21st Sep 2018
Treasurer wants to know if he can keep your tax credits
Author: Olga Galacho
Retiree's franking credit at risk

The spectre of the controversial franking credits claw-back was raised again this week, only this time it was the Coalition Government which wanted to know if withholding it from retirees stacks up.

Treasurer Josh Frydenberg on Wednesday announced a standing committee of the House of Representatives would investigate the implications of removing refundable franking credits.

It is a backflip from the position it had up until recently taken in opposing Opposition Leader Bill Shorten’s proposed retention of these tax refunds from shareholders in March this year.

To be chaired by Liberal MP Tim Wilson, the standing committee is taking submissions until 2 November.

“The ability for investors, including individuals and superannuation funds, to claim their full credits is an established feature of our tax system and is core to the financial security of retirees,” Mr Wilson said at the announcement.

“There has been legitimate community concern about proposals to remove cash refunds for their full allocation of credits for individuals and superannuation funds, and that it amounts to a tax on the savings of retirees.

“The committee is examining what impacts the removal of refundable franking credits would have, particularly on retirees who have made long-term retirement saving decisions based on their ability to claim refunds on their franking credits and whether it will compromise their financial security,” he said.

Shareholders who receive fully franked dividends are entitled to offset the tax paid by the company on their behalf against tax liabilities they have. The amount that can be claimed is called the franking credit.

In the case of retirees, most who have an income below a certain threshold will have a personal marginal tax rate of zero. People in that category are not expected to pay any tax and thus are entitled to a refund of tax paid on their dividend by a company on their behalf.

At YourLifeChoices we know that withholding the credits – also known as dividend imputation and imputation credits – would slice into the earnings of many of our members.

In our recent major poll, the 2018 Retirement Matters Survey, more than a third of you told us that you own shares in addition to those held in superannuation funds.

More than 5000 members answered the question on shares. If we extrapolate the number who are independent shareholders across our entire membership of 250,000, it means up to 85,000 of you will have your income reduced if imputation credits are not paid.

The committee’s terms of reference include inquiring into the potential effects of :

  • analysis of who receives refundable franking credits, the opportunities it provides to offer alternative savings and investment vehicles to low and middle income earners, and the impact it has on lowering tax bills
  • consideration of how refundable franking credits support tax principles, particularly implications for tax neutrality, removal of double taxation and fairness
  • if refundable franking credits are removed; who it would impact and how, and the implications from expected behavioural change by investors, including for:
    - increased dependence on the pension
    - stress and complexity it will cause for Australians, including older Australians to adjust their investments
    - if there are carve-outs applied, what this might mean for additional complexity, uncertainty and fairness
    - reduced incentives to save and distortions to which asset classes are invested in and funds are used, and
    - the reliability of providing a sustainable revenue base over the longer term.

Will you continue to be able to afford your retirement if franking credits are withheld from you? Will you be forced to apply for the Age Pension if the Government decides not to refund this tax?

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    COMMENTS

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    olbaid
    20th Sep 2018
    3:29pm
    I am confident that Tim will recommend that franking credits be retained and at the same time discredit Bill Shorten on this issue
    Bill will be made to look like the complete fool that he is . His plan will send the cost of OAP welfare through the stratosphere
    Old Geezer
    21st Sep 2018
    12:09pm
    I agree. It will show that his rich mates will still get their full franking credits and it is low income earners that are being screwed instead.
    MICK
    21st Sep 2018
    1:46pm
    This is an election stunt from the government. I see that 7 News is already grooming Morrison as he did for Turnbull in the last election. WE NEED ANTI PROPAGANDA LAWS to stop this.

    You say Olga ".... the Coalition Government which wanted to know if withholding it from retirees stacks up." The facts as I understand them are that PENSIONERS receiving franking credits will not be affected under Labor's proposed changes but self funded retirees will.
    I suggest any body affected write to ALL Labor MPs and suggest that franking credits have a threshhold after which they cut out. A figure around $20,000 would be a good place for them to end. That way most self funded retirees would not be caught in a net meant for HIGH NET WORTH INDIVIDUALS.....who are the main recipients of rich man's welfare paid for by taxpayers. This is the cohort which needs to be caught in the tax net they always seem to be able to avoid.
    olbaid
    21st Sep 2018
    1:50pm
    Hahaha - Mick and hisnlabor mates are running scared
    This study will show up Shorten for what he is - a know nothing nasty fellow who wants to destroy the middle class and the superannuation system
    Old Geezer
    21st Sep 2018
    2:00pm
    Mick I suggest your read this article and then you will see that franking credits are fair and that the Labor's policy is bad policy and is not doing what the really want to achieve.

    https://cuffelinks.com.au/basics-franking-credit-refunds-fair/

    Labor should be changing the tax rate retirees pay instead. I see that policy of allowing those over 60 tax free income from super is the real problem here and the non return of franking credits will not fix it at all. They should be taxed as normal with a rebate of 15% on super money that has already been taxed which is the same way those under 60 are taxed. Most retirees would pay no tax but those earning a lot in super will pay more tax.
    MICK
    21st Sep 2018
    2:24pm
    I habe to laugh. You put forward an article written by a man who is well connected in the business world as 'proof' and move on. Do you really take readers on this website for fools?

    The reality:

    1. double taxation happens EVERYWHERE and nobody gets refunds for it. If I hire a carpenter then the money I pay him has GST taken out. That is a tax. The carpenter then goes and spends that money on groceries. No tax refund!
    The whole argument is a sham and FRANKING CREDITS OCCUR NOWHERE IN THE FIRST WORLD OTHER THAN IN AUSTRALIA.
    Go tell your stories at party HQ. They are the normal nonsense people have to read from you two and nearly all franking credits are picked up at the top end of town who also recently got tax guts they have no of and no right to receive. This cohort also have tax minimisation schemes and deductions which would male Arnold Schwarzenegger puke plus offshore tax shelters.

    Go peddle your rich man's propaganda to somebody who is dumb enough to be conned. You picked the wrong person.
    Old Geezer
    21st Sep 2018
    2:31pm
    Mick there is no GST on my groceries.
    OnlyGenuineRainey
    21st Sep 2018
    3:34pm
    Mick, why should someone who earns too little to pay tax pay 30% on income from shares while those getting much higher incomes from other sources pay NOTHING?

    And why should a part pensioner couple with an income of $60K a year and $500K in the bank keep their franking credits while the SFR couple with an income of %30,000 a year lose theirs.

    The Labor Party is WRONG on this issue, and they need to address their error so that they don't lose the election to the mongrels we DON'T want winning again.
    Old Geezer
    21st Sep 2018
    3:58pm
    OGR this is actually a very clever more that will expose the Labor party lie for all it is worth. Once their lie is exposed they will lose credibility and people will wont believe a thing they say.

    One has to only look at what Labor is saying about the funding of schools at present to expose more of their lies.
    TREBOR
    21st Sep 2018
    4:22pm
    They shouldn't, Rainey, if their tax is worked out correctly - and provided they do not have 'hidden' income - very hard to do these days unless it's cash.

    Hound your member over that issue until he/she gets it right.
    musicveg
    21st Sep 2018
    7:00pm
    Funding of schools OG, Morrison just gave back the funding to catholic and private schools but public has still been left with less.
    Old Geezer
    21st Sep 2018
    7:34pm
    He gave it back to the private schools because people were taking their kids out of private schools due to large fee increases and placing them in public schools thus overloading the public school system. If he hadn't public schools would have had more kids for the same funding. Labor has been telling porkies on this issue.
    Retired Knowall
    25th Sep 2018
    7:58am
    This is probably why Shorty has an approval rating of around 34%.
    OnlyGenuineRainey
    20th Sep 2018
    10:24pm
    There would be little point in saving enough to be self-funded in retirement if the government sliced into incomes by removing franking credits. Already many SFRs are much worse of in income terms than pensioners. If the government wants another 500,000+ on aged pensions, attack SFRs yet again! They seem to be regarded as fair target. It's become almost a case of ''do you have savings? Hand the all over!"

    Once upon a time the government recognised the value of allowing people to benefit from doing what's good for the nation. Now, it seems, all the rewards are reserved for the bludgers, leaners, manipulators and cheats, and the honest and diligent can go to hell.
    olbaid
    20th Sep 2018
    10:38pm
    It’s only labor who seek keen on anniahlating SFR’s
    The more they destroy wealth the greater will be their support base
    OnlyGenuineRainey
    21st Sep 2018
    8:23am
    Rubbish Olbaid. i'ts BOTH parties. The LNP has already demolished the lifestyle of 300,000 retirees, and now they are apparently considering dealing the final blow to those same hard-working folk. BOTH parties hate the fact that some of us who worked hard and lived modestly actually ended up comfortable. They want to grind all but the ''born rich elite' back into poverty.
    johnp
    21st Sep 2018
    11:11am
    Agree with OGR 100%
    Billv
    21st Sep 2018
    12:10pm
    Exactly
    TREBOR
    21st Sep 2018
    12:18pm
    So, Rainey - it's all right for someone to receive several million in franked credits and pay zero tax while the company writes it off and pays zero tax?

    The tax system applied correctly will not disadvantage anyone with a small holding... at a return of up to $18,200 you would pay no tax, and on an income of $38,200 you would pay minimum tax.

    Even at $18,200 and a return of 5% you'd need a share holding of twenty times that return = $363,000 in shares - to not pay any tax on that income, and only after that would you pay the minimum rate.

    It is the same as income tax withheld - it is tax paid to the ATO on your behalf - not money held as a free gift at ta time. By the same rule, every PAYG tapayer should receive all of withheld tax back each year.

    Since he/she does not - what is so saintly about shareholders? Shorten already said there would be leeway for retirees... but those who are receiving millions have zero need for leeway and have already had the sweet ride to even have that level of shareholding and tax concessions along the way.
    Old Geezer
    21st Sep 2018
    12:50pm
    Trebor if you understood the tax system you would know that it is not possible to receive several million in franking credits either as an individual or in ones super fund and receive a refund cheque for those franking credits.

    If you were to receive several million in franking credits as an individual you must have earnt many millions more in income. You pay the top rate of tax of 45c on this which is considerably more than the 30c you can offset in franking credits. So you will pay at least 15c plus Medicare levies on your millions. So he keeps his several million in franking credits.

    If it was in a super fund then they are only tax free on the first $1.6 million in the pension phase. If that super fund received several million in franking credits they would have to have earnt many millions more in income than those franking credits and will so keep all those franking credits. Note it is possible to have only $2 million in a super fund and be able to use all ones franking credits to pay their tax. It is those with less than $1.6 million that will lose big time.

    If you earn $18,600 you pay no tax. But if you earn $18,600 under Labor you will pay 30% of it in tax. Therefore your income will drop to approx. $13,000. How is this fair when if you earnt that money anywhere else you pay not tax? It is certainly not a free gift when it is the difference between a person just making ends meet and not having a chance to do so.

