What will the ALP proposed franking credits policy mean for my SMSF?

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What will the ALP proposed franking credits policy mean for my SMSF?

If the Australian Labor Party are elected in 2019 they intend to ban the refund of excess franking credits.

This means, if your SMSF received a tax refund at the end of the financial year because your franking credits exceeded any tax payable, you will no longer receive that money.

SMSFs are significantly affected because in retirement phase they have a tax rate of 0% and will generally receive a refund of all their franking credits. SMSFs in accumulation phase are taxed at 15% and generally use their franking credits to help offset this tax.

  • The SMSF Association is pleased to have been invited to speak the House of Representatives Economics Committee regarding their inquiry into the impact of losing refundable franking credits. Our Association has been a leading voice on how the removal of refundable franking credits would impact SMSFs and retirees more generally.
  • Our Policy Team has highlighted throughout their advocacy work the clear inequities and flaws in the Australian Labor Party proposal to remove refundable franking credits. Read the policy breakdown here.
  • Our Association is opposed to the Australian Labor Party’s proposal to change the refundability of franking credits. We oppose this policy on several policy grounds including:
    • It distorts the dividend imputation system.
    • It unfairly targets SMSFs and not those in large APRA superannuation funds.
    • The pensioner guarantee which only protects individuals in on the pension before 28 March 2018 has not been crafted fairly.
    • It reduces the incentive to be self-sufficient in retirement.
    • It impacts retirement incomes.
    • Its largest impacts will likely be felt by those who can least afford it.
    • It further adds to uncertainty of superannuation.
    • It is unlikely to gain the mooted $55 billion in revenue.