disgraceful government is sent th Davey Jones' Locker. After that I'll revert back to Independents which is where we all need to be to protect the nation from political parties who are effectively owned by donors rather than tax payers who pay their high salaries.
    Adrianus
    20th Feb 2019
    5:08pm
    We need to prepare people like this with a new form of mind control in the event that war breaks out we will need kamakazies.
    Adrianus
    20th Feb 2019
    5:08pm
    We need to prepare people like this with a new form of mind control in the event that war breaks out we will need kamakazies.
    Misty
    20th Feb 2019
    6:59pm
    I cannot understand why people cannot change their financial affairs so they are not affected badly if the FC law is passed, surely all you people did not put all your eggs in one baske, any financial expert would tell you that is the wrong thing to do, far too risky.
    Misty
    20th Feb 2019
    7:03pm
    What on earth is the matter with you Adrianus, your comment makes no sense whatsoever, have you been imbibing some of that nectar?.
    MICK
    20th Feb 2019
    8:34pm
    Just another LNP funded troll Misty. Best to try and avoid posting with this person.
    Anonymous
    20th Feb 2019
    8:38pm
    Can’t handle the truth eh Mick
    Typical from the likes of you and Thebore
    Rae
    20th Feb 2019
    12:25pm
    Be better to reform the tax system.

    Shorten must realise that it is States responsible for schools and hospitals and they don't get income taxes. The LNP forced privatisation on the States and ruined revenue and the Federal Government needs to fix that.

    Superannuation has been reformed far too much and is fast losing any credibility as a sensible means of saving and investing.
    TREBOR
    20th Feb 2019
    3:12pm
    Hear, hear!!
    Jim
    20th Feb 2019
    6:18pm
    Maybe we should give income tax collection back to the states, I believe that is how it used to operate, let the federal government collect the 10% gst and distribute that tax according to need, after deducting the necessary funds to run the military and border control and any other national agency that protect all Australians. We could probably halve the amount of politicians in Canberra, now which party would be game to bring that in as a policy, none I guess.
    TREBOR
    20th Feb 2019
    8:20pm
    Wouldn't trust the States as far as I could throw them...
    Jim
    20th Feb 2019
    8:24pm
    Ditto, I was just thinking about the possible savings from getting rid of a few of the snouts in the trough, just dreaming.
    Old Man
    20th Feb 2019
    12:39pm
    Labor has flip-flopped on Christmas Island. Until yesterday a number of Labor MP's rubbished the decision to re-open Christmas Island the Shorten declared it was "all fine". Have they gone too far down the track to change their position on franking credits? I think not. As soon as the polls suggest that the policy may cause them an election, the policy is for turning.

    There is a way around the franking credits and that is for companies to treat dividends as an expense and deduct them from taxable income. Companies will only pay tax on net profit and those receiving dividends will need to pay tax on the total income. This, of course, won't happen as it will drastically reduce tax income.
    TREBOR
    20th Feb 2019
    3:14pm
    **groan** - oh... no... not the refos again...

    ATO says that a company MAY take dividend franking as a deduction... it would be far simpler to si8mply abolish it and stop all this nonsense.
    MICK
    20th Feb 2019
    4:47pm
    Only for those who are in a high tax bracket OM. What we are discussing here is retirees who earn around pension level. Your idea, which I think I covered above as well, sounds plausible.
    The real issue is the big end of town will not stand for it having to pay tax at their marginal rate (=48%). This is the real stumbling block. What tax bracket did you say you were in?????
    Gonfishing
    20th Feb 2019
    12:46pm
    So as a self funded retiree I don't pay any tax.if I owned all of BHP's shares then they would be paying me all of their profits as fully franked dividends. I would then get all the tax that BHP had paid as a cash refund which means noone pays any tax on the profit made BHP. How can this be fair?
    Travellersjoy
    20th Feb 2019
    12:52pm
    Spot on!
    Anonymous
    20th Feb 2019
    1:10pm
    Dumb - you will be paying tax at the top marginal rate which means BHP profits are being taxed at 45% not 30%
    Jim
    20th Feb 2019
    1:19pm
    No they wouldn’t be paying all of their profit as franking credits, this is a new accusation, where did that come from? They might pay all of their dividends to shareholders, those profits would be taxed at the company tax rate of 30% the amount paid to the investor would be their shares multiplied by the dividend minus the 30% tax withheld to pay the companies tax liability, now the above scenario isn’t how it would happen, the company retains a certain amount of the profit to reinvest, then they decide how much of the remainder they pay as a dividend which is then paid to the investor minus the 30% withholding tax if the dividend is fully franked, so you see the investor has had 30% of his dividend withheld, much the same way as all PAYG taxpayers have tax withheld from their income, then at the end of the year if they were not liable for the tax withheld by their employer because their income fell below the tax free threshold they are entitled to claim that tax that has been withheld, exactly the same way as withholding tax/franking credits is withheld from the investor, who may or may not be a pensioner, any other system would be discrimination against one section of the community, Hope this goes some way to clear up any misunderstanding.
    TREBOR
    20th Feb 2019
    3:16pm
    Depends on your level of income - REAL income that is - and unfortunately governments have made a Frankenstinian Monster of superannuation such that it permits endless free extra money for some ...

    Perhaps the idea is that a superannuation fund have an absolute limit, and you pay tax on all income above..... that'll slow down some of the fat cats....

    Wait for the screams of 'unfair' .....
    TREBOR
    20th Feb 2019
    4:19pm
    Only if his/her net income warranted 45% income tax.... **rolls eyes again**

    You're giving me a headache forcing me to roll my eyes endlessly, Loathie.... try to catch up in class...
    Old Geezer
    20th Feb 2019
    4:31pm
    I am also a SFR and I pay no tax as all my tax liabilities are paid for by my franking credits. So I get to keep my dividend plus all my franking credits. No one pays tax on my dividends either.
    MICK
    20th Feb 2019
    4:48pm
    There's a hole in the buck dear Lisa dear Lisa, there's a hole in the bucket dear Lias a hole......
    Gonfishing
    20th Feb 2019
    5:19pm
    From the Government's ASIC website:

    https://www.moneysmart.gov.au/superannuation-and-retirement/income-sources-in-retirement/income-from-super/retirement-income-and-tax
    "For people aged 60 and over - Benefits from a taxed super fund (i.e. most super funds) are tax-free."

    So my point again- if my benefits are tax free and I own all the shares that BHP has issued through my Self managed super fund which is in pension phase then I can claim back all the franking credits. Why, - because the SMSF pays no tax on its earnings if it is in pension phase. So whatever tax that BHP has paid will be given back to me.

    I know that BHP will not pay out its entire profits as dividends. BHP paid out $US3.35 billion as dividends which will have franking credits worth 30% of that amount = $US1 billion. Also a further $US10b was paid out and assuming it was fully franked then the franking credits would be $US3.33b

    So if I were the only one holding all the shares, I will get a tax refund of $US4.33b
    So potentially, the Australian Government can lose this amount of tax revenue on which no one pays any tax.
    Not everyone who owns BHP shares is tax exempt. My illustration was to demonstrate how no one pays any tax on franking credits issued to someone who does not have a tax liability. However, the potential lost revenue from all company dividends in Australia is estimated to be $5b. That is $5b of company tax that is refunded and on which no one pays any tax.
    The following SMH article shows how much dividends were paid by BHP in 2018: ( https://www.smh.com.au/business/companies/bhp-hands-shareholders-record-dividend-after-big-profit-lift-20180820-p4zyne.html)

    BHP hands out a record final dividend and pledges billions to come
    Darren Gray
    By Darren Gray
    August 21, 2018 — 8.37am

    BHP's army of shareholders will receive record final dividends worth $US3.35 billion next month, and in a couple of months will learn how they will receive a further $US10 billion of returns from the miner.

    BHP unveiled a record final dividend of US63 cents a share as it reported a 33 per cent jump in underlying net profit to $US8.93 billion ($12.2 billion) for fiscal 2018, its biggest underlying profit since 2013-14.
    Jim
    20th Feb 2019
    6:37pm
    I take your point gonefishing, and most of what you are saying could be construed as correct, but in reality it’s using numbers to create something that is highly unlikely, as for the dividends and the special dividends, are you talking about the buy back that took place at the end of last year, that was an unusual circumstance that needed a special ruling from the ATO, the figures you quote are similar to the figures quoted by BHP regarding the result of the sale of assets in the US, or are you quoting some other dividend? I am not sure if I have done the right thing, but I sold my shares in the buy back at a price that was about $6 less than the price after the buy back, something to do with the value of the shares and capital gain, will reduce my tax liability apparently?
    Misty
    20th Feb 2019
    7:06pm
    I think OG has had some of whatever it is Adrianus has had.
    TREBOR
    20th Feb 2019
    8:22pm
    I'm on my second light beer.....
    Gonfishing
    20th Feb 2019
    8:41pm
    Jim the BHP example was for illustration only. The modelling released by PBO estimates that revenue foregone by this tax refund is $5b per year in relation to giving refunds to individuals or super funds.
    Anonymous
    20th Feb 2019
    8:45pm
    Rubbish
    There is no revenue foregone
    Old Geezer
    20th Feb 2019
    9:17pm
    Yes I have done very well out of BHP in the last six months with the buyback and the recent dividend. BHP now $37.94 so they were a good buy at $15.
    Old Geezer
    20th Feb 2019
    9:17pm
    Yes I have done very well out of BHP in the last six months with the buyback and the recent dividend. BHP now $37.94 so they were a good buy at $15.
    Anonymous
    21st Feb 2019
    7:41am
    Gone Fishing, you are confused! Your example is incorrect. If you owned all of BHP, you should certainly pay a LOT of tax, because either your private income would be way above the tax threshold, or your super would exceed the $1.6 mil TBC and you would be taxed on all income on any amount over that threshold at 15%.

    Where Shorten is WRONG, is that in that scenario you would KEEP YOUR FRANKING CREDITS as a tax deduction. But your SFR friends who had very limited assets and income would forfeit their tax refund and pay tax at 30% of their dividend, so effectively what Shorten is doing is transferring the burden of company tax to those shareholders who have no tax obligation - and letting the rich continue their party.

    Please explain then how it is fair for a $200,000 a year salary earner to get a tax deduction of the franking credits and someone who contributes just as much to the treasury annually (or potentially more!) by not drawing a pension to be deprived of a refund of their overpaid tax, and someone who costs the nation tens of thousands annually by drawing a pension to get TRIPLE benefits, including a cash refund of franking credits.

    If the system is wrong, fix it fairly, and with respect to those who have been compelled by changes to the pension threshold and a low investment return environment to rely on the franking credit refund that was legislated as an entitlement at the time they planned their retirement.
    Travellersjoy
    20th Feb 2019
    12:51pm
    Makes me more likely to vote Labor, since I have long been a nonLabor voter.

    Howard et al have made monkeys of us all, and had tax payers propping up the capital accumulation of some at the expense of everyone else.

