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*Survey on Labor's franking credit proposal*

This is a short survey on your attitudes to Labor's proposal to deny refunds of franking credits, other than for exempt groups such as pensioners. It should take less than two minutes to complete, and you are welcome to add comments.

We will publish the results next week.

 

Create your own user feedback survey

  •   27 February 2019
  • 24
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24 Comments
Geoff F
February 27, 2019

One of the questions asks what options are being considered to mitigate against the consequences of Labor's policy - to facilitate a more granular response, this should probably be divided into 2 components:
1. Investments inside super
2. Investments outside super.

Sally
February 28, 2019

What did the tax reviews have to say?
Can we base policies on expertise rather than vote buying with consequences.?

alan cooper
February 28, 2019

We have based our retirement income heavily on franked income. Not having these credits will decrease our income by 10 percent.

Alan White
February 28, 2019

It would be interesting to canvass if a person did not agree with Labor's franking policy and that same policy will affect them detrimentally, and that same person considered themselves a regular labor voter, would that same person consider changing their vote at the upcoming election because of this issue alone.
Given the polls though and that the policy does not affect pensioners, the issue probably doesn't rate high enough for labor to modify their proposal.

Think
February 28, 2019

Hi Alan,

I don't quite fit the profile but I am a swing voter (I have never understood followers of a party irrespective of the candidate or policies of the day) in a swing seat.

The policy detrimentally impacts both my parents and though not myself, I still think the policy is unfair.

Because of this issue alone my vote is not impacted as I believe there are larger issues of government to weigh up.

As an aside I care about sustainable taxation and I am not being presented with an alternative from the Coalition.

harry
March 03, 2019

There already exists sustainable taxation.
Tax receipts rose by 6.7% last year, well ahead of inflation.
They rose by 6.9% the year before, they are forecast to rise 7.3% next year.
That's the current numbers from the last Liberal budget, looks sustainable to me, and you don't need to trash investment and retirement plans of millions of Australians to achieve it.

Think
March 04, 2019

Hi harry, tax receipts versus inflation isn't relevant but rather against expenditure. It is a shame the intergerational report isn't conducted more frequently by Treasury which last forecast, based on current legislation, an issue but not so based on 'proposed' changes which haven't eventuated in full (as always happens).

harry
March 04, 2019

If only there was a way of governments to control their expenditure ...

Eric Kratzer
February 28, 2019

I am not an age pensioner

Peter Turnbull
February 28, 2019

I am a 76 year old self-funded retiree who relies on income from a carefully constructed share portfolio over many years I go to gym , pay private health cover , and pay many other expenses incurred by people my age For the financial year 2017 /18 my refund due to imputed credits obtained by my Accountant was $4435.00 Some retiree tax now that I will lose that Redistribution is the aim of all left-wing socialist Governments Peter Turnbull

Philip
February 28, 2019

If you don’t bank any money, you can’t go to the bank and ask for money via a withdrawal. If you don’t personally pay tax, how can you expect a tax refund?

Dudley
February 28, 2019

If your employer banked your wages, you can go to the bank and not only ask but actually withdraw money.

If your employer paid tax on your wage, you can expect a tax credit when you lodge your tax return. A refund if over paid.

If your company paid tax on your dividends, you can expect a tax credit when you lodge your tax return. A refund if over paid.

In no case did you personally pay.

It is an inevitable consequence of being an employee or a shareholder that your employee or company must, by law, pay mandated tax which will be credited to employee or shareholder.

Geoff
February 28, 2019

But if my employer puts money in my bank account I can absolutely go to the bank and ask for money via a withdrawal. I just did that very thing. But I didn't "personally" bank any money.

Your use of the word "personally" is where your specious analogy fails. As has been pointed out endlessly on these pages by many people - the tax is imputed to the shareholder. Now you can not like that all you want but that's the way it is.

Peter Turnbull
February 28, 2019

Because the company has already paid the tax ATO is simply holding it for me I paid tax for 40 years and plenty of it.

harry
March 02, 2019

If I don't personally pay tax, then why does the gross total of the dividends, 30% which I personally didn't receive appear on my personal tax form? Why does a person on the highest marginal rate get to claim that 30% of the gross dividends that they didn't personally receive are "payment" for the 47% in taxes they owe on their gross investment income but mine just simply disappear.

Warren Bird
March 03, 2019

Philip, the analogy you use is simply not applicable to a tax system.

PAYG players do this all the time. The ATO estimates your income for the next year and taxes you. But if you don’t earn that income you get it back - even if you have a zero tax rate, you get a refund.

With dividends it’s similar to that. The system taxes you at 30% until you do your tax return, then if you’ve overpaid tax you get it back. If you’ve underpaid (ie you are on the 45% bracket) you pay more.

The imputation system integrates the personal and company tax systems. That’s going to require an adjustment when the individual does their return. It works, it’s right, it shouldn’t be meddled with.

Paul B
February 28, 2019

It seems to me that the knock on effect of this proposed policy will have a larger impact that it was first thought and ultimately counterproductive to its main intent. Mainstream investors will simply rearrange their portfolio accordingly while the battlers will lose out big time.

Jason
March 03, 2019

Philip, companies deduct tax from the shareholders’ dividends pending completion of the shareholders’ tax returns when any adjustment is made. It works like withholding tax, so the shareholders are in fact paying tax. It’s deducted from dividends just like PAYG is deducted from employees’ incomes pending completion of their tax returns.

Mia
March 02, 2019

I going to cancel my health fund if Labour gets in power.

Ted
March 03, 2019

That’s exactly what I am going to do as well Mia. I’ll also be telling the charities that I regularly give to, that if this Labor proposal is introduced, I’ll be reluctantly curtailing, if not completely ceasing, my donations to them.

Mick
March 03, 2019

Mia and Ted, That will show them. May you have good health.

Dudley
March 03, 2019

harry March 3, 2019 at 7:12 PM #

"There already exists sustainable taxation. Tax receipts rose by 6.7% last year, well ahead of inflation.":

I checked this over a longer period, 2014 to present (44th parliament on) using:
https://data.gov.au/data/dataset/2b690e28-8239-48c6-a71d-2658f37d51d7/resource/c21aa248-ec4c-4b5b-9b1b-6d545a55e399/download/1.-income-statement.xlsx

I found 5.76%:
https://docdro.id/JNVYvui

Like with all volatile data, the estimate is not exact; less so for shorter periods.

Tax rising faster than inflation. If expenditure is less than revenue and rising slower than revenue then debt would be reduced.

Perhaps harry is correct and Labor does not need to damage dividend imputation - just wait for the rivers of gold.

Dudley
March 04, 2019

"If expenditure is less than revenue and rising slower than revenue then debt would be reduced.":

I found expenditure increasing at 3.46%:
https://docdro.id/XGnLxST

Dudley
March 04, 2019

From 2014, revenue up 5.76% per year from 2014, expend up 3.46% per year:
https://docdro.id/XGnLxST

Now trend revenue = expend.

If trend continues, in 1 year there will be a surplus of:
=12 * ((1 + 5.76%) - (1 + 3.46%)) * $39,400M
=$10,874M

 

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