    So no matter where you earn your money you should pay the same amount of tax. So why should one pay 30% tax on the same income just because they earnt it in dividends?
    TREBOR
    21st Sep 2018
    12:53pm
    And you know I stand four square for all retirees being treated fairly and not being allowed to fall below Pension rate - as could happen to some with a small income. SFRs already pay extra in healthcare and such costs - hardly fair when my view is that a fully vetted income up to pension rate should be a right, along with all extras that go with it.

    There is a lot of injustice around and inequity around.

    Now let me get back elsewhere to shorten on the drive for women's super etc.
    TREBOR
    21st Sep 2018
    12:57pm
    Jesus - OG - that 30% is included as part of total income - it is tax withheld - and tax is payable on the total - NOBODY ever said the full 30% should not be returned - some of it may - or may not - depending on the taxable income of the shareholder.

    If you had the privilege of paying 45c per dollar in income - you've already got enough - why should you get more and more when you retire?

    The entire system is fatally flawed. I once did some figures for a pr1ck relative on his PS income - and worked out that he could receive the same in hand at the lowest rate if he took a reduction in salary of (at that time from memory) around $60k a year - he went into shock...

    The thing about those with the big incomes is - it's not the money - it's the 'status' of being a big earner - and just like living in a 'high class suburb' as mentioned yesterday about rental assistance - your choice, you pay your way without question.
    Old Geezer
    21st Sep 2018
    1:03pm
    So how it is fair under Labor that that person who receives several millions in franking credits is able to write the whole lot off against his income but someone earning $18,000 income from shares loses $5000 leaving him $13,000?
    MICK
    21st Sep 2018
    2:28pm
    Pretty spot on OGR.

    The issue I have advocated is for Labor to have a threshhold for franking credits after which they cut out. $20,000 would be a fair figure. Of course the government trolls will be screaming disadvantage from the rafters because rich people believe they should pay no taxes. Cutting franking credits at the above will end the game.

    All readers so affected should write to every Labor MP and ask for the above amendment if they want their vote. I will be.
    Wstaton
    21st Sep 2018
    2:31pm
    OG. From what I know Labor has already said that Superanuant's would be protected.

    It is the top rorters they are after.
    Old Geezer
    21st Sep 2018
    2:36pm
    Wstation they are only protected if they are on welfare. Self funded retirees are not on welfare and are right in the firing line and will lose the most by this unfair policy.

    It is estimated some 500,000 will divest their wealth and go on the old age pension. The cost of these people on the pension more than likely will cost more than any financial benefit gained by not refunding franking credits. So there will be no money for hospitals, schools etc. Can we afford this to happen?
    TREBOR
    21st Sep 2018
    2:43pm
    "So how it is fair under Labor that that person who receives several millions in franking credits is able to write the whole lot off against his income but someone earning $18,000 income from shares loses $5000 leaving him $13,000? "

    That's what I just said, OG.... we're on the same page here. I'm in full support of those with a small income from shares - but not in favour of those who are copping millions etc and writing it off and then getting the 30% back as a gift.

    Those SFRs on an income lower than Pension and perks should be receiving a top-up from Centrelink and the same perks as OAPs. Pretty simple, eh? Shorten's position is that those on low incomes will receive full benefit.... I'm still waiting on his nuts and bolts - and post election back-flips.
    TREBOR
    21st Sep 2018
    2:45pm
    Wstaton - does that include 'superannuants' on millions p.a? Seems to me that is the problem.... dividend imputation and tax avoidance schemes are resulting in massive imbalances...

    Time to put a stop to all.... easy enough.
    Old Geezer
    21st Sep 2018
    3:01pm
    Trebor Shorten has said those on welfare will keep receiving their franking credit refunds however those on low income not on welfare will not. These people will lose 30% of their already low income.
    OnlyGenuineRainey
    21st Sep 2018
    3:53pm
    Wstaton - WRONG WRONG WRONG. Shorten said PENSIONERS would be protected, no matter how high their income, but anyone NOT on a pension at the date of the announcement would NEVER get franking credits, no matter how low their income or how poor they may eventually become.

    Trebor, the LNP already substantially addressed the issue of people with millions getting tax free incomes and franking credits. They capped tax free pension accounts in super at $1.6 mil. Labor, on the other hand, is promising to CONTINUE letting even the highest income earners benefit from franking credits to reduce their tax bill, while the battlers get screwed.
    Old Geezer
    21st Sep 2018
    4:02pm
    OGR it would not surprise me that the cost of welfare will skyrocket with 500,000 more on the old age pension and any gains from this unfair policy will be minimal compared to the cost of those extra pensions.

    Also the smart money in SMSFs will just invest elsewhere'

    There has also been a lot more capital raisings by companies of late than normal so are they getting in now to raise capital while they can as it will be a lot harder under Labor with this unfair policy.
    TREBOR
    21st Sep 2018
    4:24pm
    It should be all those under a certain level of income, OG, OGR - not just those on Social Security. always watch what any politician says - they choose their words very carefully so as to leave loopholes.

    When it comes to a couple, I'm in favour of each treated separately so that they can actually earn a little more - the bills don't stop coming once you get older, retired and less able etc...
    OnlyGenuineRainey
    21st Sep 2018
    8:24am
    Olga, will YLC be making a formal submission - hopefully defending the rights of SFRs?
    TREBOR
    21st Sep 2018
    12:19pm
    Stipulate 'smaller SFRs' Rainey - the fat cats have no need of any help - they've already had it.
    OzGKW
    21st Sep 2018
    12:27pm
    Trebor, fat cats won't be getting any refund of franking credits because their average rate of tax will be >30%. They will absorb all of their franking credits to offset their other tax payable. That is exactly why it is discriminatory to deny franking credit refunds to lower income earners.
    TREBOR
    21st Sep 2018
    12:59pm
    Correct - so why then is there any argument about this Oz?

    For the simple reason that far too much of franked credits is not paying tax and the recipients are not paying tax... that's precisely where Shortenski started off on this - and the rumour mill and emotional clouds have swamped the whole discussion.

    Too many are paying zero tax on huge incomes - and getting their imputation back complete as well.

    Again - the small holders are not affected and will not be either - as long as I have any say in it.
    TREBOR
    21st Sep 2018
    1:00pm
    Now let me go and chew on Shorten over 'women's super' and the next phase in the stupidity of paying women more for the same work...
    OnlyGenuineRainey
    21st Sep 2018
    4:01pm
    Trebor, the fat cats either have already lost their big franking credits by being forced to reduce tax free pension balances to below $1.6 million, or have such high incomes that they will continue to get the credits as a tax reduction.

    The ONLY people losing by this stupid proposal are SMALLER SFRs.
    TREBOR
    21st Sep 2018
    4:25pm
    I agree - unless done carefully it will (as usual) impact on the lower income recipients.
    OnlyGenuineRainey
    22nd Sep 2018
    4:25pm
    Trebor, Labor's proposal ONLY impacts on those on low incomes. The high income earners keep their credits!
    Captain
    21st Sep 2018
    9:33am
    We are SFR's (without aged pension,) and without the franking credits our income will be lower than those on the pension when you take into account the other benefits the aged pension brings in.

    I fail to understand how any political party can even think about attacking SFR's income in any way as we worked hard to get to where we are, went without for years and are saving the govt hundreds of thousands over our retired lifetimes by not claiming a pension.

    Where is the incentive to work hard and save for the future when the system you worked under suddenly changes the goalposts!!!! My wife and I have lost faith in the Australian political system over the last 10/15 years as too many politicans are now "in it for themselves" rather than for the good of the country.
    Billv
    21st Sep 2018
    11:41am
    Couldn't agree more. Just once before I go I would love to see politicians live on a pensions income for a month.
    Rae
    21st Sep 2018
    11:44am
    Yes Captain. I find it appalling that a defined benefit pension that is 48% non concessional is deemed only 10% non concessional by Centrelink now. The whole idea of paying after tax savings into superannuation thus saving the revenue base was wiped out by this change and those pensioners could not do a thing about it.

    At least in this case shares can be sold down and invested in other products with better returns over time than dividend payers minus the extra cheque money.

    The Government will end up paying anyway as those on lower incomes will be able to claim part pensions and receive valuable concession cards.

    Pity all those buying units in funds with the promise of those concessions were robbed as they can't do a thing about it unlike shareholders.
    TREBOR
    21st Sep 2018
    12:20pm
    You are in the category that Shortenski has already said will get leeway, Captain - besides this is all distraction from the stupid and ongoing idea of paying women for not working along with super for not working - i.e. at a higher rate for the same work.
    MICK
    21st Sep 2018
    2:32pm
    Well written Captain. You are not alone mate and many of us are wondering why we have been written off given that we save governments billions of dollars in pensions they do not pay us.
    The reality is governments in this country have mismanaged our money for decades and now they come after workers repeatedly with the coalition handing out money to those who have no need. If re-elected company tax cuts for the rich will add to personal cuts they recently received. Be careful who you vote for as it could get much much worse. Rich folk never want less!
    OnlyGenuineRainey
    21st Sep 2018
    4:12pm
    WRONG AGAIN TREBOR. Shorten DID NOT say there would be leeway for low income SFRs - ONLY for pensioners, many of whom are far better off than their SFR counterparts.
    TREBOR
    21st Sep 2018
    4:26pm
    Sorry - my error, Rainey - I recall saying before that smaller SFRs needed to be included... my mistake.
    Old Man
    21st Sep 2018
    11:15am
    It's drawing a long bow to suggest that the committee investigating the implications of removing tax imputations is wanting to make it a coalition policy. It seems to be a way of sticking it up Labor by making clear who will be affected and by how much. As I see it, it is a pure political act to discredit the other side, not a way to formulate policy.
    Rae
    21st Sep 2018
    11:47am
    Yes I agree. Too much of that going on and not enough proper government policy.

    Sticking it up the other side and each other seems to be a great deal of what they are doing instead of running the country properly.
    MICK
    21st Sep 2018
    2:33pm
    Ye OM the coalition will NEVER let go of money handouts to the top end of town. That is close to the only thing they ever do in government.
    Wstaton
    21st Sep 2018
    2:36pm
    yep! That all they seem to do in question time instead of answering the question. I switch off now as soon as it starts on TV.
    Old Geezer
    21st Sep 2018
    2:39pm
    Mick to top end of town don't lose their money handouts under this Labor policy either.
    Nerk
    21st Sep 2018
    11:22am
    Why are they forcing retirees to get all their money out and putting under their bed to become eligible for the pension.
    Rae
    22nd Sep 2018
    8:17am
    I think they want you to spend it and keep the economy going until at least after the election.