    This is just one of the rorts that should go for high wealth (not income) individuals.

    I will also vote for a meaningful change to companies law to make them accountable, and to corporate tax, to remove the loopholes they drive their B-doubles of tax free cash through on their way to a tax haven in the sun. It is a scandal that google, apple, facebook et al pay no tax here, and we give them billions to truck away.
    MICK
    20th Feb 2019
    4:51pm
    Sounds pretty spot on. THE CURRENT GOVERNMENT is fully aware of tax avoidance by the wealthy and multinationals who use fraudulent offshore tax shelters. Malcolm Turnbull has one. This is why I keep accusing this lot of betraying the country and its citizens but they refuse to do anything about it and are riding out the storm hoping it will all go away. I must say the right wing media has done a good job of trying to bury the dirt.
    TREBOR
    20th Feb 2019
    8:24pm
    ... and stirring up squid's ink, Mick.... da boats.. da boats..... run and hide your daughters... 300 sick people might be flown here for treatment and then detained again ... da boats... da boats.... open borders... rapists and murderers and padeophiles loose on the streets (what's new?) .... da boats... da boats....
    MICK
    20th Feb 2019
    8:37pm
    Yes TREBOR......but the tax issue is the centrepiece of the betrayal. The rest is icing on the cake. They're rotten to the core and if you heard the news tonight re Cash, Corman and Hockey you'd realise the corruption is a Club.
    Why does the mainstream media mostly hide the dirt?
    Eddy
    20th Feb 2019
    1:03pm
    My answer is an emphatic NO, franking credits, which I view as an enormous tax rort, are a non-issue to me. Affected people who rely on these credits for income should re-arrange their investments to ensure they get the best return on their money without relying on tax refunds for tax they did not pay.
    Jim
    20th Feb 2019
    1:37pm
    How do you regard franking credits as a rort, franking credits are tax withheld from an investors dividend, if that investor’s income falls below the tax free threshold then surely its fair for that investor to receive the withheld tax back, why do you claim it’s a rort to treat an investor any different to any other earnings income. I am genuinely interested in why you think this way, you might know something I don’t know that could influence me to understand your point of view.
    Adrianus
    20th Feb 2019
    1:56pm
    Gentleman Jim?
    Adrianus
    20th Feb 2019
    1:56pm
    Gentleman Jim?
    Old Geezer
    20th Feb 2019
    4:34pm
    I don't pay tax but I keep all my franking credits as well.
    Eddy
    20th Feb 2019
    4:51pm
    Well Jim, in terms of Tax a company is an individual entity, same as an individual person. As well as an ABN it has a tax file number. A company is required to pay tax on it's profits or , if it makes a loss, can carry forward losses to a following tax year. Just because a company makes a paper loss it does not prevent it from paying a dividend from cash reserves or borrowings, in which case the dividend is not usually franked (as no tax is paid). A franked dividend has had the company tax already paid by the company and, as then Government does not consider that tax should be paid twice on the same money, a shareholder may claim the franking credit as a tax deduction against the tax payable on their total income. However if the shareholder has no tax payable with which to claim a franking credit then the tax paid by the company is only taxed once and, in my opinion, should not be refunded to a shareholder.
    You may have a contrary opinion to mine, and you are entitled to it, but unless you, or any other respondent on this forum, can give me a cogent reason why they should receive a refund of tax they have not paid in the first place, my opinion will remain unchanged.
    MICK
    20th Feb 2019
    4:55pm
    Eddy - a think a solution is for companies to pay higher dividends and then pay less tax as a result. Those who are currently paying no tax will at worst pay a few dollars more but will essentially be in the same position. High income earners will of course have to pay tax at their marginal rate and get caught. They're the crew who Turnbull gave large tax cuts to so none of us need to feel sorry for this group as they are leeches feeding on the carcasses of their fellow Australians anyway and they have been living the life of Riley at the expense of low earning folk and retirees.
    Bring it on!
    Captain
    20th Feb 2019
    5:54pm
    Eddy, if people on the Aged Pension will receive the DI, why should the Self Funded Retiree NOT receive the DI? This appears to be at odds with your previous statement. "However if the shareholder has no tax payable with which to claim a franking credit then the tax paid by the company is only taxed once, and in my opinion should not be refunded to the shareholder."

    The Labor Party is considering putting into Legislation a Bill that discrimates against a particular portion of the population. Can we expect the Human Rights Commission to become involved?
    Old Geezer
    20th Feb 2019
    6:14pm
    Captain it is illegal not to refund those imputated credits under s51 of our Constitution which I have no doubt will be put to the High Court if this goes ahead.
    Old Geezer
    20th Feb 2019
    6:14pm
    Captain it is illegal not to refund those imputated credits under s51 of our Constitution which I have no doubt will be put to the High Court if this goes ahead.
    Jim
    20th Feb 2019
    6:56pm
    Thanks for the considered reply eddy I can appreciate that you have a different opinion, which of course I don’t agree with, my stance is that I have paid the tax by the company withholding the full amount of the dividend thereby reducing the amount I receive, the franking credits that have been withheld are then a tax liability for the company because they have taken the amount due to me as a dividend from my account, so whichever way you look at it I have paid the tax at what ever rate they were franked at, usually 30% if my income is below the tax free threshold then I am entitled to claim that tax that has been withheld, the only viable way I can see a change being acceptable to everyone is for companies to pay the full dividend to the investor and let the investor be responsible for their own tax liability, but as another contributor has mentioned the tax dodgers will have a field day, it’s a been turned into a complex system that should have been fairly simple.
    TREBOR
    20th Feb 2019
    8:25pm
    Good thinking, Eddy.
    TREBOR
    20th Feb 2019
    8:28pm
    A whole or part refund from credit tax from franked dividends was always on the cards.... if the ATO does its job properly, none will be affected but those with masses already. Certainly the lower end won't lose.... scare mongering... Mick's got it right.....
    Eddy
    20th Feb 2019
    1:03pm
    My answer is an emphatic NO, franking credits, which I view as an enormous tax rort, are a non-issue to me. Affected people who rely on these credits for income should re-arrange their investments to ensure they get the best return on their money without relying on tax refunds for tax they did not pay.
    KSS
    20th Feb 2019
    2:48pm
    Clearly then you do not hold any shares franked or not. Good luck with the property then when the negative gearing is stopped and the capital gains tax is increased on that investment.
    TREBOR
    20th Feb 2019
    8:29pm
    Argh, aye.. let's broaden the scope of discussion......
    Eddy
    20th Feb 2019
    9:58pm
    For the record KSS, you are correct, my wife and I do not hold any shares, franked or otherwise. We have no investment property so negative gearing and CGT do not affect us. In short the only "investment" we have is less than $50k in a bank account which pays paltry interest and my wife's small superannuation nestegg.
    Anonymous
    20th Feb 2019
    10:05pm
    Explains why you accept labors b/s without thinking .
    Doesn’t affect you and damn those who you think have more than you
    Eddy
    20th Feb 2019
    11:09pm
    FLV, all politicians feed us b/s, Labor are no better or worse than any other political party. Anyway do you really think we are envious of those taking advantage of imputation credits. I think not. At age 74 we are better off than we have ever been. We own our home (no mortgage) and have no debts. The only downside is we do not qualify for any OAP, fail the income test. I do not even have a Centrelink CRN (my wife has a CRN as she was in receipt of carer allowance for her late mother). We own three timeshare units and have a cruise every 18 months or so. We are really living well. No need to be envious of anyone.
    TREBOR
    21st Feb 2019
    10:08am
    'Envy'? My dear fellow, one does not 'envy' self-proclaimed cheats and thieves - one despises them.... the Thatcher woman is dead, Britain is struggling to regain its life again, and her utterances from an empty and self-centred mind should be buried with her....

    "But Denis - I don't want to be alone!"

    "You always have been, Maggie - you always have been...."
    LarryFine
    20th Feb 2019
    1:05pm
    Chris Richardson in the above article states . "Once both members retire, however, they would then be re-eligible for the refunds" Is this correct ???
    Adrianus
    20th Feb 2019
    1:50pm
    Not necessarily in my opinion. Chris Richardson is eluding to the difference between a super fund which is in accumulation and one in pension phase. A super fund pays 15% on income and then 0% in pension phase so why would that make any sense for a Shorten/Bowen policy which is designed to give union funds an advantage? You may argue that not much of what those two do makes any sense.
    TREBOR
    20th Feb 2019
    4:19pm
    'alluding' - hasn't been eluding for fifty years... (victory roll)....
    Captain
    20th Feb 2019
    5:59pm
    Larry Fine, Mr. Shorten stated that if you were not in receipt of an Aged Pension on 18 March 2018, you will never receive the DI Credit, even if a later date you receive the Aged Pension. There has been no reporting to say this stance has changed.
    TREBOR
    20th Feb 2019
    8:31pm
    I've done figures for you all above, Skipper - as OG says, a refund under the proper circumstances must be paid..... a government cannot simply say NO to all.... the decision can only be on an individual basis, and in that sense Shorten and Co are out of the ball park.
    TREBOR
    20th Feb 2019
    8:32pm
    It is only reasonable that if at some time you fall into Pension bracket, you should receive DI. Really not hard to handle for a well-motivated and efficient public service.... what it lacks is the guts and the brains to get this going .....
    Sundays
    20th Feb 2019
    1:22pm
    Hasnt this topic been done to death on this site? The company pays tax not the individual. If an individual pays tax they add the Gross dividend to their tax return and receive the franking credit as a refund. Didnt pay tax no refund. The same way you cant claim work related deductions if you havent paid any tax. Endless posts wont change many views. I agree that a minimum refund could be introduced to ease the burden for lower end SFR but really it is a rort for wealthy retirees.
    Julian
    20th Feb 2019
    1:55pm
    Amen to that.
    Jim
    20th Feb 2019
    2:01pm
    This is one of the problems, I agree this topic has been done to death, but the agenda has always been the same, to set one side of the community against another. All sorts of semantics are used in an attempt to prove one or the other side of the debate, the simple fact is if a dividend has a franking credit attached to it that franking credit is withheld from the investor and it should be paid to the tax office, whichever way you look at it the investor has had an amount withheld from their dividend if a franking credit is included,remember the investor doesn’t receive the franking credit but still has to declare it as income and if the investors income falls below the tax free threshold they are allowed to claim that amount back, not all dividends are franked either partially or fully in those cases no tax has been paid on behalf of the investor, so obviously no tax can be claimed back because non has been paid, but if the investor’s income is above the tax free threshold they are liable for any tax payable, to remove the confusion maybe the best way forward is for the investor to receive the full dividend and be liable for their own tax liability, in many cases no tax would be payable, but it would remove the envy component of the debate.
    Arvo
    20th Feb 2019
    3:08pm
    Jim- "...the best way forward is for the investor to receive the full dividend and be liable for their own tax liability, in many cases no tax would be payable"
    This might create a problem for ATO from tax dodgers and the ignorant.
    Where share holder's dividend income tax withheld amounts to be greater than the individual's assessed taxable income, sure, pay income tax refund otherwise there is nothing to refund.
    Arvo
    20th Feb 2019
    3:15pm
    sundays- It's not about not paying tax = no refund. It's about where individual share holder's income tax withheld by the company is greater than the assessed income tax liability of the individual investor then a tax refund is due, when it's not then, there is nothing to refund.
    Jim
    20th Feb 2019
    3:37pm
    Quite right Arvo, tax dodgers are a huge problem and it’s not always the ones at the top of the food chain that are guilty, the black economy in most countries including ours is worth billions of dollars a year, Australia’s black economy is reported as being 9.4% of our GDP if we could only find a way to force the multi nations to pay their fair share of tax, then collect all the tax from the black economy,we could wipe out poverty over night, pay everyone a decent pension, finance our healthcare, in the words of the castle, I must be dreaming!
    TREBOR
    20th Feb 2019
    4:20pm
    A breath of fresh air in here, Arvo - simple, innit?
    Sundays
    20th Feb 2019
    5:51pm
    Arvo, Of course you are correct.Ive stated my position and nauseum on this site and was using shorthand.

