Save
Controversial tax proposal in spotlight as dividend returns spike in 2018
Save
Controversial tax proposal in spotlight as dividend returns spike in 2018
Total dividends across the Australian market increased significantly last year, as the fast-approaching federal election brings Labor’s proposed axing of refundable franking credits into the spotlight.
Controversial tax proposal in spotlight as dividend returns spike in 2018
Total dividends across the Australian market increased significantly last year, as the fast-approaching federal election brings Labor’s proposed axing of refundable franking credits into the spotlight.
Market-wide dividends rose by almost 8 per cent in dollar terms last year, according to one investment management firm, with large share buybacks by major market forces such as BHP and Rio Tinto spurring positive returns.
“The almost 8 per cent increase in market-wide dividends was particularly encouraging given the traditional income stocks – the big four banks and Telstra – broadly maintained, or in Telstra’s case cut, their dividends in 2018,” Dr Don Hamson, managing director of Plato Investment Management, said.
“2018 has clearly been a very strong year for equity income generation – and this will continue into this year.”
He said such figures were particularly timely, given that a Labor-led government would move to scrap franking credit refunds following the upcoming federal election.
“To that end, we would encourage companies with excess franking account balances to consider increasing franked dividends or undertaking tax-effective buybacks before the end of this financial year,” Dr Hamson asserted.
Leading up to the May election, Dr Hamson recommended dividend income investors, particularly retirees and those with self-managed super funds, broaden their investment from Telstra and the big four banks to achieve maximum capital growth.
“Investors should be wary of this concentration as there are many other good companies that offer both consistent dividend income and better potential for capital growth in Australia and globally,” he said.
However, Dr Hamson did remain skeptical that an ALP-led government would be able to push the necessary legislation to remove franking credit refunds through the senate, a move he said would “likely prove difficult”.
The battle over franking credit refunds
His words come as the House of Representatives standing committee on economics is currently holding public hearings across Australia for its inquiry into the implications of removing refundable franking credits.
The inquiry is looking into how the changes would likely affect investors, particularly retirees and self-managed super fund members, after experts and lobbyists suggested Labor’s claim that the policy will only impact the wealthy was flawed.
Expected behavioural changes by investors should the changes be implemented, including an increased dependence on the pension, will likely also be looked at by the inquiry, as well as if there are carve-outs applied and what this would mean for additional complexity to the system.
Researchers, financial professionals and industry bodies alike have questioned Labor’s proposed policy since its announcement, with many seeking to highlight the significant impact the incorporation of franking credit dividends has on the retirement savings of more than 1 million Australians, many with modest incomes.
Tax saving
Over 2m Aussies asked the TPB for help during the last year
As the economy recovers, Australia’s tax regulator says it’s planning to put unregistered practitioners under the microscope. ...Read more
Tax saving
Will you pay higher taxes due to bracket creep?
Bracket creep will see Australians paying more tax on average, unless further cuts are introduced in the future. ...Read more
Tax saving
10 ways to reduce your tax bill
With the tax return deadline only one month away, these tips could help minimise your tax bill. ...Read more
Tax saving
Sustainable tax conditions only way forward: OECD
The Australian economy had been on a 28-year winning streak of uninterrupted growth before the pandemic. However, despite a return to lockdowns, the OECD has predicted that winning ways can return sh...Read more
Tax saving
ATO issues warning over new gift card scam
The Australian Taxation Office (ATO) is warning victims of a new phone scam, where scammers are pretending to be the tax man and demanding payments for unpaid tax liabilities. ...Read more
Tax saving
EV uptake set to stall following tax changes
Special EV taxes introduced by state governments are creating a disincentive for Aussies to choose cleaner vehicles and slowing Australia’s overall transition to net zero, new data has revealed. ...Read more
Tax saving
Rooftop solar avoids ‘sun tax’ but still faces caps
Power companies will soon be able to charge Australians with rooftop solar panels a tax for exporting electricity to the grid, albeit the regulators have walked back from the most controversial parts ...Read more
Tax saving
South Australians now eligible for COVID-19 Disaster Payment
South Australians under lockdown are set to be supported by the COVID-19 Disaster Payment, the state government has confirmed. ...Read more
What Omicron means for property, and are units right for first-time buyers? What is equity crowdfunding? Are industry super funds tapping into member funds to save their skins?
Listen now
Will housing affordability improve in 2022? Will buy now, pay later become the norm? Why are Aussies staying in failing super products?
Listen now
Who really benefits from crypto ETFs? How will the RBA respond to rising inflation? Could a mandate help address unpaid super?
Listen now
How the post-lockdown period will influence property, what the soaring NFT market means, and defining financial wellness
Listen now
Tax saving
Over 2m Aussies asked the TPB for help during the last year
As the economy recovers, Australia’s tax regulator says it’s planning to put unregistered practitioners under the microscope. ...Read more
Tax saving
Will you pay higher taxes due to bracket creep?
Bracket creep will see Australians paying more tax on average, unless further cuts are introduced in the future. ...Read more
Tax saving
10 ways to reduce your tax bill
With the tax return deadline only one month away, these tips could help minimise your tax bill. ...Read more
Tax saving
Sustainable tax conditions only way forward: OECD
The Australian economy had been on a 28-year winning streak of uninterrupted growth before the pandemic. However, despite a return to lockdowns, the OECD has predicted that winning ways can return sh...Read more
Tax saving
ATO issues warning over new gift card scam
The Australian Taxation Office (ATO) is warning victims of a new phone scam, where scammers are pretending to be the tax man and demanding payments for unpaid tax liabilities. ...Read more
Tax saving
EV uptake set to stall following tax changes
Special EV taxes introduced by state governments are creating a disincentive for Aussies to choose cleaner vehicles and slowing Australia’s overall transition to net zero, new data has revealed. ...Read more
Tax saving
Rooftop solar avoids ‘sun tax’ but still faces caps
Power companies will soon be able to charge Australians with rooftop solar panels a tax for exporting electricity to the grid, albeit the regulators have walked back from the most controversial parts ...Read more
Tax saving
South Australians now eligible for COVID-19 Disaster Payment
South Australians under lockdown are set to be supported by the COVID-19 Disaster Payment, the state government has confirmed. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