    Best way to do that is to make saving extremely unproductive and they are doing a great job of it.
    floss
    21st Sep 2018
    11:24am
    Just another attack on retirees by this stupid Liberal Government it has been ongoing since they came to power.Shortens view on franking credits was just as bad.Lest we forget Joe Hockey.
    Old Geezer
    21st Sep 2018
    12:12pm
    It is not an attack on retirees by the Liberal government but will show that Labor is looking alter their rich mates and fleecing retirees.
    TREBOR
    21st Sep 2018
    4:28pm
    LNP/Labor - no difference OG - they are all out there to take something from the majority of lower incomes - which adds up to taking a large chunk out of the bigger incomes such as themselves, their families, their cronies etc with all of their arranged deals while in 'government', who would then be upset.
    Dave R
    21st Sep 2018
    11:29am
    Howard should never have extended franking credit policy to include refunds for non-taxpayers. That was never the intention of franking and it is another concession that has made our taxation system unsustainable.
    OzGKW
    21st Sep 2018
    12:00pm
    Please tell us what you think the intention of franking was meant to be?

    Don't you think it possible that the Howard Government identified the iniquity in the initial policy, and made it possible for all shareholders to get the full benefit of the credit for tax already paid on their dividends by the companies they invested it. The Howard Government corrected what was effectively double taxation.

    I'm sure that YLC readers would be interested to know why you think it's fair for wealthy people to get the full benefit of franking credits to offset their tax bills, but why it's not fair for people on lower incomes to also get the credit for tax already paid on their dividends?
    TREBOR
    21st Sep 2018
    12:34pm
    So Oz - there was inequity in a company paying, for example, 30% equal to one million to the ATO to be withheld as against future tax burden, and then handing that million of EARNED INCOME back without a murmer and with no tax on it or any other income?

    It is withheld tax, same as PAYG earners have withdrawn before they get their money every week... and is itself part of taxable income and even with no other taxation levied, should be taxed at the going rate for $1m.

    Let's try it in simple terms:-

    Joe Thinne the worker is paid annually $100,000 and has (for example and simplicity of calculation) 30% in tax withheld = $30,000 PAYE tax paid into the ATO in advance.

    Bill Fatte is paid annually $1,000,000 from his share portfolio, with 30% in tax withheld = $300,000 tax paid into the ATO in advance.

    Joe does his tax return on his gross income which includes the PAYG component, and is entitled to a return out of his $30,000 or (say) $200 in deductions - he gets a tax cheque for $200.

    Bill does his tax return with his sole income being his return on shares, and his gross income including the dividend imputation is $1000,000 - he writes off 50% = $500,000 in costs and thus pays tax on a total of $500,000 - is it then right that Bill is returned that $300,000 in full without paying any tax on it? He still owes tax on $500k - how would he get back the whole $300,000 without paying anything out of it?

    Not that hard really...
    Old Geezer
    21st Sep 2018
    12:56pm
    If Howard had not extend the franking system to allow refunds of franking credits then our sharemarket would not be near as big or robust as it is today. Only the wealthy would own shares and the liquidity of our market would be very low. Raising capital would be also difficult.
    Old Geezer
    21st Sep 2018
    1:00pm
    Trebor I'd love to know how one can write off $500,000 in costs on an income of $1000,000 from shares? That is utter nonsense.
    OzGKW
    21st Sep 2018
    1:07pm
    Trebor, you say in your example that Bill Fatte's income is solely from return on shares. In that case, he would not be allowed to write off 50% in costs because he wouldn't have an allowable deduction. Your example is therefore factually invalid. Your comment "Not that hard really" is insulting, because you have now demonstrated that you don't understand Dividend Imputation. I will explain how it really works.
    Bill Fatte's taxable income would be the full $1Million in dividends, although he would only have actually received $700,000 after the company tax was paid. Tax in 2018 on $1Million is $423,097 ($54,097 + 45c in every dollar over $180,000 income) + $20,000 Medicare = $443,097. He then gets a credit of $300,000 for the tax already paid by the companies he had shares in (assuming all are fully taxed in Australia). This brings his actual tax bill down to $143,097. This is tax over and above the company tax rate.
    Without Imputataion/Franking Credits, Bill Fatte would otherwise pay $443,097 in tax on a disposable income of $700,000. That is an effective tax rate of 63.3%.
    May I politely suggest that you get your facts straight before making comments.
    MICK
    21st Sep 2018
    2:40pm
    Dave R - what makes our tax system "unsustainable" is the inability to collect tax from the well off who consider they do not need to pay tax. So the burden falls on working Australians and the system starts to crack at the seams.
    My ball park figure for a fair tax system is to firstly make offshore tax shelters illegal. Shrieks from the rich. Of course these are fraudulent in nature because the concept of exporting profits is perverse and is fraudulent behaviour between the rich and governments.
    Second thing is to reduced deductions and remove the many dodgy one used for rich folk to reduce taxable income to zip.
    Third thing is to crack down on accounting schemes which further reduce taxable income.
    Last thing is to restore tax scales so that we again have a progressive tax system where the do the unthinkable: PAY THEIR DUES.

    All of this talk about franking credits is a sideshow. The above is where the real action is.
    TREBOR
    21st Sep 2018
    2:48pm
    Christ, OG - do you understand 'example'? Stop being so picky over nothing - you do the figures with a few guesses and 'examples'....

    I agree totally with you Oz - I was just offering an example.... you are all adults who can do figures for yourselves...
    TREBOR
    21st Sep 2018
    2:49pm
    BTW - thank you for your figures - I can't do everything for everybody.. so thanks.
    TREBOR
    21st Sep 2018
    2:52pm
    No - the 30% included in his taxable income makes his income still $1,000,000 - it is tax withheld - not tax taken, and is included in his gross income before calculation.

    Therefore he would be paying $443,097 on $1,000,000, which is correct for that level of income. He must be bleeding to death on a mere $10,000 a week after tax....
    TREBOR
    21st Sep 2018
    2:55pm
    If you look at it another way - if he pays the $143,097 in tax on $700,000 and receives NOTHING in return from the ATO for his franked dividends - he is square, since it then equals the tax on his total income.

    If on the other hand the ATO hands him back the $300,000, he is paying an effective tax rate of 14.3097% on $1,000,000 income.... absurd.
    Wstaton
    21st Sep 2018
    3:02pm
    Are we saying that the full $300,000 is deducted from the total tax bill. This to me seems monstrous as I do not see how company tax paid correlates with income tax as they are completely separate taxes.

    One is on company profits one is on income.

    As for franking credits even the USA do not have this and very few other countries have.

    One question should also be asked. If the profits are made from an overseas company and companies profits are taxed in that country do those overseas countries give franking credits to overseas shareholders. If so why would we be giving money back to Australians who main source of income is from overseas sources.
    Old Geezer
    21st Sep 2018
    3:13pm
    Yes the whole $300,000 is deducted from the tax payable. This will not change under Labor's policy as this person pays a lot more tax than he gets in franking credits.

    Ignore Trebor's as if anyone tried to write off $500,000 they would get a please explain letter in the post and would have a hard time substantiating that sort of deduction.
    OnlyGenuineRainey
    21st Sep 2018
    4:09pm
    What other countries do is irrelevant. Other countries have totally different tax policies across the board, and totally different pension policies, Wstaton. Stick to what is RELEVANT.

    The high income earner will STILL keep his franking credits under Labor and save a whopping amount of tax. The LOW INCOME SFR will lose up to 30% of their income and many will be forced onto pensions and the cost to the taxpayer will SKYROCKET. Currently, an SFR couple just above the threshold saves the country some $40,000 a year, less maybe $8000 in franking credits - net $32000 a year into the taxpayer coffers.

    Take away franking credits and force the SFR to spend a bit and put their hand out for a pension. $8000 saved (temporarily) but the NET cost to taxpayer goes up to $48000 a year, because they not only get a pension and benefits, but now they get their franking credits as well!

    HOW TO STUFF AN ECONOMY WITH SHORT TERM IRRATIONAL THINKING (supported by the green-eyed monsters and idiots!)
    TREBOR
    21st Sep 2018
    4:31pm
    'example', OG example - you no read-a da English?

    Keep attacking me over nothing, OG - for once we all seem to be on the same page, but you and some others persist with the same old clouding the waters disputing over trivia...

    Could that be deliberate to confuse the discussion?
    Billv
    21st Sep 2018
    11:30am
    So, once again it's time to hit pensioners. Always easy targets with little or no will to fight. It's just another way to kill off the elderly through stress and hardship. Oh what joy to have us move on to the hereafter to join our loved ones, if such a place exists. And they call this the lucky country?
    ph
    22nd Sep 2018
    5:06pm
    he Lucky Country is a 1964 book by Donald Horne. The title has become a nickname for Australia and is generally used favourably, although the origin of the phrase was negative in the context of the book. He was being facetious.
    floss
    21st Sep 2018
    11:33am
    It will be the last straw for self funded retirees what next from this corrupt mob of idiots .Super is no longer of any use to ordinary working people and this will finish it off.
    Billv
    21st Sep 2018
    11:37am
    I agree. But why go after the rich, such as politicians, when they can go after the vulnerable
    Old Geezer
    21st Sep 2018
    1:07pm
    You are right floss. Super is only just worth having with franking credits refunded. If they are not refunded then it will be costing retirees more to have their money in super than if it was invested in their own names. Super will be finished.
    MICK
    21st Sep 2018
    2:43pm
    floss - if self funded retirees throw in the towel and spend their funds they 'll then be on the pension. Then the family hone will end up in the mix to force people to sell it and live on the proceeds. we've already seen the first shot over the bow with this one with Hockey putting that one out for comment. Just like John Howard's 'Work Choices' the family home is not over and will return.
    The only solution is to vote this bunch of rich man's puppets out and form a new government.
    TREBOR
    21st Sep 2018
    2:58pm
    Yes - the smaller SFRs need to be protected - and the big fish pay their way. You are right, Mick - always look for the next step in any political game of chess - and the LNP and Labor are headed in the same direction of taking as much as possible from the lower end.

    If you read it - I argued night before last that neither the LNP nor Labor as it currently exists want a strong and independent Union movement of any other movement of ordinary folk..... for the same reasons.... they want total control over the nation so they can pursue their respective ideologies without hindrance.

    Please - don't be silly - I totally ignore the Greens, who are sell-outs of the first water.
    Old Geezer
    21st Sep 2018
    4:21pm
    I have been told valuers are already out valuing the homes of pensioners but yet to find out why.
    TREBOR
    21st Sep 2018
    4:32pm
    Not hard, OG - any address on a real estate link can find you a current value of a home...

    I think we both know why the value of pensioners/retirees homes would be looked at.... dig your trenches deep, people....
    Rae
    22nd Sep 2018
    8:25am
    Yes floss. Saving for your own retirement is very stupid now unless you can save the $1.6 million.

    You'd be better off spending and enjoying life like most do, buying a home and getting the aged pension and concessions.

    Saving the absolute maximum for a full pension and no more is pretty clever now.