    There are many SFR with SMSF wholely invested in Australian shares. Because they can have a maximum of $1.6M in their super in pension mode no income tax is payable and the pension being drawn never appears on a tax return. At the moment, these SFR also get the Franking credits paid by the companies they hold shares in refunded. So yes, I agree with you but in these cases there is no assessed liability, so in my view no refund. It’s also Labor’s view, and is costing billions in revenue.

    However, others who have a few shares outside of super, aren’t pensioners and pay no tax will get caught up unecessarily

    I agree with Chris Richardson that ‘Franking credits are being rorted on a massive scale’. He then goes on to say there should be an overhaul of Super, but personally I think there have been eneough changes and I am suspicious.
    Captain
    20th Feb 2019
    6:04pm
    Sunday, as I posted previously, why should one section of the community receive the franking credit (Aged Pensioners) however another section of the community (SFR's) not receive the franking credit. All I say is a fair go for all.
    Sundays
    20th Feb 2019
    6:22pm
    Well that’s politics because, when I did Tax Help, all the Pensioners whose returns I did were battlers with a few shares and refund of Franking credits were very small but if you are a full pensioner it helps pay a few bills. Labor just don’t want to alienate the Nanas and Pa’s with a thousand shares here and there.
    Adrianus
    20th Feb 2019
    1:54pm
    I've read the article after reading the headline " Franking credits are being ‘rorted on an industrial scale’"
    However, there was nothing in the article which supports the claim of rorting.
    I suppose the headline is designed to irritate those who think they may be missing out on some sort of rort?
    Anonymous
    20th Feb 2019
    2:04pm
    It’s a leftie article
    Knows-a-lot
    20th Feb 2019
    4:10pm
    Leftie beats heartless Rightard any day.
    MICK
    20th Feb 2019
    5:06pm
    I recall Kevin Rudd at a prime time TV interview in response to the Murdoch media "yes and I started WW 3". I smiled when he made that statement and whenever I see the media doing its dishonest spiel I remember. Last one 2 days ago when Peter Overton (9 News) ran 2 anti Labor comments. One against NSW state Labor, the other against Federal Labor. What a surprise! Od course I don't recall anything about the lying Michaelia Cash who refuses to give a statement and therefore has no case to answer.....yet.
    Ain't politics fun.
    TREBOR
    20th Feb 2019
    8:34pm
    The Cash Cow and Der Cormannator?
    dick
    20th Feb 2019
    2:12pm
    I am a part owner of a number of companies. Those companies make profits and pay tax on those profits. They pay part of those profits to me with the tax taken out... so I have paid tax through my company ownership and the profits received which have had tax prepaid. Shorten clearly has no financial understanding or credibility.

    Also Labor says they will use the money to balance the budget !!???? But the Prime Minister has guaranteed that the next budget in April will be in surplus so there is no need to balance the budget because it already has been !!!!!!!!.

    Labor hasn't changed... they did this last time in power.. it tells you that a big spending spree is on the cards and they have to increase taxes to cover what was a balanced budget... lack of financial control yet again....spend spend spend is Labor's mantra.
    TREBOR
    20th Feb 2019
    3:21pm
    Your company is one legal entity - you are another - your company has taxes to pay and so do you. It doesn't matter that you are the owner - you are receiving personal income at a level you determine to keep your tax as low as possible as well as company benefits from running them.

    What's your complaint?
    Anonymous
    20th Feb 2019
    3:43pm
    So now he is the owner
    When it suits you shareholders are owners and when it doesn’t they aren’t
    Your as consistent as a chameleon or weasel
    TREBOR
    20th Feb 2019
    4:27pm
    No - you are the one weaseling and in fact outright lying - you must be getting desperate... I have never once said shareholders are owners - exactly the opposite - they are investors not owners, and while they receive a certificate of shares, the actual shares belong to the company.

    HE said he was 'part owner of a number of companies' - I said that even so his personal income is totally separate, as are his taxes and company taxes, since he is a personal income recipient. You as a 'salary earner' are liable for personal income tax on salary - you are also liable for personal income tax on any other income from shares..... which must bee added to your income in full (got that?). Ownership of the company has no relevance to your personal income and your personal liability for taxes.

    Got your kind against the wall, eh? Well - we'll bring the skinning knives along soon... to finish the job properly .... get that coonskin nailed to the wall.....
    Paddington
    20th Feb 2019
    2:18pm
    Why would anyone need it who has $900,000 anyway? Why would you even be complaining?
    Just enjoy life and be thankful to be so privileged. There are single women on here renting with nothing and some people are whinging about franking credits when they have plenty.
    Manage your affairs better and go have a life instead of writing thousands of words about a nonissue. You are not in a war zone or being abused in Saudia with no rights.
    MICK
    20th Feb 2019
    2:31pm
    2% of 900,000 = $18,000 Try to live off that Paddington.
    The rhetoric then turns to 'spend the $900,000'. Of course but then you end up on the pension, you leave nothing for the next generation (did you get an inheritance?) and taxpayers are deluged with the very large Boomers cohort all needing to be supported.

    Oh yes.... Next: 'sell the family home, live in a tent and live off that'!

    You need to be a bit compassionate Paddington and ask the government TO TAX THE WEALTHY & MULTINATIONALS. I know that's not fashionable and the trend is that wealthy entities should pay zero tax but it is what needs to happen. No exceptions. No creative accounting to avoid paying tax. No (fraudulent) offshore tax shelters. Just compliance!
    TREBOR
    20th Feb 2019
    3:25pm
    2% in the bank, Mick - not from shares and certainly not from shares that go into a superannuation account.

    At a mere 5% that's $45,000 - not really enough for a couple, but at that level of income they should be receiving part pension or at least low income extras - except I think those rules have been abused by this and the previous government with changes to taper rate and such.
    Paddington
    20th Feb 2019
    3:38pm
    Mick, many do not have that. They do not even have a home. They have nothing. This is a first world problem. You are supposed to be a Labor supporter? That amount of cash plus a home and other assets is not poor. Even if that is for a couple it is a lot. Why would you attack me for saying that?
    I agree with taxing the multinational companies and super wealthy people so why think I don’t?!
    Franking credits are peculiar to Australia, at least our way of dealing with them. They were never meant to be permanent.
    I expected to be attacked but not from you!
    This money should be spent on education.
    If I had $900,000 I would look for another way because it is a huge amount of money.
    It is about choices and making decisions to manage money whether you have little or a lot.
    I am actually glad not to have this awful dilemma of having a million dollars lol!!!
    Paddington
    20th Feb 2019
    3:54pm
    Good, Trebor, a voice of reason ...
    $45,000 is enough for a couple actually. Many people live on less.
    A lady put a good break down on this on an earlier site with this same topic that has been done to death.
    TREBOR
    20th Feb 2019
    4:31pm
    I posted figures somewhere here today that showed a couple would be getting $1500+ a fortnight to receive no pension, which is more than a single OAP by a country mile, and more than couples pension as well.

    Few here seem interested in figures and facts, though, just argument over their pet wants, and they all want more, more, more for MEEEE!.
    Paddington
    20th Feb 2019
    4:54pm
    Sundays explained it very well too on 8/2 (Tim Wilson)
    Yes, Trebor, we have so much like freedom to vent on here, no bombs going off around us, gender equality compared to many other places, andso much more.
    Mick, OGR bullies others on here and OG and Lothario and others put down pensioners or anyone who disagrees with them.
    All I ever do is try to stick up for the victims on here and hope the ones who left due to bullying come back.
    We are blessed compared to many other parts of the world.
    MICK
    20th Feb 2019
    5:20pm
    TREBOR - shares are not like money in the bank. They're risky and the average dividend is nowhere near 5%. You are cherry picking if that is what you believe.
    Many retirees put their cash in the bank because they do not want to risk it. They accept 2% which is less than inflation and taxable.
    We always pay out taxes TREBOR.

    Paddington - I am sorry you are struggling but your post is unfair. First I am not a Labor supporter even if I lean towards many of their policies. That's just me.
    $900,000 is a lot of money to those who have nothing agreed. Its not much for those trying to earn THEIR SELF GENERATED pension. You do not appreciate how hard this is and the reality that if some of us did not do that then the pension for the rest would have to lower than it is now to afford this. You may also want to consider that many who have managed to accumulate this sort of nestegg (no violins please) did so because they saved every penny and worked hours which the rest of the workforce would never work because they demanded a life balance. You need to see this in that light and be a bit fairer. Having $900,000 is not being rich but it does allow one to avoid the public purse....thank me for that every time you get your pension, which involves zero amount of risk, planning, record keeping and stress.
    Sorry if I appear to be tough but just trying to pass on the facts. Others will likely tell you their own stories as well. It looks like heaven but its tough.
    As for franking credits I think most people affected are angry at the fact that they planned this according to the rules and Shorten sprung this out of nowhere to come in the day he is elected. A real offensive attitude with zero understanding on the impact this will have on some. We'll cop the lower income (below the pension you are collecting) and move on. Some may be worse off. That's life!
    Cheers
    Sundays
    20th Feb 2019
    6:14pm
    Yes Mick but when did we start pitting the haves against the have nots. In her post on Sunday OGR stated she did not know a single Self funded retiree who didn’t have less than a pensioner. Nobody can believe that!

    I am self funded and worked 60 ours a week and saved for years, purely to have a comfortable retirement. I feel a lot less stress knowing I can pay my bills, travel and have some luxuries Pensioners cannot afford. Life is too short

    My father in his semi skilled job also worked very very long hours to support a large family. He saved, he taught us well, but he was a low income earner. My father, my uncle a former POW and others like him didn’t need to thank anyone.

