Public hoodwinked on franking credits policy

Published:

NOTE: This article is older than 12 months

"For a year, the Labor Party has continually tried to hoodwink the general public on Franking Credits refunds," said Mr Wayne Strandquist, Acting President of the Association of Independent Retirees.

"The Labor Party has taken advantage of the complexity of the tax system and a lack of understanding about franking credits by using over-simplified and emotive terms that do not properly explain the situation," said Mr Strandquist.

"A tax refund occurs when there has been an overpayment of tax and statements like 'you get a tax refund when you haven't paid income tax, the tax refund is a gift from the government, it's a tax loophole, it benefits the top end of town and no other country does this' do not clarify the policy," said Mr Strandquist. "No one criticises workers when they receive a refund when too much tax has been deducted from their income", Mr Strandquist noted.

The average self-funded retirees with incomes of between $30,000 and $50,000 will get a significant cut of $5,000 to $10,000 in income under the Labor Franking Credit policy, said Mr Strandquist.

Mr Strandquist said, "the Labor Party statements on Franking Credits are open to challenge as follows:

Firstly, cash refunds are received by low-income earners (including retirees) who do not pay income tax because they own part of a company that has already paid the tax at 30%. If a shareholder's tax rate is less than 30% they receive a refund of tax already paid and this is not a gift.

Secondly, it has been argued that the refund of franking credits is rorting a tax loophole. It is not a tax loophole but has been a legitimate part of the commonwealth tax law since 2000. 

Thirdly, it is claimed that franking credit refunds go to the wealthy and benefit only the top end of town. This is not the case for the vast number of self-funded retirees who have incomes below $37,000 a year. Furthermore, the majority of retirees in Self Managed Super Funds are also not wealthy.

Fourthly, there are many OECD countries that have some form of tax imputation scheme.

Finally, retirees can't retrospectively change their retirement income strategies, so they are soft targets by Labor to raise funds for all sorts of purposes.

The Labor Franking Credit policy is based on flawed assumptions, is unfair and discriminates against self-funded retirees of modest means," said Mr Strandquist, "when at the very least the policy should be grandfathered", he added.

 
Australian Government Community Elections Money & Finance Political Seniors
Social:   

Association of Independent Retirees :
PO Box 332, Launceston, Tasmania,7250 ​, Australia Wide
07 3012 6470
Association of Independent Retirees
Showing 4 recent articles for this business
Self-Funded Retirees Seek Assistance 19 May 2020 | "Many self-funded retirees who do not receive an aged pension are suffering financial hardship due to the economic impact of the Coronavirus pandemic with little or no support from the Government," said Mr Stra... More information...
Retirees who saved for their retirement overlooked by Government 13 May 2020 | Self-funded retirees have been overlooked in the initiatives announced by Government to support business, workers and social security recipients to cope with the impact of the Coronavirus pandemic", said Mr Wayne... More information...
Retirees seek relief on superannuation drawdown 22 March 2020 | Legislation requires retirees to draw a minimum percentage from their superannuation pension account (usually drawn monthly). Being forced to withdraw from superannuation when the value of the account is substa... More information...
Triple whammy hits self-funded retirees 16 March 2020 | Retirees who partly or fully self-fund their retirement are reeling from the triple whammy of reduced interest rates, the savage fall in share prices and the unintended travel costs", said Mr Wayne Strandquist... More information...


comments powered by Disqus

All articles submitted by third parties or written by My Sunshine Coast come under our Disclaimer / Terms of Service