    You'd need a hell of a lot of shares to make $34 000 plus concessions in dividends anyway.
    OzGKW
    21st Sep 2018
    11:52am
    The policy of not refunding excess tax credits is discriminatory. Wealthy people with an average tax rate above 30% will still receive the full benefit of franking credits to offset their tax bill, but people whose average rate of tax is less than 30% will not get the full benefit of franking credits.
    The tax paid by companies they invest in will be kept by the Government. Lower income shareholders will therefore subsidise the Federal Budget, but wealthy shareholders will still get the full offset of the companies' tax against their personal tax.
    Anyone who considers this to be fair should not be in Parliament.
    However, we are looking at the real possibility of the first proposer of this policy becoming the next PM, betraying the very people his ALP is supposed to be helping.
    TREBOR
    21st Sep 2018
    12:36pm
    EXCESS tax credits after proper tax calculation on income - yes. Tax credits in full - NO! But if someone is copping a heap without paying any tax - something is rotten in the state of Denmark.

    That's the rub.... too many rorts and loopholes.
    Old Geezer
    21st Sep 2018
    1:42pm
    I agree OzGKW. The worst thing he doesn't seem to even know how the franking system works and who his policy will really affect or he does know but is telling everyone complete porkies.
    MICK
    21st Sep 2018
    2:55pm
    OzGKW - if you give figures you'll see that wealthy taxpayers on 48% will be paying more. That is the intention. Retirees with a large exposure to franking credits will of course be hit and it is here we need to lobby Labor MPs to set a threshhold of around $20,000 before franking credits cut out. That is fair.

    Read this:
    https://www.macrobusiness.com.au/2018/03/winners-losers-franking-credit-changes/
    Old Geezer
    21st Sep 2018
    3:29pm
    Mick that is very broad based and does not tell me who is really affected by this unfair policy.
    TREBOR
    21st Sep 2018
    5:36pm
    Again, OG - shows clearly that our tax system needs a full review and overhaul. Some are getting away with heaps and others with nothing... and the ones not getting away with heaps are in the sights of government.
    fred
    21st Sep 2018
    12:00pm
    I urge all to lodge their own submissions . So, if the Refund of Dividend Imputation Tax Credits are removed by Labor and Bill shorten has said Labor will apply the legislation only against Self Managed Super funds,can somebody tell me how it is possible the Union based super funds can be carved out and exempted and Union Funds continue to get the Tax credits for members in Pension phase
    Old Geezer
    21st Sep 2018
    3:07pm
    Fred what I don't understand is how those receiving a pension from such funds get the same rate of return as those in the accumulation phase. If imputation credits are refunded then why those receiving a pension getting a higher return? Who is benefiting by these refunded imputation credits?
    almost a grey hair
    21st Sep 2018
    12:06pm
    I agree with OGR, why strive to become a SFR when I lose $1380 a fortnight as a home owning couple which is $35880 a year(from yesterday) For me self funding is possible but why bother at the mo I am retired but my wife works for approx $32000 a year. When she reaches pension age which is in 2 years time she will be on the oap at half the couple rate then two years later when I reach pension age we will lose her OAP altogether and will have to rely on being self funded. I am positive that neither gov knows what they are doing with pensions and they are only concerned about being re-elected even if they are a bunch of out of touch muppets. My only real path is to spend up before I get to oap age and enjoy it by
    travelling and getting the house in order then collect the 38 k a year (by then it will be $40k) The chances of moving to a first world universal pension are remote since the introduction of the super guarantee but I feel that its the only fair to all way of doing things.
    MICK
    21st Sep 2018
    2:58pm
    You are either quite wealthy or not working the figures correctly almost a grey. I highly doubt you are losing $35,880 a year because of franking credit changes. Remember you get dividends too and franking credits are not dividends.
    OnlyGenuineRainey
    21st Sep 2018
    3:59pm
    Mick, an SFR couple is losing some $40,000 a year by being self-funded. Currently, franking credits reduce that loss by a few thousand. When the loss increases, there is simply no point in being SFR. Why not say 'bugger the taxpayer', spend up big and take the handouts. Way simpler. Eliminates management headaches and costs and reduces risks, and it seems it elevates you socially as well, since it seems SFRs are a hated species!
    Rae
    22nd Sep 2018
    8:37am
    I agree almost as to be self funded you give up the $35880 and concessions worth a further $3000 to $4000.

    It no longer makes any sense.

    I'm fairly filthy that I worked two jobs and ran a business to raise my kids and save for myself. It was pretty tough at times and the saving money would have been nice.

    Certainly spending on renovations, new appliances, new cars, and paying off all debt and a bit of fun travelling is well worth doing for that $35880.

    Both the ALP and LNP are determined to punish savers and reward spenders so go for it.

    Superannuation is for the very rich and mugs now.

    Everyone hates savers and is out to get them one way or another.
    floss
    21st Sep 2018
    12:08pm
    It looks like Frydenberg is just another gutless politician that will attack the weak and not the multinationals that pay very little if any tax. The quicker we have a election the better ,I just can't afford this mob.
    OzGKW
    21st Sep 2018
    12:36pm
    Floss, it was Bill Shorten who first suggested denying refunds of excess franking credits to lower income earners. What makes you think you will be better off with him as PM. He doesn't even understand that the impact of his decision will disadvantage his own voter base. He might have changed his tune a bit after some feedback, but he should have realised the problem before he first suggested that policy. I don't have confidence in his ability to govern. Unfortunately, Frydenberg is also considering the policy - or perhaps more likely, will properly investigate the impact of that policy to further discredit the Opposition.
    Old Geezer
    21st Sep 2018
    1:34pm
    It is actually a very clever move by Frydenberg and yes he will do a good job in discrediting the opposition on this issue. Once discredited how can the electorate trust them?
    MICK
    21st Sep 2018
    3:01pm
    Frydenburg was Turnbull's lieutenant. He will come after working Australians and if re-elected to office he will be the architect of CORPORATE TAX CUTS. We'll all be much worse off if that scam gets off the ground but this lot will not let this go. The big end of town own this lot so who's bidding would one expect it to do.
    Old Geezer
    21st Sep 2018
    3:54pm
    Mick you just don't get it at all.
    TREBOR
    21st Sep 2018
    12:11pm
    Note 'franking credit clawback' - it's a freebie nobody else gets. It was a free gift that has become a vehicle for tax evasion (not avoidance) and is flawed.

    Let each pay his or her own ta on their real income. Companies and shareholders are discrete legal entities - not one and the same, and tax credit should properly be added to income and then tax due determined.
    Old Geezer
    21st Sep 2018
    12:18pm
    Rubbish Trebor. It is the same as not giving back excess tax paid by an employer on behalf of an employee.

    Also how to you explain why high income earners will still get your so called freebie but low income earners will not? It is a tax on lower income earners but a gift to high income earners. People in both major parties are looking after themselves and their wealthy mates at the expense of low income earners.

    How is this fair?
    TREBOR
    21st Sep 2018
    12:37pm
    Rubbish, OG - no PAYE earner is repaid the full amount of withheld tax, and that is the issue being pursued here... the repayment without question of the full amount of withheld tax without paying tax at all.
    TREBOR
    21st Sep 2018
    12:39pm
    A DI recipient would still get back some - as long as his/her overall tax did not exceed 30% - in which case they need to ante up more. Same rule applies.... don't pretend you don't know that.
    OzGKW
    21st Sep 2018
    12:42pm
    Trebor, the franking credit amount IS ADDED to a shareholder's taxable income before the tax is calculated in the shareholder's hands, JUST AS YOU SAY IT SHOULD BE. That way, each shareholder pays tax on the company's net income at the shareholder's rate of tax, and then gets a credit for the tax paid by the company.
    Didn't you realise that already happens? Perhaps you will revise your attitude to the issue when you fully understand how dividend imputation works.
    Old Geezer
    21st Sep 2018
    12:52pm
    I suggest no one takes any notice of Trebor as he has no idea how our tax or franking credit system works and is only mudding the waters on this issue.
    olbaid
    21st Sep 2018
    1:45pm
    I have tried talking sense into Trebor the last few month but they guy is incapable of rational thought ,
    He’s much more content with posting smart arse comments and being a comedian .
    Have decided to ignore his posts . Waste of time
    olbaid
    21st Sep 2018
    1:47pm
    Micks the same - blames LNP for everything, even his hemorrhoids
    TREBOR
    21st Sep 2018
    3:01pm
    Totally wrong - I have always stated clearly that DI is part of overall income and included for tax calculation... the only problem is with those who are obviously using it to get a free bonus on that withheld tax... and NONE of those is a smaller DI recipient - who Shorten has stated will be sheltered anyway.

    Read the link Mick put up... and stop going round and round...

    How many times must we go through this?
    TREBOR
    21st Sep 2018
    3:02pm
    https://www.macrobusiness.com.au/2018/03/winners-losers-franking-credit-changes/
    MICK
    21st Sep 2018
    3:03pm
    TREBOR - no other country has franking credits. Only Australia. The trolls can cry poor and victim all they like but the above is the fact....and the LNP are screaming 'unfair' to prevent rich man's welfare from being removed.
    olbaid
    21st Sep 2018
    3:06pm
    Mick - you’re lying again
    Many countries offered and still do offer imputation
    Those who rolled back offered other incentives in its place or compliment a lower thresholds kid of imputation with direct tax cuts and rebates

    How can you lie with a straight face . Oh I forgot you’re a Shorten lackie
    OnlyGenuineRainey
    21st Sep 2018
    4:11pm
    Mick, other countries pay pensions with no means test too. And have very different tax policies in all areas. What they do is NOT relevant unless we are copying EVERYTHING they do, not just cherry picking.
    TREBOR
    21st Sep 2018
    4:34pm
    Out tax system needs a full review - and not a Howard one, either.... this nation needs to capture the tax revenue where it is being earned - not from those with a little bit all the time.
    TREBOR
    21st Sep 2018
    5:39pm
    Many countries"

    "Relatively few countries - Australia, New Zealand and Malta - currently have a dividend imputation system. However, most countries have arrangements to prevent double taxation. Canada grosses up dividend income (and capital gains) and then offers federal and state tax credits to prevent double taxation."

    https://www.superannuation.asn.au/ArticleDocuments/359/ASFA_Dividend-imputation.pdf.aspx?Embed=Y
    SuziJ
    21st Sep 2018
    12:30pm
    What tax credits?
    Old Geezer
    21st Sep 2018
    1:43pm
    Tax you have paid over and above what you are required to pay.
    MICK
    21st Sep 2018
    3:04pm
    I understand SuziJ. You do not have the spare cash to own shares. Life's tough for some and posters like OG have little comprehension and no soul.
    TREBOR
    21st Sep 2018
    3:05pm
    Incorrect, OG - tax withheld in advance and comprising part of your total income against your future tax calculation and then refunded or not according to your FULL taxable income.

    EXCESS tax credits are tax you have paid over and above.. not tax credits pure and simple from dividends.
    sanity
    21st Sep 2018
    12:30pm
    The comment by OGR says much of it - beneficiaries of government handouts versus those who are more inclined to put their heads to the grindstone and have a plan of how they wish to end their working life = SFR's.