    The pension is paid by all taxpayers and is a right.
    TREBOR
    20th Feb 2019
    6:40pm
    Yes, indeed, Mick - shares are a gamble to some extent... and we're talking about the REAL companies with multiple shareholders here - not the Lothario kind of backyard 'family company' that the ATO doesn't even consider worth the ammo.

    Yes - the dividends can be poor and not worth it unless you hold a huge swathe of shares... and taxes are always due and do not take into account risk. I suppose some of the structures are there to offset risk... such as low company tax compared to personal income tax... but it is, as I've said, a poker machine and could all collapse tomorrow.

    There is no golden guarantee or Divine Right of shareholders to make money out of a risk taken.
    TREBOR
    20th Feb 2019
    6:44pm
    No - $900,000 is not a lot to work with in 'assets' and dividend income,and has ups and down built into it if in shares. Nearly twenty years ago I said to our local newsagent that he would need around $2m in income bearing assets to have a comfortable retirement - not that far off - the Guv thinks a far lower figure is reasonable.... but I was working on a return of around $2,000 pw for what I termed 'comfortable', and that was a forward estimate from twenty years ago - almost... about right I'd say to aim for.

    He was aghast at my presumption....
    Misty
    20th Feb 2019
    7:20pm
    As I have said before , why on earth would anyone put all their money into shares, isn't it more sensible to have a diversified porfolio?, and why can't people change their investments so the proposed FC changes will not impact them so badly>
    Paddington
    20th Feb 2019
    7:21pm
    Mick, we are not struggling. We are better off now than when we were raising a big family. So, I imagine some families now are doing it tough who have a lot of children to raise. Their wages have not kept up and many cannot get enough hours.
    I suspect there are poorer people than retirees. A single pensioner who does not own their own home and needs to rent would be in the worst position out of the retirees.
    MICK
    20th Feb 2019
    8:39pm
    TREBOR - I have lost more money on shares than I care to remember. Only half pay dividends. Tell me about shares.
    The real money every made was from real estate.
    Misty
    20th Feb 2019
    11:39pm
    Why are you always picking on me Only Genuine Rainey? don't think I haven't noticed there are only a couple of us who cop it from you, I hope admin take notice of this and do the right thing.
    radish
    20th Feb 2019
    3:15pm
    I can't believe the abysmal quality of the franking credit controversy. Franking credits should be retained. The principle behind franking credits is that companies are owned by their shareholders; therefore all company income should be returned to shareholders with no company tax levied; the dividend income should then be added to each shareholder's other taxable income, and taxed at each individual shareholder's appropriate marginal rate(s); if a shareholder's marginal rate is zero because he/she earns less in total income than the tax free threshold then that shareholder pays no income tax on his/her dividends. By corollary, if a company pays 30% income tax on behalf of all of its shareholders, then in accordance with the above principles, shareholders in receipt of dividends on which a 30% tax has been paid, but whose marginal tax rate is zero because they earn less in total taxable income, including the dividends, than the tax free threshold, should receive that 30% back as a refund. By extension, those shareholders whose total taxable income attracts a marginal rate of (say) 45% would be up for an additional 15% on their dividends. And they are. This is also how sole proprietorships/partnerships work. All business income is added to the owner's/partner's other taxable income, and the business owner/partner pays tax at his/her marginal rate.
    Anonymous
    20th Feb 2019
    3:20pm
    Not according to Trebore and a few other mitts on here
    My family owned company pays me salary and sometimes I take dividends
    Trebore would have my pay tax twice on the fruits of my investment
    What a dumb dumb
    TREBOR
    20th Feb 2019
    3:34pm
    **groans, rolls eyes** Companies are NOT owned by shareholders - shareholders INVEST in companies. Furthermore, companies have specific tax liabilities and so do individual income earners - who are totally separate.

    Do you also claim to 'own' the government because you pay tax?

    If you 'own' the company, why then can't you simply demand your share of its assets if it goes bust and go your own way with those assets?

    This nonsense about 'owning' companies is just a furphy put about to hide the reality that companies must pay tax (most don't BTW) and individual who are totally separate legal entities also pay income tax on money earned.

    Some of you people must have been the worst students any teach had to put up with - you simply will not accept simple facts and move on, but insist on trying to muddy the waters.

    Pay your taxes, you bums!
    TREBOR
    20th Feb 2019
    3:35pm
    You dope, Loathie - you mean you don;t pay tax on your salary? You feel you shouldn't have to?

    And if you are handed extra personal income via dividends you feel that should not be considered as part of your personal income?:

    What part of personal income do you find hard to follow?

    You are an absolute joke, son.
    Anonymous
    20th Feb 2019
    3:46pm
    Haha you mutt
    Shareholders can wind up tjeir company and take its assets
    Because they own the company you dope
    TREBOR
    20th Feb 2019
    4:34pm
    Really? And do what with them? How many times has that happened with any of the companies all these shareholder have shares in?

    Stop trying to change the issue - what part of personal income do you not understand?
    TREBOR
    20th Feb 2019
    4:42pm
    Do you somehow imagine that our good friend above with the 'part owner of companies' should not be liable for tax on income her derives personally from them?

    You reckon that because a company pays company tax a shareholder who may or not be a part owner of a tiny company should not pay tax on personal income derived from that company?

    Clearly your accountant needs going over with a fine tooth comb..... and clearly the rules need to be changed to cut out all this nonsense...
    TREBOR
    20th Feb 2019
    4:01pm
    WELL! The comments from those who feel their shares equate to 'owning a company' and they thus should not pay tax since the company has already done so - who refuse to understand that a company and a shareholder are two separate entities (even for a 'family company' Loathie **rolls eyes**) and both are liable to taxes, that companies pay company tax and individuals EVEN SHAREHOLDERS pay personal income tax and never the twain shall meet, and who continue to confuse (deliberately or otherwise) dividend franking as some sort of non-liability to the recipient - clearly show the absolute need for a total overhaul of company law and of company tax laws, particularly as related to shareholders, and also of the way the ATO is handling itself (and being handled) in this storm of insanity....

    I've done the figures for you - offered the links to the ATO and Centrelink time after time - yet some refuse to face simple realities.

    Oh, well - let them feel the Wrath of Shorten ..... a wise company would, right about now, get rid of dividend franking....... but oh, hell - a full third of business council members pay zero tax, another third pay some, and only about a third pay 30% of net income as required... 30%!! A good deal when Jo and Joe have to pay 48% on that kind of income!!
    Zach
    20th Feb 2019
    4:12pm
    Talk to your financial adviser rather than taking the half arsed comments made in this forum to heart
    Paddington
    20th Feb 2019
    7:22pm
    I think some on here needto dojust that!
    Anonymous
    20th Feb 2019
    9:54pm
    And be told that because you have a low asset base, you have no real options unless you can become a finance guru overnight and spend your golden years trading shares for - hopefully - enough capital gain to live on.

    Stop believing Labor's LIES. Their policy is a massive transfer of wealth TO THE WEALTHY.

    The $200,000 a year income earner pays no extra tax on his dividend income because his franking credits offset it.

    The retiree with $4 mil in super and a $2 mil house can use his franking credits to offset his tax on the portion of his super over $1.6 mil

    The part-pensioner with $800,000 and a $2 mil house gets cash franking credit refunds on top of concessions and benefits and a small part pension.

    The couple with a $400,000 house and $850,000 in assessable assets, and an income of just $37500, loses up to 30% of their income and can NEVER get franking credit refunds, no matter how poor they may become. Not paying tax? BS! They are contributing more to the treasury by not drawing a pension than most folk on $200,000 a year incomes. They DESERVE a little help, not abuse and theft.

    If this is what Labor calls 'fair', we cannot afford to EVER let them govern.
    Anonymous
    20th Feb 2019
    9:59pm
    This is the labor way OGR
    Do t know why you sound surprised
    Labor is intent on making everyone poor
    Whereas the LNP wants to life the wealth of all Australians
    Old Geezer
    20th Feb 2019
    4:38pm
    Is this proposed policy fair?

    We have arguments saying that if you don't pay tax you should not get a refund.

    So if I don't pay tax because my franking credits pay my tax then why do I not miss out on anything?

    I can't see how this is fair at all.
    TREBOR
    20th Feb 2019
    4:48pm
    I've laid it all out times many including examples of calculation of tax... nobody should lose one cent if this is done properly, best way being to get rid of franked credits entirely.

    The ONLY issues are those who are hiding tax and Shorten and Co are going at it this way since they are frightened of actually making the ATO capable of doing its job and catching all the rorters.... that would cost too much and would be electorally unpalatable due to 'they're increasing the bludging public service numbers again!' (allied with 'private enterprise can do it so much better') **rolls eyes** .... well... PE certainly does a better job of ferreting out the means of tax minimisation and even rorting.

    They would also be cutting their own throates since they and their families and mates are massive shareholders themselves and they benefit from government decisions....

    Lothario reckons if his family company pays company tax he shouldn't pay tax on a salary he earns from it.... go tell that to the tax man.... or that if that family company pays him franked dividends he shouldn't have to include that in his personal income as required and add the full dividend amount to his salary (etc) for tax calculation .... go tell that to the tax man as well....

    Good luck with the hanging......
    MICK
    20th Feb 2019
    5:22pm
    That sounds like your normal LNP line OG. Some things never change.
    Old Geezer
    20th Feb 2019
    5:39pm
    Mick ROFL as that is the most stupid comment I have read all day.
    TREBOR
    20th Feb 2019
    8:38pm
    You haven't been reading Loathie? More twists than a politician's excuse for going missing for a night on a junket tour....
    Anonymous
    20th Feb 2019
    9:38pm
    OG is right, Mick. A person with a $200,000 a year salary can buy shares and pay no extra tax because their franking credits eliminate the tax on their dividends.

    A retiree with $4 million in super and a $2 million house can buy shares and pay no extra tax because their franking credits reduce the tax payable on the balance over $1.6 million.

    A pensioner couple with $800,000 and a $2 million dollar house can buy shares and get cash franking credit refunds on top of concessions and a small part pension.

    But an SFR couple with just $1 over the assets threshold, and possibly a house worth only $500,000 (so very much poorer than the pensioner) loses up to 30% of their income and can never get franking credits EVER, no matter how poor they may become. Not paying tax? BS! They are contributing more to the government than most $200,000 a year income earners by not drawing a pension. That's every bit as good as paying $50K a year tax, and they DESERVE a little help to get by on the very small income that some with assets just over the threshold have to live on.
    waikune
    20th Feb 2019
    4:56pm
    Bottom line...Labor has repeated that Pensioners do not vote Labor... So much for "Working for all Australians"
    Misty
    20th Feb 2019
    7:28pm
    That is not true waikune, why are you telling porkies?, Chris Bowen did say that the SFSR do not vote Labor but they are not all pensioners, many do vote Labor
    Anonymous
    20th Feb 2019
    9:25pm
    Yes, Bowen said SFRs don't vote Labor. That's why he's bribing pensioners to keep voting Labor and abusing SFRs. He doesn't care about the nation or fairness - only buying votes. SCUM OF THE WORST KIND.

    20th Feb 2019
    5:04pm
    I think that it is very unfair for self funded retirees to have there franking credits taken away.some self funded retirees are on income just a little above the pension me included .if union bill wanted to be fair to self funded retirees he should put a limit on franking credits anyone that gets less than $12000 worth of credits should be exempt from his intended cut to franking credits
    Arrowmaker
    20th Feb 2019
    5:33pm
    Surely if companies don't have to pay direct tax, the problem is solved.

    Remember that companies facilitate a large amount of indirect tax through employee tax payments, payroll tax, stamp duty, fringe benefits tax, etc.

    Shareholders would pay tax on dividends at their marginal rate, but dividends are higher because there is no Company Tax.
    So they only start to pay tax when their taxable income, including gross dividends, reaches $18,200. That is, if the shareholder has no taxable income they can receive $18,200 worth of untaxed dividends and effectively "recover" $5,460 of "Franking Credits" without needing to submit a claim.
    TREBOR
    20th Feb 2019
    6:52pm
    What is this 'direct tax'? They pay a concessional income tax (company tax) of UP TO 30% - few actually pay 30% - that's a lot less than Joe Toiler and his Wife on the same income .... they'd be paying top rate....

    Many of the taxes you cite are State issues - not Federal... employee tax payments are mandatory and comprise part of an employee's gross income, and are tax deductible, so no argument there.

    Companies are getting a good deal paying only 30% MAX on their net profit..... after all those expenses are deducted....

    Easiest way to ensure there is no problem never-ending argument, and rorting is to abolish franked dividends altogether and have everyone settle their own taxe liability with the ATO - as is required already - but in future without all this unnecessary fiddling and opportuity for hiding income or perhaps not even declaring it at all.

    When the ATO does a random selection of companies to look through, and a company can stay there for three years without being replaced, and a company stands a good chance of never being selected, there is ample opportunity for some unscrupulous handlers to not pay their full tax.

    Reducing numbers of qualified and capable people in the ATO for many reasons has been a bone-breaker for tax collection in this nation.

    As for your figures - I've done them above for someone who is just out of receiving a pension..... that's a good start....
    Crimmo
    20th Feb 2019
    5:36pm
    Franking credit cash refunds should never have been brought in, the first place. It goes against basic income tax principles. However now that it has been brought in, it should remain. We already have 'Menzies Legacy' from 1949, which has resulted in the funding crises for the aged pension system. Now the 'Howard Legacy'.
    I should add that the idea of introducing an annual franking credit payment cap, is a crazy idea. This would be like public servants creating work for themselves to enforce it.
    Anonymous
    20th Feb 2019
    9:44pm
    I don't agree that franking credits go against basic income tax policy. I think they are entirely consistent with income tax principles. They ensure people pay tax according to their income - not according to how their income is derived. There would be no issue with them at all if tax law were properly enforced and all the loopholes that allow avoidance were closed. It's not the franking credits that are the problem. It's cheats artificially reducing their taxable income.
    Anonymous
    21st Feb 2019
    7:15am
    And enforcing a limit on franking credit refunds would not make work. It's simple. You have to fill in a tax return and state the credit you are claiming in order to get either a credit or a refund. If the number in that box exceeds the legal limit, it's either disregarded or automatically reduced in the assessment - or the return is rejected and you are asked to try again. Just like if any other error in the form is detected. No problem at all.
    Crimmo
    20th Feb 2019
    5:36pm
    Franking credit cash refunds should never have been brought in, the first place. It goes against basic income tax principles. However now that it has been brought in, it should remain. We already have 'Menzies Legacy' from 1949, which has resulted in the funding crises for the aged pension system. Now the 'Howard Legacy'.
    I should add that the idea of introducing an annual franking credit payment cap, is a crazy idea. This would be like public servants creating work for themselves to enforce it.
    Curious
    20th Feb 2019
    6:20pm
    There are two kinds of income, as illustrated below: -

    "There are two kinds of taxable income: Earned income (salary, wages, tips, bonuses, commissions, etc.) and unearned income (dividends, interest, rents, alimony, winnings, royalties, etc.)".

    "There are also three types of taxable income: -

    Active – Earned income, Requires Face Time. You Work For Your Money.
    Portfolio – Capital Gain Income from Stocks, Bonds, 401K, etc. Involves Risk.
    Passive – Cashflow Income – Rent, Royalties, Your Money Works for You".

    A dividend payment is part of the cash flow income when a corporation declares a cash dividend on its stock, its retained earnings are decreased and its current liabilities (Dividends Payable) are increased. In other words, once a dividend payment is made, the capital value of your stock will decrease, resulting in a risk of lower capacity to earn a higher income in the future period. This risk needs to be recognized as part of the investment risk.

    Having said that above, I have seen a lot of arguments here, franking credit refunds should not be given to those, who don't pay tax. If this is the genuine issue, we must examine how this argument affects three different types of taxpayers and non-taxpayers: -

    (1) taxpayers earning a wage or salary (Active income);
    (2) taxpayers and non-taxpayer earning a dividend (Passive income); and
    (3) Taxpayers earning a Capital Gain (portfolio gain income)

    The tax liability for (1), (2) and (3) above is as follows: -

    (1) the taxpayer with a wage or salary will have a taxable income and dividend minus deductible expenses at a marginal rate, commencing from $18,200.00 as per tax table, ranging from 19% to maximum of 45% as taxable income reaches up to $180,000.00 and over. In other words, the dividend income can be taxed at and up to 45%.

    (2)(a) a taxpayer with dividend income can be taxed at a marginal rate, zero tax if taxable income below $18,200.00 or if has other income, she/he can be taxed, ranging from 19% to maximum of 45% as taxable income reaches up to $180,000.00.
    (2) (b) a non-taxpayer with dividend income but pays no tax, her/his taxable income must be below $18,200.00. Some SMSF members' allocated pensions are not taxable as part of the Superannuation Act. However, it is arguable that they are entitled to franking credit refund as they are part of the decreased retained earnings for the company, they invested in. If they are denied from receiving the relevant franking credits, the risk of investing in the company stock has increased. The next question is whether this risk can be offset against future capital gain when this stock is sold. The tax lawyer will have a field day and the legal cost will be enormous. I would like to hear a legal opinion on this matter, as it is an important issue, which needs to be addressed, not only in the superannuation industry but also the investment markets.

    (3) The taxpayer with a portfolio gain is subject to a capital gain tax, which is also a subject of LNP's election issue. This is not just a matter of 50% or 75% concession. We need to know what the deductible expenses under this CGT legislation are, for example, the risk of undermining future income by the decreased earning through dividend payment and franking credits not refunded.

    The current tax law is very clear what is taxable income and how people are taxed. If there is a government policy that a certain class of people is not entitled to a franking credit refund, there will be a great resentment of discrimination. It is important to have one rule for all. This particularly so, when the majority of the SMSF members are retirees, who cannot re-enter into the workforce to supplement their superannuation income and to pay their expenses for their old age care.
    Arrowmaker
    20th Feb 2019
    6:53pm
    Fantastic explanation Curious!

    Brilliant! I agree that legal advice is needed on the ramification of removing the cash refund on franking credits for dividend payments below $18,200. I'd never considered the CGT angle.
    TREBOR
    20th Feb 2019
    6:55pm
    Interesting - but I'm worn after a day ripping the endless troll apart.....

    I'll read it later.....
    Sundays
    20th Feb 2019
    7:27pm
    Trebor, he said he was leaving, but he just changed his name.
    TREBOR
    20th Feb 2019
    8:40pm
    Ah - a technicality!! That explains it!!
    Misty
    20th Feb 2019
    7:31pm
    This topic is going around in circles, he said, she said, they said and no one seems to be getting any closer to the truth, one side believes one version and the other side another and NEVER THE TWAIN SHALL MEET, unfortunately.
    Sundays
    20th Feb 2019
    8:13pm
    I agree Misty. There are so many, more important policies that YLC could cover leading up to an election.

    20th Feb 2019
    8:08pm
    Yes OG
    I currently get about $5k refund in franking credits
    But that’s easily adjusted if Shitten and Bowel get their way
    No need to claim as much expenses or move some money out of cash or property into unfranked dividend paying shares
    The unfranoed dividend shares will have higher propensity for capital gains so sell those down a little at a time to offset against the tax refund

    It’s all about managing cash flow
    Misty
    20th Feb 2019
    8:21pm
    Tell that to Only Genuine Rainey Lothario, I don't think she will agree with you.
    Anonymous
    20th Feb 2019
    8:34pm
    OGR may not have that luxury Misty .
    She is just above the asset threshold
    I haven’t touched my super and don’t think I ever will It’s left in accumulation phase where the credits are used to offset the obscene 15% tax on its income
    No need to transfer to pension phase . Can always withdraw lumps if need to but with my frugal lifestyle don’t think so.
    My kids can have it when I go
    TREBOR
    20th Feb 2019
    8:42pm
    What's your total income, Loathie? If you add your $5k plus your dividend payment in are you paying 30%+ in tax already? If so - no refund.

    No problem whatsoever.
    Old Geezer
    20th Feb 2019
    9:02pm
    I actually own a lot of shares that people have been buying instead of those with franking credits. They have now gone up quite a bit since the policy announcement so I have started taking profits. I just love these curved balls.
    Sundays
    20th Feb 2019
    9:03pm
    Yes, leave it to your kids. A neighbour inherited a lot of money from frugal parents. Together with the Partner, they have spent like there is no tomorrow. Made me think that we should enjoy our money while we can
    Old Geezer
    20th Feb 2019
    9:19pm
    Sundays I am definitely enjoying myself while I can. However the more I spend the more I make so it's like dog chasing it's Tail.
    Sundays
    20th Feb 2019
    9:32pm
    You are a very nasty person Rainey. Lets face it by your yardstick based on perceiving others on the basis of money you have failed.
    Anonymous
    20th Feb 2019
    9:39pm
    I pay no net tax Thebore
    So it doesn’t matter what my gross income is
    My tax contribution is already favored into the imputation credits and the huge amounts of GST I pay on deductions and salaries to staff on my company payroll
    Anonymous
    20th Feb 2019
    9:45pm
    Sunday’s - you either have no kids or they have been badly brought up
    Good luck to you and them
    Explains why you are so hateful to those who are happy
    I live on $80 k a year as a single person
    Enough for me
    Sundays
    20th Feb 2019
    9:50pm
    $80K for a single person is not frugal.Youre doing well and im sure your kids will be grateful
    Misty
    20th Feb 2019
    11:49pm
    Picking on Sunday and mysedlf again OGR, you can't help yourself can you, why are you SO VINDICIVE TOWARDS SUNDAY AND MYSELF AND PENSIONERS IN GENERAL,I hope admin is taking note of this and does the right thing.
    TREBOR
    21st Feb 2019
    7:02am
    Ah,by your own admission you 'draw a salary from your family company' - yet you pay no tax.... and then you add imputed dividends as much as you want without paying tax. They're going to deem your salary one day, son, and then you're for the high jump. I take it yours is one of those 'companies' that currently is not being scrutinised by the ATO?