    Governments used to lay the groundwork for what they suggested we do - save into super, put away after-tax earnings into super, invest appropriately etc. They then introduced the platform for those who implemented that plan - including the refund of franking credits - in lieu of seeking a handout in the form of pensions and allowances when that time came.

    If either government introduce this pull-back then we must act appropriately - pull money out of super and spend - maybe upgrade a home rather than trade down; overseas holidays or whatever; upgrade the car; pull as much cash out as is possible and mattress it; just get the pension and allowances. Still retain the super fund to the level that complies.

    We could fight back and, definitely, should!

    Let's just wait until the election - strong decisions are pending - and, we must make them if needs be. I'm not intending to give in to these bastards!
    TREBOR
    21st Sep 2018
    3:06pm
    Sighs - not the old 'us = goodies, them = baddies'?
    Rae
    22nd Sep 2018
    8:53am
    Waiting until the election might be a tad too long if you want to avoid losing capital.
    TREBOR
    21st Sep 2018
    12:50pm
    For those who are about to weigh in with the old 'that's how the rules for business work' etc -

    Nonsense - those outdated rules were originally designed in the 18th century to enable the already rich to create a nice little earner and not incur costs in doing so... such a view has long been over taken by social and economic events, and thus the entire range of business law and regulations is in dire need of reconstruction to suit the modern day.

    No longer is business a privileged position - and for ages now a business has been held to be a 'separate legal entity' the same as any individual and thus should be liable to the same rules for taxation and economic transactions. Jeez - businesses were even campaigning to be given a vote..... but they didn't want to pay Jo Ordinary's tax rates to do it.....
    Old Geezer
    21st Sep 2018
    1:10pm
    If anyone is interested there is a petition to stop the changes to the Current Franking Credits system.

    http://www.australianstockreport.com.au/franking-credit-petition

    That video with Lee Sales after you sign it also shows that Labor has no idea what it I doing too.
    Old Geezer
    21st Sep 2018
    1:28pm
    A good article to read.

    https://cuffelinks.com.au/tax-super-rich-prove-costly/
    Old Geezer
    21st Sep 2018
    1:31pm
    Looks like people are getting organised too on this.

    https://cuffelinks.com.au/labors-franking-policy-outside-super-pensions/
    olbaid
    21st Sep 2018
    1:59pm
    Signed
    MICK
    21st Sep 2018
    3:06pm
    Yeah I saw that. This is a petition so that the poor wealthy do not lose their welfare.
    The Australian Stock Report is a high pressure organisation which cold calls and makes all sorts of claims. To be avoided and the petition has nothing to do with struggling retirees and everything to do with the rich wanting to retain tax funded handouts.
    Old Geezer
    21st Sep 2018
    3:09pm
    Just shows how little you understand how franking credits work and who those are who will be affected by Labor's policy.

    I'll say it again the rich will not be affected one iota by this policy. That is a Labor lie.
    OnlyGenuineRainey
    21st Sep 2018
    3:56pm
    High income earners keep their credits. Pensioners keep their credits. The ONLY losers are the LOW INCOME EARNERS.
    Rae
    22nd Sep 2018
    9:00am
    I signed too. I don't actually hold any individual shares as I trade indexes only but I think the ASX will suffer from this.

    It's not fair to change the rules while the game is in play.

    There has been far too much of that already without adding to it.

    It does seem to only effect low income earners and SMSF. Very discriminatory.
    Wstaton
    21st Sep 2018
    1:55pm
    Not knowing exactly what franking credits are and knowing I could not comment until I investigated what they actually were It made me have two minds. There does not seem to be anything complicated about them.

    It would appear that these as a whole seems to actually reduce the amount of company tax a company pays. If a company pay say $1000 dollars in company tax (0n about $3333 profit) and the difference goes to one person who say at the top rate (2333) with franking credits of $1000 dollars then the overall company tax paid between the two is only (if at the top marginal rate of 45% is only $550. This seems illogical to me as this does not seem the intent of company tax and thus depriving revenue that could be used in other areas of necessity.

    This is also seems to me that large franking credits benefit the very large income earners more than the smaller superannuation investors.

    This to me is the problem. But at the same time should people who have the advantage of being able to have money to invest get something that a great many of us who can't, get extra benefits that reduces the amount of tax that the government receives.

    Their is also one other point that is not clear to me. If an investor receives say this $2333 (plus $1000 franking credits) Is the $2333 added as taxable income plus I assume reduces the tax on this $2333.

    We should also consider that that this is income tax being paid so why should company tax be used to reduce it? There again it could be said that the company tax could be considered as and expense to earning the dividends received.

    Now if the government wants to protect people paying into super funds wouldn't it be fair to only allow franking credits to those earnings directly attributed to those super funds. If any of these people want to by shares outside then hard luck.

    Unfortunately this also adds a problem "SMSF" and I am not going there as I do not know what controls are in place to manage SMSF and the amount of investments and earning that can be earned within. I would think that there must be a limit as there is for superanuants who invest in super fund companies.

    It should also be considered that super has already got a lot of tax benefits there again that benefits those who can contribute larger amounts than those who can't.
    Old Geezer
    21st Sep 2018
    2:15pm
    If an investor receives $2333 in dividends and attached to those dividends is an imputation credit of $1000 then $3333 is added to his other income. He is taxed on the dividend paid plus the franking credits. He is then taxed on all his income. If his income is below $18000 he gets tax refund of $1000. Under Labor he will not get this refund.

    If that person earns $100,000 and pays say $25,000 in tax his tax is reduced by $1000. This does not change under Labor.

    SMSFs income is tax free for anyone over 60 if the fund is in the pension mode for the first $1.6 million in the fund. They currently have all their franking credits refunded. Under Labor they will lose all their franking credits.

    If a SMSF has $2 million and pays more tax than it's franking credits it franking credits are deducted from it's tax bill. If it's tax bill is the same as it's franking credits it pays no tax. This does not change under Labor.

    Do you think it is fair that the wealthier you are and the more income you earn you can use franking credits to reduce your tax but if you don't earn enough income for your tax to off set your franking credits they are not refunded?

    What I don't understand is how Labor could think it is a good policy when it goes against their core beliefs?
    TREBOR
    21st Sep 2018
    3:10pm
    As long as the adjustment to tax taken from DI is not confused with a free and FULL return because they already paid a little more, OG.. all is good. Been through it time and time again... it is just tax payable including DI as part of income - same as PAYE tax withheld is part of gross income, and rightly so.
    Old Geezer
    21st Sep 2018
    3:15pm
    Trebor you are making no sense at all.
    Wstaton
    21st Sep 2018
    3:31pm
    Thanks OG,

    I decied to read the Labor proposed policy on Franking credits and I noticed something that I find amazing. In it I read:>

    ________________________________________________________________________
    "This change only affects a small number of shareholders who have no tax liability and use imputation credits to receive a cash refund.

    While those people will no longer receive a cash refund, they will not be paying additional tax.

    More than 92 per cent of taxpayers do not receive a cash refund for excess imputation credits, and won’t be affected at all by this change."
    __________________________________________________________________________

    Considering that franking credits were originally designed to supposingly stop double taxation. How is it that someone who pays no tax can get a cash refund. Just show the lackadaisical way some of our tax laws are put into place. Of course our big earners would certainly ensure that things are set up so no tax is payable.

    Amazing.
    Old Geezer
    21st Sep 2018
    3:41pm
    That is the Labor lie.

    You receive a refund of your franking credits because you pay not tax or not enough tax to use them. How do you not pay tax? You don't earn enough income to pay tax.

    If only wealthy people were affected by this why did Labor backflip and exempt those on welfare? If people on welfare are affected then it is not restricted tot eh wealthy.

    Also 92% of tax payers is misleading. Those who pay no tax are not taxpayers. Many who do not pay tax get refunds of their franking credits. All you have to do is fill in a simple form instead of a tax return.

    Therefore that statement you have in inverted commas is a complete lie.
    OnlyGenuineRainey
    21st Sep 2018
    3:48pm
    Firstly, the claim that it only affects a small number of shareholders is a blatant lie. If that were true, it wouldn't be worth bothering to change the law. Where are the claimed savings if it only affects a small number?

    Secondly, it DOES stop double taxation. The person who pays no tax SHOULD NOT pay tax because their income is below the legal threshold, or they are retired and granted a FAIR tax concession - probably in recognition of the fact that they don't get a pension. Now, they actually ARE paying tax, of a sort, by missing out on a pension. They are contributing tens of thousands annually to the taxpayer. Why should they now pay 30% tax on income from one source, despite NOT being liable to pay tax due to their overall status, and despite income from any other source being tax free?

    Sorry, Wstaton, but you've got it all wrong. But sure, the big earners are set up to escape tax. That will ever be, no matter what. It's the battlers that will be slugged unfairly.

    Consider this:
    Couple X have about $500,000 and get a part pension. Total income $60K a year. Franking credits - $6000 a year, and they get to keep them under Short-on's policy.
    Total cost to taxpayer- around $15000 a year for franking credits, pension, benefits, and admin costs.

    Couple Y have about $850,000. No pension. Total income $32,000 a year.
    Franking credits $8,000. They lose these.
    Total cost to taxpayer WITH franking credits - $8000 a year
    Without franking credits - $0

    Couple Z has around $300,000 and gets a full pension.
    Franking credits $3000 a year, and they get to keep them
    Total cost to taxpayer - approx. $42,000 a year.

    So WHY would anyone consider it smart to punish couple Y, who are costing the taxpayer so little, while rewarding X and Z who are imposing a heavy burden?

    What happens when 500,000 or so Ys decide it's not worth saving and spend their money and go on the pension? The cost to the taxpayer will run into the tens of billions!


    BTW. Labor is ignoring the fact that the LNP already substantially addressed the issue of people with huge amounts in pension fund getting tax free income AND franking credits. They capped the balance in tax free super at $1.6 million. I don't think they went far enough, but that's a separate issue. Killing franking credits is an attack on lower income SFRs who are contributing massively to the economy. It's not just blatantly unfair, it's economically harmful in the extreme.
    TREBOR
    21st Sep 2018
    5:41pm
    I always make sense, OG - it's called English.

    So now you reckon that DI should be viewed as a full refund every time and just handed back to every DI recipient without consideration for overall tax burden?

    English, my lad... ENGLISH....
    olbaid
    21st Sep 2018
    3:15pm
    If labor get their way , many including myself will move investments offshore , buy a second passport in Greece, Cyprus , Grenada or Chile
    Open share trading and investment accounts in Jersey island and/or Hong Kong and avoid overstaying to be caught under residency rules in Oz
    I can see billions of dollars leaving the country , with billions lost in tax revenue
    Old Geezer
    21st Sep 2018
    3:19pm
    Yes we will become world citizens and spend less than six months a year in any country and thus pay no tax at all. One passport is enough and if we spend less than six months I Australia we are no longer residents. We just invest from a non tax paying country. Vanuatu used to be another one.
    Wstaton
    21st Sep 2018
    3:34pm
    Off you go guys we don't want you.