    It will be fun to see you justify all this 'work' you do on behalf of your 'family company', without being paid for it....

    You are a walking argument for the abolition of 'family companies' as an obvious tax rort.

    If only you knew what your admissions are handing to a future government ..... Tax and company laws are in desperate need of overhaul when people can pay zero tax endlessly and yet draw large sums for personal use. Your kind ARE the problem for this nation - never its solution.
    Sundays
    21st Feb 2019
    8:37am
    Misty, ignore OGR. She is so fixated on this issue you can see it is making her mentally unwell. If ‘forced’ on the pension she will not be at the poorer end. In fact, with a concession card and discounts on rates etc. might be better off. None of us can control the future, enjoy the life you have while you can
    Misty
    21st Feb 2019
    9:37am
    You know very little about me and my lifestyle OGR, YOU DON'T KNOW WHAT OUR INCOME WAS OR WHAT EXPENSES WE HAD THAT CAUSED US NOT TO BE ABLE TO SAVE AS MUCH AS WE WOULD HAVE LIKED. You iobviously can't have had it so bad anyway, if you and your partner both had low paying jobs, one of you retired early because of ill health you say well not many people I know could buy a house for $4000,000. and have over $800,000in shares if they had low paying jobs so how did you do it? Come on put your money where yhour mouth is or stop calling pensioners, myself especially greedy and selfish, I HAVE HAD ENOUGH OF YOUR ABUSE, IT IS A CRIME IN CASE YOU DOIDN'T KNOW.
    Misty
    21st Feb 2019
    10:42am
    OGR you don't know a lot do you, when I was nursing the pay was very poor and my husband did not work on the Snowy Scheme for long so his jobs were not high paying, you know nothing about the expenses we have had that has taken a toll on our saving, SO STOP JUDGING PEOPLE WHEN YOU KNOW NOTHING OF THEIR CIRCUMSTANCES, again your posts are all about YOU, YOU YOU.
    Adrianus
    23rd Feb 2019
    11:58am
    Misty you must have worked in Victoria where all the nurses are paid the lowest wages in Australia. Whatever happened to the HSU Vic Branch? Is it still running?
    Adrianus
    23rd Feb 2019
    11:58am
    Misty you must have worked in Victoria where all the nurses are paid the lowest wages in Australia. Whatever happened to the HSU Vic Branch? Is it still running?
    Misty
    23rd Feb 2019
    10:47pm
    Never worked in Victoria in my life Adrianus, in the late 50's when I started my nurses training I got 7 pound a week and we worked broken shifts and weekends included in that week.
    Anonymous
    26th Feb 2019
    1:32pm
    Wow! 7 pound a week? What year was that MIsty? You've confirmed my suspicion that you were well paid, but just don't know what 'low wages' really means. Nurses have always done moderately well compared to the unskilled and unqualified (which both my partner and I were) - though I do think they were underpaid given their working conditions.

    I recall earning $12 per week in the late '60s, paying nearly $3 tax and $8 for board and lodgings. Our family had to try and survive on $69 net per week in the mid-70s, paying $25 per week rent, paying of a huge medical debt for our special needs child, spending $10 per week on average on ongoing medical care for that child, and trying to save for a deposit on a home. Our car was a restored wreck bought for $200 from a wrecking yard. It was actually half of one car and half another welded together!

    Lots of us have done it very hard, MIsty. Some chose to save. Others didn't. Most could have if they had chosen to. It's WRONG to suggest that those who chose to spend more and live better should now live off the taxpayer and those who saved should be deprived of all the benefits of their saving.

    And BTW. I don't appreciate being judged either, so maybe you and Sundays could stop the offensive innuendos. I am not dishonest and I am not greedy. Nor am I nasty - but I'm heartily sick of the disrespect and nastiness that Labor is stirring up with its disgusting lies and divisive, unfair policy.
    Misty
    26th Feb 2019
    7:28pm
    Well OGR by the early 60's I was probably earning about the same as you, working 12 hour split shifts, finishing at midnight and starting again at 5am. I know nurse's wages have improved a lot but hey were not good in the early days.. OGR you are the one always picking on Sunday, Paddington and I the most, I am not nasty I don't call you greedy or selfish and I definately do not post any innuendos in my comments, you are the one always calling pensioners greedy and selfish, you cannot blanket one group of people like that.
    Anonymous
    26th Feb 2019
    9:10pm
    I fear you read Sundays and Paddington's posts, and your own, with a very bigoted eye, Misty. THEY ARE OFFENSIVE. EXTREMELY OFFENSIVE. Protest all you please. Blame all you like. It doesn't change the facts. You and Sundays have even gone so far as to imply I am a liar. And you have constantly justified supporting the destruction of my lifestyle - on the grounds that 'nobody you know has that sort of money' (not that you'd know anything about what sort of money I have. You no doubt have no idea how absurdly unfair and inaccurate the assets test is.)

    "By the early sixties...'. I said I was earning $12 per week in the LATE sixties, Misty. $12 a week nearly a decade earlier would have been very nice indeed! And nurses were certainly earning more than $69 per week in the mid-70s. I had many friends who were nurses and they were doing quite nicely compared to us. Not that they didn't deserve to - but I'd have given my eye teeth for an opportunity to get into nursing or a similar profession.

    I am well aware that nurses wages were not good in the early days - BUT THEY WERE ALWAYS A HELL OF A LOT BETTER THAN WAGES FOR THE UNSKILLED AND UNTRAINED. At no time, EVER, did a nurse earn as little as people like toilet cleaners, ditch diggers and garbage collectors. And their jobs were not at all pleasant either. And they had no hope of ever improving - unlike nurses who could move up to being sisters and even possibly a matron.

    As for calling pensioners greedy and selfish - only those who display unfairness and selfishness. I used to be the pensioner's champion. I stood up for them aggressively. But too many have shown their true colours in this franking credit debate, and I'm totally disillusioned. My faith in humanity has been destroyed. All I see is abuse of SFRs at every turn and demands for fatter pensions and more theft from anyone who saved. I'm sorry if my disgust shows.

    20th Feb 2019
    8:08pm
    Yes OG
    I currently get about $5k refund in franking credits
    But that’s easily adjusted if Shitten and Bowel get their way
    No need to claim as much expenses or move some money out of cash or property into unfranked dividend paying shares
    The unfranoed dividend shares will have higher propensity for capital gains so sell those down a little at a time to offset against the tax refund

    It’s all about managing cash flow
    Anonymous
    20th Feb 2019
    8:44pm
    Just made US 1000 consultancy fees on a 3 hour long phone call today .
    Not taking it in cash but a paid for holiday in Spain
    Cmon Thebore , gimme your best shot
    Old Geezer
    20th Feb 2019
    9:04pm
    FormerLaborVoter No don't take holidays as they can be traced. Ask for gift cards instead as they cant be traced but can be written off the givers tax as a deduction.
    Old Geezer
    20th Feb 2019
    9:04pm
    FormerLaborVoter No don't take holidays as they can be traced. Ask for gift cards instead as they cant be traced but can be written off the givers tax as a deduction.
    Anonymous
    20th Feb 2019
    9:32pm
    The giver is a foreign consultancy firm OG
    I pay for my tickets . They pay tjebhotel and entertainment bills
    Too easy
    TREBOR
    21st Feb 2019
    7:03am
    A mine of information you pair of thieves.... they'll catch you one day...
    TREBOR
    21st Feb 2019
    7:04am
    Such 'gifting' will one day be a tax burden..... nothing is free....
    TREBOR
    21st Feb 2019
    10:15am
    Here are the two -OG who rants about people he knows rorting Centrelink, and Olbie/diablo/Loathie/FLV who carries on about 'leaners' ... both proclaiming to the world how they rip off the tax system....

    Deep is the hypocrisy in these ones...
    Anonymous
    21st Feb 2019
    10:22am
    How dare you make blatant false accusations Thebore ??? You really are a piece of work.
    Taking advantage of legislated tax exemptions and deductions is not ripping off , you silly bugger, its called smart personal finance management
    Next time you do your tax return, make sure you don't claim any deductions - hypocrite !!!
    Anonymous
    21st Feb 2019
    10:22am
    How dare you make blatant false accusations Thebore ??? You really are a piece of work.
    Taking advantage of legislated tax exemptions and deductions is not ripping off , you silly bugger, its called smart personal finance management
    Next time you do your tax return, make sure you don't claim any deductions - hypocrite !!!
    Older lady
    20th Feb 2019
    11:15pm
    Only genuine Rainey you nailed it.
    Thresholds are the way to go.
    And don’t let it effect superannuation, so people are encouraged to save for retirement.
    Hit the rich. Not middle and lower class , which current system Labour wants would do.
    Misty
    20th Feb 2019
    11:51pm
    Australian Labor Party, the name Labor does not have a "u" in it, although they do in the UK.
    TREBOR
    21st Feb 2019
    7:04am
    Labour after they removed U from it.... and from consideration....
    Anonymous
    21st Feb 2019
    7:04am
    Funny, I thought Bill Shorten disliked doing anything DIFFERENT. Or does he ONLY dislike different when being the same suits his evil agenda?
    Anonymous
    21st Feb 2019
    7:05am
    And is that really the best you can do commenting on Older Lady's comment, Misty? SAD.
    Rae
    21st Feb 2019
    8:01am
    Just remember at the point we are all poor together it is called Economic Depression and pensions will all be cut to join the millions unemployed at that point.

    Envy of the Tall Poppies never ends well.

    The rich pay most of the taxes regardless of propaganda and that lets the rest of us pay fewer taxes and receive funding. Without them we are all poorer.
    Anonymous
    21st Feb 2019
    8:08am
    Well said Rae
    Misty and Thebore - please try and understand that
    Sundays
    21st Feb 2019
    8:48am
    I agree Rae, but there is a fine line between tax minimisation and rorting the system thereby reducing the amount of Government revenue to be used for all of us.
    Adrianus
    21st Feb 2019
    9:36am
    Rae, I agree. I cant help but think, that something sinister is at play. We often say that our politicians don't take a long term view with strategic planning.
    But what if Labor was doing just that?
    What would that outcome look like?
    I think there is a cruel fate awaiting us if we allow this to proceed. This attack on the middle class should be setting off an alarm.
    Anonymous
    21st Feb 2019
    9:49am
    Except that Labor isn't doing ANYTHING about rorting, Sundays. It's attacking honest, diligent retirees who worked hard, paid their tax, and are now saving the nation a great deal of money by living on the small income their savings generate and not asking for handouts.

    If Labor wants to increase revenue to be used for all of us, take it fairly and responsibly and don't victimize a sector of the population that genuinely can't afford the loss and has done nothing to deserve it.

    Adrianus, I agree. There is something very sinister and evil at play here. There are too many lies being told to justify the unjustifiable. There IS an agenda - and it has nothing whatever to do with increasing money for health and education.
    TREBOR
    21st Feb 2019
    10:31am
    The rich can afford to pay taxes....

    Company Gross Profits to July 2018 = $90221Bn.

    AWE May 2018 = $1206.90 pw = $62,758.80,
    x 12,000,000 workers = $753 Bn ....

    I'd venture to say that since there is such a huge discrepancy .... need I say more?

    The vast majority of shares and transactions are held/handled by the rich in countless more ways than the rest - of course they do and should pay more tax.
    Anonymous
    21st Feb 2019
    10:37am
    wtf are you comparing - apples with cow manure ???
    the high wages are a result of successful businesses employing millions of Aussies

    these wage owners also own part of the companies through their super portfolio
    Anonymous
    21st Feb 2019
    10:37am
    wtf are you comparing - apples with cow manure ???
    the high wages are a result of successful businesses employing millions of Aussies

    these wage owners also own part of the companies through their super portfolio
    Misty
    21st Feb 2019
    10:44am
    It is the truth OGR LABOR does not have a U in it.
    Misty
    21st Feb 2019
    10:46am
    There you go again OGR, being nasty again, I was just pointing out a fact that Older Lady may not have known.
    Misty
    21st Feb 2019
    10:50am
    Rae it is wedll known that the rich pay as little tax as possible, as Kerry Packer said,"Anyone who does not minimise their tax has a hole in their head", oe something to that effect, that is what they pay their accountants and Financial Advisors for. Take OG and Lothario on here, always skiting about how little tax they pay.
    Anonymous
    21st Feb 2019
    11:19am
    Yes, the rich pay as little tax as possible. So according to you selfish Labor voters, that makes it okay to rip off people who have no hope of ever being rich, but worked hard and saved well.
    Adrianus
    21st Feb 2019
    9:16am
    Why on earth is Australia even contemplating returning Shorten and Bowen to government after what we saw of them.
    I am shaking my head in disbelief.
    Bill Shorten has said he will run the government like a union.
    That should have red flagged it folks!!
    Anonymous
    21st Feb 2019
    9:40am
    My partner said, some years ago, Bill Shorten is one of the most dangerous men Australia has ever seen in politics and if he ever becomes PM, the nation is in for some very serious trouble. I think that was an accurate statement.
    Adrianus
    21st Feb 2019
    11:22pm
    He's a windsock. We need a leader.
    Adrianus
    21st Feb 2019
    11:22pm
    He's a windsock. We need a leader.
    Adrianus
    22nd Feb 2019
    11:38am
    Rainey, have you noticed that Bill Shorten is starting to use the Adolf Hitler arm waving jestures?
    Adrianus
    22nd Feb 2019
    11:38am
    Rainey, have you noticed that Bill Shorten is starting to use the Adolf Hitler arm waving jestures?
    Misty
    22nd Feb 2019
    11:51am
    Adrianus why don't you press F5 after you post?, then only one post will show up not 2, or do you want it that way?.
    Adrianus
    22nd Feb 2019
    1:18pm
    Sorry Misty, I do refresh after posting, but its the viruses coming in from the YLC site that damaged my mouse. I replaced it and got some more damage. I'm going to buy another mouse soon.
    Misty
    22nd Feb 2019
    2:22pm
    They are taking a long time to fix any technical problems aren't they.
    Anonymous
    22nd Feb 2019
    3:27pm
    You’re lucky Adrianus . The YLC virus has caused problems with my YouTube channel. It keeps replaying Shorten giving his hitler salute .
    Isn’t he the Dr Goebells of economic policy
    Adrianus
    22nd Feb 2019
    3:51pm
    Karl Marx, Erich Fromm and others had to leave Germany because of Adolph, but he wasn't backward in copying any of their tricks.
    Adrianus
    22nd Feb 2019
    3:51pm
    Karl Marx, Erich Fromm and others had to leave Germany because of Adolph, but he wasn't backward in copying any of their tricks.

    21st Feb 2019
    10:18am
    Westfarmers rewarding its OWNERS with a special dividend. Origin forst have profit increased by $1Billion over same period last year, back to returning profits to OWNERS.
    RIO reporting next week, expecting special dividends back to OWNERS.

    What is one to do with all that beautiful franking credit refund bonanza !!!!

    21st Feb 2019
    10:18am
    Westfarmers rewarding its OWNERS with a special dividend. Origin forst have profit increased by $1Billion over same period last year, back to returning profits to OWNERS.
    RIO reporting next week, expecting special dividends back to OWNERS.

    What is one to do with all that beautiful franking credit refund bonanza !!!!
    Sundays
    21st Feb 2019
    10:49am
    That is good news for you, but then you are smart eneough to realise that dividends can decline as well which is why you probably have a diversified portfolio.
    Adrianus
    21st Feb 2019
    7:58pm
    Golly, I wonder who these owners could possibly be? According to TREBOR these corporations are separate entities and don't have owners?
    Sophie
    21st Feb 2019
    11:55am
    When you buy shares, you’re buying a share of the company’s assets and its profits. In fact (and in law), you’re a part owner of the company..so far so good.

    Companies that have made a PROFIT can do one of two things with the excess cash. They can either take that money and reinvest it.. or.. they can take the excess funds and divide it among the shareholders in the form of a dividend.

    If the company chooses to do the latter..(i.e. pay out dividends)..the earnings are taxed TWICE by the government..this is because of the transfer of the money from the company to the shareholders. This appears to be the point some seem unable to grasp and hence the confusion.

    To explain a bit further..the FIRST taxation is at the end of the financial year when the company must pay taxes on its earnings.

    The SECOND part of the exercise comes when the shareholders receive the dividends which come from the company's AFTER TAX earnings.

    To explain even further…the shareholders pay taxes first as owners of a company that brings in earnings.. and.. then AGAIN as individuals, who must pay income taxes on their own PERSONAL dividend earnings.

    It’s not hard at all to understand…

    My personal opinion is:

    The wealthy should not be receiving this tax benefit.

    The pensioners are exempt which is good.

    The SFRs who are just on the border line should be given the same treatment as the pensioners.

    .
    Anonymous
    21st Feb 2019
    12:03pm
    Wtf
    You say shareholders are taxed twice and then you go on to say it’s ok for the some people to be taxed twice ????
    Poor diddums - stick to playing with fairies in your backyard
    Sophie
    21st Feb 2019
    12:40pm
    My clay gnome at the bottom of my garden knows more about shares and economics than you ever will, let alone my fairies and myself, you ignoramus.

    Go and troll elsewhere!

    .
    Misty
    21st Feb 2019
    12:41pm
    If you haven't got anything constructive to say don't say it FLV, or whoever you think you are today, ignore him Sophie he is rude and arrogant.
    Sophie
    22nd Feb 2019
    11:26am
    It's all right Misty. You always find those who make valueless comments are greatly lacking in lots of areas.
    Misty
    22nd Feb 2019
    11:48am
    This one cannot make up his mind who he is Sophie, first he is Lothario, who says he is leaving, then turns up with the same photo as FormerLaborVoter, which I do not believe he ever was, seems he has an idendity problem.
    Adrianus
    22nd Feb 2019
    3:47pm
    Sophie I disagree with almost everything you've written. Those people you claim who are getting taxed twice may very well have been prior to 1987, which is when Paul Keating introduced the imputation system, but that does not happen now.
    John Howard recognised the inequality and discrimination toward lower income earners and corrected the unfairness by allowing the ATO to refund the excess taxes taken from business owners/shareholders.

    The changes made by Howard have been running smoothly for a lot longer than Keatings Beta model, so why all the brouhaha now?
    Here's why..
    Bill Shorten's cooked up franking credit tax is a divisive tool which drives a wedge between us. And he is allowing plenty of time for this to marinate and boil over.
    Reagan
    24th Feb 2019
    10:44am
    SPOT ON SOPHIE !!!!!!!!!

    The wealthy should not be receiving the franking credits. Just plain greedy and no thought for the poorer members of society.

    This is the only country in the world that allows people to double dip.
    Anonymous
    24th Feb 2019
    4:11pm
    Yes, Reagan, the wealthy have no thought for the poorer members of society. Rich folk like Shorten and Bowen are making sure wealthy people keep double-dipping, while they steal from the POOR.

    Labor IS GIVING MORE TO THE RICH and TAKING FROM THE POOR.

    Of course it will also let pensioners TRIPLE DIP - no matter how rich they are (and some are very rich, with multi-million-dollar homes and high incomes when part pension, concessions and share dividends are combined).

    On the other hand, self-funded retirees are BEING ROBBED BY LABOR, but Labor will let those on high incomes continue to claim franking credits. It just intends to rob struggling less wealthy retirees who, by living on their savings (NOT DIPPING AT ALL!) save the taxpayer tens of thousands every year. They actually contribute more to the national treasury than most average wage earners.

    But when Labor is done STEALING the income THEY EARN FOR THEMSELVES by overtaxing them unfairly, they will go on the pension, and then they WILL double-dip - but unlike the selfish pensioners who are spitefully supporting Labor's planned theft, they won't be able to TRIPLE DIP, because Shorten intends to punish anyone who didn't put their hand out for a pension by robbing them of the franking credit refunds FOR LIFE, no matter how poor them may be or become.

    Stop quoting propaganda and do some research, Reagan, and you'll see how hideously wrong you are about this policy.

    Retirees with more than $1.6 million and all high income earners will keep some franking credits to save on tax. The richer they are, the more they will retain.

    Retirees with less than $1.6 million will lose up to 30% of the income they live on TO AVOID TAKING FROM THE TAXPAYER. Some - couples with less than $1 million and a very modest home - live on LESS than the old age pension now, but take NOTHING from the taxpayer. NOT ONE CENT. Because franking credits are tax deducted from their dividend before it's paid to them. Check out a dividend statement and you'll see that's a fact. So refunds are THEIR MONEY, returned to them because they don't have enough income to be liable to pay tax. If they had more than $1.6 million in super, or a high private income, they would keep their credits. LABOR IS ROBBING POORER RETIREES TO GIVE TO THE RICH.

    Only country in the world? Yes, it's also the only country in the world that means tests aged pensions. So let's change that also. It's also the only country with the tax system we have. And it's the nation that suffered least in the GFC. Also the only country that's an island continent. And the spelling of the name of a certain political party is unique also. Only fools want to copy other countries for the sake of it. Smart people be different and better!

    The double-dippers are the pensioners, so let's address that, shall we? Self-funded retirees paid tax their whole lives, are STILL CONTRIBUTING HEAPS TO THE TREASURY, and get NOTHING except a small and fair refund of tax paid but not owed.