    Lets change the laws and income derived in Australia is Taxable wherever one lives.
    OnlyGenuineRainey
    21st Sep 2018
    3:35pm
    Yes, and more retirees will buy grander houses and take world cruises and do whatever it takes to reduce income and claim a part pension, and the government will LOSE.
    olbaid
    21st Sep 2018
    3:40pm
    Wstatuon - it already is .
    Non residents pay a flat 30% on all Australian derived income and they can’t claim franking offsets .
    It’s stupid
    Old Geezer
    21st Sep 2018
    3:44pm
    I will certainly not be deriving any income from Australia or offsetting my intellectual properties so that I have no income.
    OnlyGenuineRainey
    21st Sep 2018
    3:55pm
    Really, Wstaton? You don't want self-funded retirees and hard working taxpayers? You want everyone to be a leaner, whether they need to be or not?
    TREBOR
    21st Sep 2018
    5:46pm
    'buy a second passport'... now we're the international Mafia.... let's just cheat everywhere, every time.....

    Do you realise what you just said?
    TREBOR
    21st Sep 2018
    5:47pm
    Under the re-worked tax system - if you hide in that way, OG - you will pay an entry and exit tax here..... 30%.. easy - change the rules... catch all the tax haveners....
    Old Geezer
    21st Sep 2018
    6:12pm
    Trebor I do not have to buy a second passport as I am entitled to hold 3 passports to three different countries. Now you know why I can't be a pollie.
    olbaid
    21st Sep 2018
    6:54pm
    I know what I say , always
    Problem with you is you never k ow what you say and don’t say .poor confused Trebor
    TREBOR
    21st Sep 2018
    7:15pm
    I'm not the one talking about buying a second passport..... amazing, simply amazing.... and your only response is vitriol...

    Good show, OG... if you can use those passports, fair enough... but you told me you were a multi-generational Australian.... how then do you derive two extra passports?
    olbaid
    21st Sep 2018
    7:17pm
    Trebor - what is wrong in getting a second passport ?
    Your post was insulting - you owe me an apology
    Rae
    22nd Sep 2018
    9:19am
    You don't need a second passport to trade international shares, bonds, commodities etc.

    And yes Australia is getting very risky. The ASX has been bumbling along for the past 6 years getting nowhere fast.

    If you are self funded you can move around within the foreign countries regulations. Some quite lovely islands are happy to have those with incomes come stay for extended periods and It's a hell of a lot cheaper there than here.

    I loved Australia once but it's pretty much wrecked now. If you are dependent it's still okay I suppose but that can't last. The money is going to run out.
    Jim
    21st Sep 2018
    3:33pm
    How many times do we have to explain that a refund of your franked dividends is no different to any other tax claim that everyone in Australia is entitled to, if my income is above the tax free threshold I do not receive any tax back if my income is below the tax free threshold then I am entitled to claim that tax back, why is this so hard for people to understand. Labor first suggested this as a way to push their ideology of envy politics, when it was pointed out that this would affect pensioners and low income people Labor quickly did a back flip, for the time being anyway, time will tell!
    Old Geezer
    21st Sep 2018
    3:48pm
    That is how it works now but if you earn your money in dividends under Labor you will not get your tax refunded if your tax payable is less than your tax paid. That is how unfair this policy is.
    TREBOR
    21st Sep 2018
    5:51pm
    Jim.. correct.

    OG - wrong.... if you are correctly including all your income for tax purposes, you may or may not receive some or all of your DI back.. regardless of whether or not Labor is handling it ... it depends on your TRUE income... and that is really the issue.

    Too many are getting too much outside of proper income declaration.... too many loopholes and bolt holes for those with enough to exploit them.

    When you pick up income sufficient to warrant that 30% tax and then write it all off somehow via paper-shifting etc... you need to be picked up...
    olbaid
    21st Sep 2018
    6:52pm
    Too many getting too much - b/s politics of envy of the Shorten kind
    TREBOR
    21st Sep 2018
    7:16pm
    You reckon it's all fine and good for people to hide income and not pay tax and derive extraordinary benefit from working the rules?

    Thanks for your total support for an overdue and much needed full review of the rules.....olbie...
    Old Geezer
    21st Sep 2018
    7:28pm
    Trevor what about those who have low incomes without any loopholes?

    There is a table in this article that shows 54% of those affected by non refund of franking credits earn less than $18,200 and 86% earn less than $37,000.

    https://www.theaustralian.com.au/national-affairs/treasury/bill-shortens-tax-grab-to-affect-the-lowest-incomes/news-story/913244e374618c4e74dd2883944e70b4
    Rae
    22nd Sep 2018
    9:34am
    OG be interesting to have the ATO do a very good check on those declaring less than $18200 who receive franking credits. Explaining their assets may be a bit tricky.

    There are plenty of ways for business owners and corporations to avoid earning income but still do very nicely from capital gain and cashflow.

    Dividend investing has been easy and franking credits apparently great but all good things end.

    Obviously the Government is broke, has little income to replace all the Privatised everything revenue and is spending far too much on corporate sponsorship.

    Australia is going down thanks to both our Parties being full of blithering idiots.
    mr.auspicious
    21st Sep 2018
    3:44pm
    Dividend imputation was introduced to remedy the double taxation of funds distributed
    in the form of dividends. One has to question the credentials of any political organisation
    seeking to reintroduce this discredited, discriminatory tool of fiscal policy.

    Of course the fiscal credentials of the Labor party are already well established. There will
    be an inevitable return to fiscal profligacy which has already burdened the economy with
    superfluous infrastructure such as the NBN. There is also the spectre of an increasingly
    uncompetitive manufacturing sector, which is already encountering economic difficulties
    arising from more expensive energy input costs. The Labor party has promised no respite
    in its pursuit of this misguided policy. Unless curbs are introduced in the foreseeable
    future, the economic impact will be severely detrimental, yet totally avoidable if common
    sense prevailed.

    This stuff is by no means exhaustive but exemplifies the " chalklenges "faced by the pragmatic " silent majority " of the electorate who
    are not idealist zealots, nanny state proponents, or subsidised members of the community
    viz. politicians. Added to that, those who have chosen to plan for, and self fund their
    retirement have accepted a risk/reward option with more downside risk, than would
    apply if retirement funds were externally managed.
    Old Geezer
    21st Sep 2018
    3:49pm
    That makes no sense to me at all.
    TREBOR
    21st Sep 2018
    6:01pm
    What 'double taxation' was that?

    A company as one discrete entity pays its taxes - the individual as shareholder as a separate discrete entity pays his or her taxes... the two are not the same.

    Unfortunately Howard Costello muddied the waters with their rhetoric about 'double taxation' to allow many to escape paying tax.
    OnlyGenuineRainey
    21st Sep 2018
    8:23pm
    No. Because the company is owned by the shareholders. A public company does not have any income. It's ONLY income is the shareholder income, which the shareholders, as owners, authorise the directors to apply to expansion, dividends, or other approved uses.

    Just like PAYE, company tax is paid by the person entitled to the income, but actually transmitted to the ATO by the company - deducted from the income due to the shareholder. The shareholder HAS PAID THE TAX - exactly as a PAYE taxpayer has paid tax on their wages despite the employer making the physical payment.

    When the shareholder completes their tax return, just like the wage earner, he/she is assessed according to TOTAL income, and the amount of tax due is determined. If the tax paid by deduction from dividends is NOT credited against the tax due, then the shareholder is taxed twice on the same income, because the dividend income is declared and counted in the total.

    Example: X earns $150,000 in taxable income, INCLUDING $30,000 dividend income from which $8,000 was deducted in tax prior to him receiving it.

    X's marginal tax rate is 37c in the dollar. He is obliged to pay $20797 + $22200 for a total of $42997. But that includes tax of $11,100 on his dividend income. Since that dividend income was already taxed $8000 before he received it, he's paying double tax if he can't claim an $8000 franking credit deduction.

    To claim that the company and the shareholder are separate entities for tax purposes is to claim the employer and employee are separate entities and PAYE tax should not be credited against the employee's tax! Or what about tax taken where no TFN is quoted? It's not paid by the individual, so they shouldn't get it back????

    Sorry Trebor. You are WRONG on this issue. Franking credits are no more than a refund of excess tax paid to prevent double or otherwise grossly unfair tax on people who should not be paying tax on that particular component of their income - either because it was already taxed, or because they have no legal tax liability due to their taxpayer status.
    DaveL
    21st Sep 2018
    3:52pm
    TheTax office recently stated that PAYEtaxpayers have around the same bogus claims as company tax avoided. OAP with cash under the bed, also receive pensions which should be adjusted DOWN. Labor’s rip-off of franking credits is a guise for political expediency, when considering the other matters. Full tax reform is needed, plus paying down Australia’s government debt should be undertaken before tax cuts, increasing pension and benefits to their mates.
    Old Geezer
    21st Sep 2018
    4:10pm
    People have and always will try to claim all most anything against their tax so nothing new there. Every so often the ATO sends out letters about these claims to scare people but how many they actually catch is an unknown.

    Yes we hear the sob stories of pensioners being robbed of their life savings but no one tells us they had them in the mattress bank. Did you know that there are 33 times more $100 bills released than any other note? It is rare to even see a $100 bill so where are they? No wonder they want to microchip them so they can trace them.

    Black market is also a big problem where tradesman do jobs for cash. There is also a GST problem where tradesman's add on GST to their bill but are not registered for GST so pocket it as an extra 10% for doing the job.

    People have and always will try to dodge tax so its; not a new problem at all.
    TREBOR
    21st Sep 2018
    6:03pm
    What are these 'bogus claims' by PAYE earners? Each is carefully vetted.... and the PAYE taxpayer has no avenues for writing off income such as companies etc do.
    Old Geezer
    21st Sep 2018
    6:09pm
    No PAYE claims are not carefully veted as we have a tax system that accepts what people put in and only audits a small percentage of them.

    Many companies have their accounts audited as do super funds.
    TREBOR
    21st Sep 2018
    7:18pm
    No worries then, OG - get a job and claim a few thousand back on costs of clothing .... you serious? If a tax deduction claim for a PAYE is outside parameters, they are queried on it...

    It may be true that a few only are audited, but if you throw up a red flag... you're in.
    Old Geezer
    21st Sep 2018
    7:38pm
    Tax accountants know where those red flags are and I too have a good idea so if you are stupid enough to put something in your tax return outside them without being able to substantiate them then you are asking for trouble.
    olbaid
    21st Sep 2018
    4:19pm
    The only common sense approach to eliminating the imputation system is to reintroduce universal pension for all
    You cannot tweak one aspect of our taxation regine without addressing the wholesale inequity repercussions of a one eyed policy that labor wants to introduce
    Old Geezer
    21st Sep 2018
    4:23pm
    Leave the imputation system as is and tax the income of those of 60 like they do everyone else with tax credits for income already taxed.
    mr.auspicious
    21st Sep 2018
    4:22pm
    Self funded retirees have accepted greater downside by adopting this approach. One major
    factor a self funded retiree has to contend with is market volatility. In an industry or
    privately managed superannuation fund, the retiree pays an fund manager to deal with
    such issues.
    Now politicians, notably the Labor party under Shorten seek to deprive legitimate risk
    takers, the opportunity to be compensated for tax that has already been paid on their
    behalf.