    Be careful what you wish for, Reagan. When hundreds of thousands more are forced onto the aged pension and saving for retirement is so harshly punished that most don't even try, the pension bill will be so high that government will start finding ways to slash it. The poorest WILL suffer most if Labor has its way. We simply can't afford their fraud.
    LJ
    21st Feb 2019
    12:57pm
    The changes to franking credits and negative gearing are solely aimed at raising $billions in new taxes to pay for Labor's intended big spending when in office.

    The power of the Hegelian Dialectic is seen here, where the discussion is easily directed so that even the opponents are searching for ways and means to raise the taxes, without questioning why the taxes are necessary.

    The proponents, Shorten and Labor, are not being required to first justify why a Shorten Labor government cannot live within its means, ie., the existing budget. Or find ways to cut waste, get efficiencies and deliver more with less, as we the public are constantly being chided to do!
    Anonymous
    21st Feb 2019
    12:59pm
    LNP is delivering surplus budgets going forward and paying off labor debt
    Shorten is going to piss the surplus down the drain
    Misty
    21st Feb 2019
    1:24pm
    Have you looked at any hospitals lately LJ, so many are under resourced, not enough staff, especailly in country towns, transport is a mess, schools need to be built and hospitals also, so of course extra money is needed for all these things, as well as aged care, DIS, Veteran's pensions just to name a few where that money can be spent.Oh and BTW FLV or whoever you think you are today, debt has doubled under this government so I would be quiet about debt if I were you.
    LJ
    21st Feb 2019
    2:28pm
    Misty,

    You are further demonstrating the power of the Hegelian Dialectic. It sidesteps and avoids any discussion of the whats and whys and invents a convenient problem or problems that need fixing. All stated in general terms of course. There is every avoidance of facts and evidence.

    Labor wants to gather a big tub of taxpayer money to play around with later. So they find some convenient problems (as you do too) to justify more taxes and whopper taxes at that.

    Both sides of politics do it, so there is no harm and every benefit in recognising the rhetorical weapon and objecting.

    What should they be doing differently if they had any interest in being authentic? What must come first? Most know the answer to that.
    Misty
    21st Feb 2019
    2:51pm
    The answer depends on your age, your circumstances in life and may I say, what party you vote for.
    Curious
    21st Feb 2019
    2:55pm
    Misty,

    Traditionally, I am a Labor voter because I thought ALP cares about people like you and me. On this occasion, the matter relates to franking credits refund, I find this subject matter has been used without in-depth consultations with people concerned and it seems not negotiable. This heavy-handed approach sounds very much to me, "robbing Peter to pay Paul", which is based on an emotional appeal. If you like, the rich versus the poor mentality.

    I am not going to lecture anyone. When I went to university studying Economics, the making of the Gross Domestic Product (GDP) depending on the efforts of all quarters of the economy, not just the rick or the poor. Therefore, government policy should embrace everyone and corporation to make a contribution to this GDP. It is paramount that all rules and regulations must apply to all and every one of us and not only to a certain group and not others. To divide one group from another is to tear the fabric of our society.

    Consequently, the government, irrespective of parties, must provide a comprehensive mission and target for this country so we can all work and make a contribution to this GDP. Robbing the rich and paying the poor is not the solution. Do you know why? The Rich can uproot himself and move overseas. We want the rich to stay and to pay tax.
    Misty
    21st Feb 2019
    3:40pm
    But do they pay that much tax Curious?, don't they pay their accountants and Financial Advisors to structure their finances, as did Kerry Packer, so thay pay very little or no tax at all?.
    Curious
    21st Feb 2019
    4:46pm
    Misty. That's why we need tax reform, embracing all parties to play a part and "to rob Peter to pay Paul" is not a solution. This doesn't mean, I don't agree with you that our hospitals and schools need more funding to make them more efficient.

    Tax reform needs to define our priority for the nation and how we distribute our share of contributions to sections of our community, industries, private and public sectors and above all protecting our vulnerable young and old citizens. Based on these fundamentals the government policy should promulgate the vision and mission of this country. Are we going to be the leader of the Western World economy through technology, financial centre, agricultural leadership, multiculturalism, medical science, advanced education services, exemplary infrastructure for the best living country in the world?

    Having said that, do you think the proposal of limited franking credit refund makes any difference to our vision and mission and the balance of the budget. Please don't forget that the Federal Government should focus on Macro-economics - the big picture. This doesn't say, Microeconomics is not important. Our current tax law is very fair and equitable. However, if we play games with the tax law without a bigger picture, we will end up in a mass. It will take years to repairs the damage, while many people suffer.
    Misty
    21st Feb 2019
    6:01pm
    I am not an Econamist Curious so I cannot answer that.
    Curious
    21st Feb 2019
    8:17pm
    Misty. I didn't mean to hurt your feeling, not being an Economist.

    My point is as follows: -

    In 2017, the Australian GDP is worth AUD$1.520 trillion OR US$1.325 Trillion. This is the size of the Australian economy. The ending of franking credit refund for some self-funded retirees will bring in about AUD$11.4 billion. Do you think the issue here is out of proportion? You don't need to be an economist to work this out.
    Sundays
    21st Feb 2019
    10:02pm
    Curious I am not an economist either but given Government expenditure is about 36% of GDP should the real measure be Government revenue vs expenditure especially as we have increased Government debt. I think the 11.4 Billion makes a significant difference in that light
    Adrianus
    21st Feb 2019
    11:19pm
    Misty, I have to agree with LJ and Curious. Of the $11.4B Labor would hope to collect from this tax they have earmarked just $1B for hospitals. Their argument simply doesn't stack up.
    Curious
    22nd Feb 2019
    9:35am
    Sunday. Thank you for raising this point.

    I did a fact check on the Commonwealth's tax revenue with the following results: -

    (1) In 2017, individual income tax was collected at $170 billion or 39.3% of all revenue collected in Australia.
    (2) For the same year, Income tax on enterprises collected at $77 billion or 17.7% of all revenue; and
    (3) Also, GST at 55.56 or 12.8% of all revenue collected.

    With this fact available, do you think there is room for improvement either in income tax on enterprises or GST in tax reform?

    To pursue $11.4 billion for the self-funded retirees out of $170 billion individual income tax, or 6.71% of this tax group, has a double edge sword. The self-funded retirees may request the company they have shares with not to pay tax on their behalf and pay their tax at a marginal rate, which may be zero because their taxable income is below $18,200.00. Alternatively, they go for unfranked stocks with a higher capital gain and pay zero tax, as their taxable income is below $18,200.00. The worst scenario is that the self-funded retirees will be forced to have part or full old age pension. None of the alternatives is helping the government to have more tax revenue to give a balanced budget.

    I think it is sad to target at the self-funded retirees because they cannot rejoin the workforce to supplement their fruit of labor. Their nest eggs will hopefully last to the end of their lives. Call me a sucker for compassion, if you like. Having gone through this path myself, I know how much it hurts being a battler all my life and is still being targeted.
    Misty
    22nd Feb 2019
    9:54am
    Adrianus I am sure Labor would find plenty of worthy reasons to spend the rest of the money on, Education, Aged Care, DISC, Transport are just a few I can think of.
    Curious
    22nd Feb 2019
    11:16am
    Misty, are you aware that the $11.4 billion is to be collected over 4 years? That means $712.5 million a year, which doesn't help very much on education, aged care, disc, and transport. It is just a piece mill over the $1.520 trillion economy. ALP has a bigger fish to fry than picking on self-funded retirees.
    Misty
    22nd Feb 2019
    11:43am
    Yes that is true Curious, but all these changes have to get passed in Parliament, that could be very difficult with the Xbench make up, although all that could change after the next election.
    Anonymous
    23rd Feb 2019
    8:29pm
    Labor is going to need more money for health when countless thousands of SFRs can no longer afford health insurance. And charities will suffer too, when SFRs can no longer afford to donate. Overall, killing the goose that laid the golden egg is never a good idea. Reward people for striving to be self-funded and the costs to the government fall.

    23rd Feb 2019
    8:25pm
    Anyone misled by Labor's lies about franking credits should read the article at https://www.bwts.com.au/download/educational-articles/Dividend%20Imputation%20(Franking%20Credits).pdf.

    It provides a table that compares the benefit of franking credits for four different types of shareholder - high income, low income, self-managed superannuation fund member in accumulation phase, and SMSF pensioner. ALL RECEIVE EXACTLY THE SAME BENEFIT UNDER THE CURRENT FAIR SYSTEM.

    If Labor has it's way, the high income taxpayer will retain their full benefit. The low income taxpayer and the SMSF member in accumulation phase will lose part of their benefit. The SMSF member in pension phase will lose ALL their benefit.

    Thus, the ONLY losers under Labor's unfair proposal are those who are saving the taxpayer tens of thousands annually by living off their savings.

    Since anyone with more than $1.6 mil in super has to have an accumulation account, the wealthier an SMSF member is, the less Labor will take from them.

    When it comes to pensioners, of course, they get to TRIPLE DIP. No matter how wealthy - and many are quite wealthy, which valuable homes - they can claim a pension plus concessions plus franking credit refunds. While SFRs who self-fund from a lower asset base get NOTHING, and contribute tens of thousands to the tax pool by getting NOTHING. And these are the people you Labor voters abuse and call 'greedy'. Seems to me it's the TRIPLE DIPPERS who are greedy, and those who begrudge people who contribute up to $50,000 a year to the tax coffers a very small tax refund to enable them to continue to self-fund.

    Contrary to what Labor supporters want to believe - and are being told - Labor's proposal gives MORE TO THE WEALTHY.

    23rd Feb 2019
    8:44pm
    A friend who is soon to retire pointed to another problem with Labor's idiotic policy today. He earns a low wage, so he would lose some of his franking credits. But his TAXABLE INCOME includes the full dividend, which is clearly stated on dividend statements to be the 'taxable income amount' to be declared on a tax return. So Centrelink will assess him for the OAP on income he doesn't receive! He'll be deprived of part of his pension because he has income that he DOESN'T HAVE!
    CindyLou
    25th Feb 2019
    5:44pm
    People (SFR) will no doubt be forced or need to rearrange their lives, perhaps separate and buy a second house, then both will be eligible for OAP, reduced rates, cheap medicine, reduced car rego etc. Nice.
    Anonymous
    26th Feb 2019
    1:21pm
    Yes, my financial adviser suggested this. Apparently if I give the house to my partner in a divorce settlement we can both get a full pension and I can get rent assistance. Sad to have to think about such a strategy when we are close to a golden anniversary, but that's what this Labor pigs are driving us to contemplate with their greed and unfairness.
    Adrianus
    26th Feb 2019
    3:18pm
    Many young couples are doing that now, as depicted on A Current Affair. The only assets they have are 12 children, so they split them and are earning $180,000pa in Centrelink payments.
    Farside
    27th Feb 2019
    2:45am
    Adrianus ... I don't watch ACA but it did not take much fact checking to confirm your claimed $180,000 in Centrelink payments is bogus.


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