    The nicest thing that can be said it that Shorten's stance confirms his status as a crass
    hypocrite - someone who conveniently fails to recognise that his parliamentary
    superannuation is funded by taxpayers at large, some of whom will be financially
    disadvantaged as a result of his ineptitude.
    Old Geezer
    21st Sep 2018
    4:25pm
    Many self funded retirees already have their money managed by professionals so what you are saying makes no sense at all to me.
    mr.auspicious
    21st Sep 2018
    4:53pm
    here's a clarification - all financial decisions are about risk v reward. a decision to
    administer self funded retirement is inherently more risky - you can be adversely impacted
    by market volatility, black swan events, royal commissions, etcetc.

    Of course such circumstances also impact industry funds - however having access to
    a greater diversity of investment options should provide greater opportunity to spread the
    risk.....

    politicians are seemingly blind, not to mention greedy in dealing with the smsf sector.
    the hypocrisy of their stance should be self evident....
    Old Geezer
    21st Sep 2018
    5:07pm
    Big funds are likely to be effected more by market volatility, black swans etc as they are simply too big to change quickly enough and when they do it's way too late.
    olbaid
    21st Sep 2018
    4:23pm
    Thank you RIO for your fully franked dividend credited to my account yesterday.
    BHP and CBA to come
    Old Geezer
    21st Sep 2018
    4:29pm
    I had a dividend turn up just in time to pay the house insurance to the same company too.

    Looking forward to CBA and BHP ones too. I worked out I paid less for my CBA than I now get in dividends each year from them.
    olbaid
    21st Sep 2018
    4:33pm
    Wait for the nice bonus special dividends from both RIo and BHP coming to a bank Near you :))
    TREBOR
    21st Sep 2018
    4:45pm
    Yesterday you had no bank shares, OG... and olbaid ate dinner at 2 am....

    Hmmm.....
    olbaid
    21st Sep 2018
    4:51pm
    Were you outside my window Trebor
    Didn’t take you for a stalker
    Old Geezer
    21st Sep 2018
    5:09pm
    Just my small investment in CBA at $5.40 a share which is hardly worth a mention.
    TREBOR
    21st Sep 2018
    6:04pm
    Your post... not mine....... olbie...
    olbaid
    21st Sep 2018
    6:14pm
    I never mentioned 2 am - you have a knack for taking things out of context deliberately
    Errors of omission and distortion seems to be yours and Micks modus operandi
    TREBOR
    21st Sep 2018
    7:19pm
    You posted at 2.11 am that you were going for dinner.... please explain???

    (rofl emoticon required and implied)....
    olbaid
    21st Sep 2018
    7:22pm
    Trebor - with all due respect I do t have to explain anything to you especially not my personal life
    TREBOR
    21st Sep 2018
    4:37pm
    As usual - I am left to consider that some of us here are a peoples separated by a common language - many of us say exactly the same thing in a slightly different way, and someone else, saying the same thing, jumps all over them, and then persists in doing so despite being corrected time and time again. It seems to me this is only done to muddy the waters and render the discussion unintelligible to the casual reader, and thus retain the status quo through inability to discuss.

    What do you want me to do? Dictate a standard set of terms so we are all talking the same thing?
    floss
    21st Sep 2018
    4:43pm
    Olbaid could you please follow your off shore investments.At least Mick and TREBOR speak from the heart not their wallet.
    olbaid
    21st Sep 2018
    4:49pm
    heart ????
    Hahahaha - thanks for the laugh floss

    My comments are in the interest of a fair and prosperous Oz

    Those 2 are intent on destroying he fabric of our society either maliciously for political gain or mistakenly just because they simply do not understand
    TREBOR
    21st Sep 2018
    4:53pm
    Rainey all speak much the same things - with a few word differences - but somewhere along the way some have deemed this to be a perpetual competition and one in which you 'win' by constantly saying the 'other person' doesn't understand anything, when he's saying the same as you are...olbie and OG and I and Mick and Rainey all say the same things.. a few different words and off they go forever.

    I can only surmise the idea is to confuse the discussion so that nobody understands anything.

    OG says - 'the fat cats will reap benefit, the lesser incomes won't.. Rainey, olbie and I and other say the same... fight is on!

    I say 'DI is to be added to total income for tax calculation' - OG says the same, Mick says the same, olbie says the same - yet half of that lot get into me for not understanding DI...

    I get it all right - I just don't agree with what Costello/Howard did with it to benefit his rich mates and cronies... and himself, so I disagree with How It Works Right Now - not with the principle, and certainly not when it impacts on the lower return SFRs and not the CHEATS at the top end.

    Whole system needs a full review.
    Farside
    21st Sep 2018
    5:08pm
    If the coalition also comes to the view that credits should not be refunded in cash (they are tax credits after all) then those holding such shares will sell their holdings or companies will find other ways to return cash to investors besides franked dividends. At the end of the day you either believe in markets or you don't.
    Old Geezer
    21st Sep 2018
    5:12pm
    They will no longer pay franked dividends as no one will want them and they will no longer pay tax. They will move overseas and write everything off so they pay no tax. So not refunding franking credits will pale into insignificance to what they will lose in company tax.
    Farside
    21st Sep 2018
    5:16pm
    indeed OG and that is the challenge for governments across the globe. This standing committee needs to start off with premise the system is broke and put in place a plan to rebuild the whole framework over the next decade or so. Comnsideration of the Henry review recommendations would be a good place to start.
    Old Geezer
    21st Sep 2018
    5:26pm
    People need to be taxed fairly and this proposal goes along way away from taxing people fairly.
    TREBOR
    21st Sep 2018
    6:06pm
    Nothing like an honest share market... stops people over-indulging and creating booms and busts...

    73 nations met in Paris last year to address the issues of offshored tax and income... and the way such deals are destroying national economies....

    Don;t be too hasty to offshore in the hope of tax avoidance/evasion.... not for much longer.
    Old Geezer
    21st Sep 2018
    6:14pm
    Without booms and busts sharemarkets would not exist.
    TREBOR
    21st Sep 2018
    7:26pm
    Roll the dice, take your chances then... nobody guaranteed any shareholder a safe journey.... nor should they. The 30% tax withheld is to ensure that even if the company goes belly-up, and fails to even pay a dividend (it happens), the shareholder can at least claim back that 30%... it was never meant to be an avenue to recoup unearned gains and cop a free full return.

    As you said - everyone needs to pay their tax.... and too many loop-holes exist for the cunning, the devious, and the outright criminal minded.

    Close all loop-holes, regulate ways you can earn fully, and chop the rorts...

    As I said - to save any arguments - dump dividend imputation entirely and let each pay his or her own tax. Apparently the ATO is confused about how to handle DI and is handing back unearned bonuses to the biggest shareholders without question... very Central American, courtesy of Don Juan Huarte and Don Pedro Castella... beeziness eez good in El Grande Republica da San Austrador... when you hol' the reins of ze treasury and ze economy!
    TREBOR
    21st Sep 2018
    7:31pm
    .. an' don' leesten to ze crying of ze children of peasants from hunger.. they are only peasants....por favor.....
    Rae
    22nd Sep 2018
    10:03am
    Farside the UN has done some research on universal transaction tax on money. If money was taxed at creation and with every movement it could provide for redistribution.

    Obviously taxation isn't going to work when only PAYG pay it and even then not all of them.

    The amount would need to be finely tuned of course but now that Corporations are larger than Nations something will have to change.

    The rich hate the idea. They might have to pay out a little bit. Boy do they hate that idea.

    OG that is foolish. Sharemarkets would exist as would bond markets to finance enterprise and receive a bit of profit or a coupon. It is speculation based on greed and fear that causes booms and busts and a transaction tax would slow that down a whole lot in these days of very fast trading algorithms using computer platforms.
    80 plus
    21st Sep 2018
    5:30pm
    old geezer, you are partly correct with groceries however the carpenter can claim the cost of running his business including the lease of his Ute, the rego, Maintenance , spare parts, the cost of fuel etc, the other associated cost, mobile phone, computer, stationary as well as G.S.T. refund on his house insurance, car insurance, electric bill etc, so before we claw back imputation tax lets look at the MASSIVE tax rorts that the A.B.N. SYSTEM allows.
    Old Geezer
    21st Sep 2018
    6:06pm
    Only to the extent that those expenses are business related. He also pays more in car rego and insurance as his car is registered for business purposes. He can't have a refund on his house insurance or electricity only a proportion that is used for his business. He also has to pay CGT on any part of his house he allocates for business too. In many cases it is not worth claiming these as CGT will be more in the long run.

    What about his cash jobs that never make into his accounting system?

    Is he one of those carpenters not GST registered but keeps his GST invoiced? Remember all those tradesmen using Bunnings ABN on their invoices?

    This is way off the topic and has nothing to do with dividends and franking credits too.
    TREBOR
    21st Sep 2018
    6:29pm
    Legitimate business expenses are fine... it costs money to own and run a vehicle for work and tools etc...

    There are, however, murky areas such as trusts and other rorts that, put simply, would not exist unless they gave an advantage unfairly, and the super system has been rorted to overly benefit those with plenty.

    Flawed...
    olbaid
    21st Sep 2018
    6:50pm
    A trust is a legitimate business structure
    Why is it that an investor in a family business can write off a heap of expenses (personal and otherwise ) pay the family members to “work” in the business and minimize tax but a shareholder investor can’t .
    How many wives and husbands of tradies also work in the family business and pay no tax on the distributed profits
    TREBOR
    21st Sep 2018
    7:47pm
    It may well be - but it's current allowances are flawed so as to provide unfair advantage and not paying tax... if a trust itself were treated fully for tax.....

    Let's be honest - they wouldn't exist if there was not some unfair advantage in them...

    Soon to be changed, I hear..... pay your dues...
    Fair Dinkum
    21st Sep 2018
    7:09pm
    If my franking credits are cut will force me onto the pension the small share portfolio i have gives me a little better income than the pension.
    olbaid
    21st Sep 2018
    7:15pm
    Yes mate - Shortens disastrous policy will force hundreds of thousands of folk like you into OAP
    Your lifestyle will take a huge hit
    Old Geezer
    21st Sep 2018
    7:30pm
    Agree it is estimated about 500,000 people like you will be forced onto the pension in order to make ends meet.
    TREBOR
    21st Sep 2018
    7:49pm
    If your holding is small and the tax rules are properly followed - you should lose nothing... but I'd want Shortenski to actually come out and say that clearly. As Rainey said - he did leave out smaller SFRs, only saying pensioners would not be touched...

    I don't think he understand the material.
    TREBOR
    21st Sep 2018
    7:50pm
    Footie time, lads and lassies - come on, Malbun - stop stuffing about...
    Theo1943
    21st Sep 2018
    7:47pm
    I think franking credits should be credits. No tax to credit it against? Hold it over until you do.
    If franking credits are paid to recipients it means company tax was not paid. No refunds for tax not paid!
    TREBOR
    21st Sep 2018
    7:51pm
    Food for thought, Theo.. thanks...
    OnlyGenuineRainey
    21st Sep 2018
    8:07pm
    Are you a pensioner, Theo1943? I think pensions should be withheld until the taxpayer has a tax obligation to claim against. No tax paid - no pension payment.

    Who the hell do you think you are asserting that people who worked their guts out and saved should be stripped of their income in old age AS WELL AS BEING DENIED A PENSION, while the apparently elite and entitled are fed by the taxpayer.
    Bugger off with your greed and selfishness.
    OnlyGenuineRainey
    21st Sep 2018
    8:10pm
    Theo, SFRs ARE paying tax. A whopping $34000+++ for a couple. Why the hell SHOULDN'T they get a bit back when the rest of the retired society is milking the taxpayer for all their worth?
    olbaid
    21st Sep 2018
    8:12pm
    Haha. Good on yer Rainey

    Sick and tired of the leaners and self righteous pillocks who don’t understand our tax system trying to drag everyone down to the lowest common denominator
    Farside
    21st Sep 2018
    8:34pm
    most economists agree with you Theo. Refunding dividend imputation credits costing the budget around $5 billion per year and Australia is the only country in the world to refund unused franking credits as largesse to the wealthy.
    VeryCaringBigBear
    21st Sep 2018
    11:17pm
    Most economists if they are saying that have no idea of what they are talking about then. Ask them why so many companies are now doing capital raisings and why?
    Farside
    22nd Sep 2018
    8:30am
    forgive me Bear but just maybe the economists know a little more about economies than us however I am confident you can do your own research and ask questions of them. Perhaps start with Nobel Prize-winning economist Joseph Stiglitz and his comments during his Australian visit earlier this year.
    VeryCaringBigBear
    22nd Sep 2018
    10:23am
    Well believe what you like but as an economists myself I was not impressed with what he had to say.
    OnlyGenuineRainey
    22nd Sep 2018
    3:59pm
    Why is it costing $5 billion a year? If it is, then it's NOT the people who will lose their credits who are imposing that cost. It's the high income earners who will keep their credits anyway. If half a million SFRs get $10,000 each a year, that's only %50 million, but by my calculations if those 500,000 go on an OAP because they can't get by self-funded and paying 30% tax unfairly, that will cost $24 billion a year. I am NOT an economist, but I do know which number is higher.
    OnlyGenuineRainey
    21st Sep 2018
    8:31pm
    If Labor supporters could get the green tint out of their eyes long enough to think rationally, they would be lobbying Shorten to URGENTLY change his STUPID franking credits policy before the results of this inquiry are exposed - because the inquiry will make him look like a total JERK and an IDIOT of the first order.

    If he were to back-pedal now, he might save face sufficiently to maintain his lead in the polls. I suspect this inquiry will kill that lead, once the true facts of what he's doing and the damage it will cause is all revealed.

    Besides, a pensioner would have to be totally stupid not to realise that killing the income of SFRs is going to drive hundreds of thousands more onto the pension and put more pressure on the government to find ways to reduce pensions. The green-eyed monsters are blinded by envy, and don't realise they are driving nails into their own coffins with the meanness.
    VeryCaringBigBear
    21st Sep 2018
    10:59pm
    I agree OGR so many more people on welfare is not affordable without further changes to the pension. They will look at things like making any money received in the pension a debt upon ones estate using the house as collateral. Or forcing people to spend all their assets before receiving any pension.

    I have already written to my Labor MP telling them they have lost my vote on this issue alone as it is so unfair. I suggest all other pensioners do as well so that governments are not forced to make further changes to the pension system.

    OG mentioned a petition which I have also signed.
    Rae
    22nd Sep 2018
    10:16am
    Yes and let's remember that self service Centrelink system already isn't working too well.

    What happens when a few hundred thousand previous SMSF apply for pensions and start having to adjust figures every fortnight as investment changes occur. That is going to cost a fair amount of money and effort.
    VeryCaringBigBear
    22nd Sep 2018
    4:05pm
    I only adjust mine every six months now as if I was to do when my assets change I would some days be doing it very five minutes. I have been told when my review dates are and so just give them figures for those dates.
    Rae
    23rd Sep 2018
    10:16am
    Yes VCBB but that's not following the rules exactly is it. You are supposed to notify when changes occur. Stupid rules deserve stupid reactions until the stupidity is noticed and fixed.

    Having a review date and sorting then makes sense but our Governments don't do sensible do they?
    Eddy
    21st Sep 2018
    8:53pm
    People seem to have lost sight of what imputation credits was meant to achieve, mitigate double taxation on company profits. You can all thank Treasurer Keating for imputation credits being allowed as a deduction from your taxable income. However if one does not have a taxable income then no imputation credit can be claimed. Sounds simple to me.
    In tax law an incorporated entity, ie a company, is treated as an individual taxpayer, with their own tax file number, and pays tax on profits. If those profits are distributed to shareholders as dividends and, if these shareholders have a tax liability, they can claim the imputation credits against their individual tax liability, reducing their tax payable and ,in effect, ensuring that the dividend income is not taxed twice. If a shareholder has no tax liability then the dividend income is only taxed once. That is until Treasurer Costello introduced refunding imputation credits to non-taxpayers.
    Farside
    21st Sep 2018
    8:57pm
    big tick for Eddy's clear explanation
    VeryCaringBigBear
    21st Sep 2018
    10:51pm
    By allowing those on welfare to have their franking credits refunded is therfore wrong under your explanation Eddy. So why is Labor allowing these people to have their refunds? Your explanation unfortunately is n9t fair and does not stack up.
    Farside
    21st Sep 2018
    10:59pm
    Bear, the welfare brigade would also forego their imputation credit refunds if not paying taxes. Labor should take a consistent approach and compensate the poor through welfare increase, which is better for the economy due to multiplier effect.
    olbaid
    21st Sep 2018
    11:02pm
    Yes - let’s put half a million more people in OAP and increase the amount of welfare as well
    Ain’t Labor wonderful !!!
    VeryCaringBigBear
    21st Sep 2018
    11:20pm
    Let's see how they tighten the pension criteria to pay those extra 500,000 too. Better put all those extra assets in your mattress bank so they won't make you spend them before you get your next pension cheque.
    Farside
    21st Sep 2018
    11:24pm
    don't cry poor olbaid, 27 years of consecutive growth, unprecedented resources boom, growth of services sector .... comes down to choices, plenty of money available for subsidies so just a matter of choosing what we as a society subsidise and to what extent.
    Eddy
    22nd Sep 2018
    10:39am
    VeryCaringBigBear, would you like to explain your comment "Your explanation unfortunately is n9t fair and does not stack up". Why? All I attempted to do was precis why imputation credits are created. I made no comment on refunding imputation credits, although my thoughts may be well known to some on this forum.
    Adrianus
    22nd Sep 2018
    10:59am
    Eddy, I'm wondering why you think "a non-taxpayer" should pay tax at the rate of 30% while an "individual taxpayer on a marginal rate of 30%, or indeed a corporate entity, may not pay tax due to sheer volume of wealth?
    Why does the left continually try to grow the proletarian numbers by favouring a big brother ideology? This is not a Communist country.
    Adrianus
    22nd Sep 2018
    11:45am
    This is what Labor want.

    A worker on the average wage invests $50,000 and receives a taxable return of 7% fully franked, which he gets to keep.

    A pensioner has $50,000 and wants to invest in the exact same company, and get the exact same return but her net return is only 4.9%.

    Why does Labor see this as being fair?
    OnlyGenuineRainey
    22nd Sep 2018
    3:56pm
    Eddy, you may be right that the non-tax-payer doesn't pay twice if denied their credits. They JUST PAY ONCE WHEN THEY SHOULD NOT PAY AT ALL. Which in my view is worse. Much, much worse. I can tolerate someone on a high income paying a little more than we may think fair - since those folk have so many deductions and rorts anyway. I CANNOT tolerate taxing people at 30% as punishment for not earning enough to pay tax.

    Are you a pensioner, Eddy? Do you take money from the public purse that other folk aren't able to access because they worked harder and saved better? If so, I can understand why you would be so selfish as to want to deny lower-income self-funded retirees fair taxation. It's just pure greed and envy. And inability to understand the simple logic that whatever you might call a contribution to the treasury,. it always amounts to a tax. And SFRs contribute tens of thousands to treasury every year by being self-funded. Low paid workers contribute to the economy by working for low pay. Yet bullies and selfish folk want to take the franking credits away from these contributors and give them ONLY to folk who don't need them. Mindboggling!
    OnlyDaughter
    21st Sep 2018
    11:33pm
    Totally agree with OGR.
    VeryCaringBigBear
    22nd Sep 2018
    7:49am
    Labor will make super for most people over retirement age cost more to have than if that money was invested in their own names. Super funds can also have a nasty surprise when people die to in that some will have a sizable tax bill to the estate. It is not usual for $1million in super to cost the estate $100,000 Or more.

    So why keep your money in super after you retire?
    Rae
    22nd Sep 2018
    10:30am
    There are very good tax savings for larger superfund. At 10% the income is $100 000 a year on a million and around $40 000 would be taxed outside superannuation.
    In superannuation the entire amount is tax free for the retiree over 60.

    Of course that can change too can't it.
    Adrianus
    22nd Sep 2018
    11:33am
    The problem for Labor and the Unions is the growing number of people achieving some form of financial independence.
    While Labor may have been the architects of compulsory superannuation, they must also take responsibility for its demise. Labor is a tax hungry party, which is stuck in the 60's with its old fashion ideology and longing for a time when unions actually had some relevance. These days, despite Labor's urgings, people don't want to join a union. These days there are more aspirational people who have a positive outlook for their family. Labor is finding it increasingly difficult to dampen this enthusiasm for self reliance and real freedom. Labor only ever talks about the "smug rich" and the "desperate poor" its never about the majority of Australians. But the majority of Australians under the next Labor government will pay dearly.
    wombat
    23rd Sep 2018
    11:15am
    I have not read all the comments, because there are so many, but I would like to ask the question. If you are not entitled to the franking credits in the new system, will they then also not be counted as taxable income &/or omitted from the adjusted taxable income as used by Centrelink & the Tax Office for calculating rebates and medicare concessions. If not omitted this will create another inequity within the system.
    OnlyGenuineRainey
    24th Sep 2018
    9:28am
    And will the shares retirees own not be counted in the assets test?

    Somehow I suspect the government will want to have their cake and eat it too, and let the peasants starve.


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