Save
Plans to scrap tax break hit big hurdle
The federal government is launching an inquiry into Labor’s plans to scrap refundable franking credits, after lobbyists representing retirees in particular spent months finding holes in claims the policy will only impact wealthy Australians.
Plans to scrap tax break hit big hurdle
The federal government is launching an inquiry into Labor’s plans to scrap refundable franking credits, after lobbyists representing retirees in particular spent months finding holes in claims the policy will only impact wealthy Australians.
The House of Representatives standing committee on economics yesterday announced an inquiry into the implications of removing refundable franking credits, a signature tax move proposed by the federal opposition in March.
The inquiry may also look at expected behavioural change by investors, including increased dependence on the pension; and if there are carve outs applied, what this might mean for additional complexity to the system.
“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,” said chair of the committee Tim Wilson.
“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.”
Fit for purpose?
Technical experts in superannuation have been particularly frustrated by Labor’s claims that this policy targets a “loophole” being exploited by the wealthy.
“It seems to me that this measure could actually allow the rich to accumulate more in super,” said manager for technical services and education at AMP-owned SuperConcepts Peter Burgess at the time the policy was announced.
“Transferring some of their pension balance to the accumulation phase may allow them to use all of their franking credits. The effect will be more retained in super for longer, as they can draw down super from accumulation phase when they need it rather than being forced to take the minimum pension each year.”
Similarly, bodies like the SMSF Association (SMSFA), which represents SMSF investors and professionals, estimate Labor’s policy will slash the retirement savings of Australians with conservative superannuation savings.
“It’s our stated belief that this proposal will affect more than 1 million Australians either saving for or in retirement and other purposes, with our calculations showing it will cut about $5,000 of income from the median SMSF retiree earning about $50,000 a year in pension income,” said chief executive of SMSFA John Maroney.
“The notion that this proposal will only affect the wealthy is simply wrong. An analysis of ATO and Treasury data shows it is those on modest incomes who will be most affected, refuting Labor’s argument that the proposal will only target the wealthiest 10 per cent of SMSFs.”
Frustrated savers
Professionals working with SMSF trustees, like director at Heffron SMSF Solutions Meg Heffron, have found taxpayers are growing increasingly frustrated by proposals that will chip away at their superannuation savings.
Last month, Ms Heffron hit out at policies – like Labor’s plan for franking credits – which capture taxpayers who have always invested “by the book”.
“They understandably ask ‘why did I bother saving’ sometimes,” Ms Heffron said.
This email address is being protected from spambots. You need JavaScript enabled to view it.
Tax saving
How are Australians planning on spending their tax savings?
Essential bills, savings accounts, Christmas gifts and exchange-traded funds appear to be the big winners from the latest round of tax cuts, new research has revealed. ...Read more
Tax saving
First in the world: SA imposes EV tax
The South Australian government is the first government in the world to introduce an electronic vehicles tax following an announcement by the treasury. ...Read more
Tax saving
5 tips as tax deadline looms
Australians are being warned that they have just two weeks left to get their finances in order if they have not posted a tax return yet. ...Read more
Tax saving
ATO warns businesses of JobKeeper scam
The ATO is warning the community about a JobKeeper scam which is asking members to enter personal information. ...Read more
Tax saving
Why fast-tracking tax cuts won’t stimulate the economy
Treasurer Josh Frydenberg has flagged that previously legislated tax cuts could be moved forward in a bid to help stimulate the Australian economy. ...Read more
Tax saving
Last-minute items to check off before 30 June
With the end of the financial year almost here, an accounting firm has outlined key changes with tax returns this year and flagged some last-minute tax strategies to consider before 30 June. ...Read more
Tax saving
Australia’s richest owe the Tax Office $772m
Australia’s elites and private companies fell $772 million in taxes due to miscalculations and deliberate tax avoidance, the Australian Taxation Office has revealed. ...Read more
Tax saving
Do you have to pay taxes on a trust?
Trusts are usually set up for business, estate planning and investment purposes to separate the legal and beneficial ownership of assets held within the structure. ...Read more
Is the market overheating; should ETFs take your fancy, and what’s happening to the low and middle income tax offset?
Listen now
Home values up 30% (or are they); NFTs taking the world by storm, and why Keating thinks Aussies will be ‘poor’ in retirement
Listen now
Raging floods, the tech stock bubble and the ongoing SG debate
Listen now
Meet the Manager with Trilogy’s Philip Ryan: RBA rates and property price growth
Listen now
Tax saving
How are Australians planning on spending their tax savings?
Essential bills, savings accounts, Christmas gifts and exchange-traded funds appear to be the big winners from the latest round of tax cuts, new research has revealed. ...Read more
Tax saving
First in the world: SA imposes EV tax
The South Australian government is the first government in the world to introduce an electronic vehicles tax following an announcement by the treasury. ...Read more
Tax saving
5 tips as tax deadline looms
Australians are being warned that they have just two weeks left to get their finances in order if they have not posted a tax return yet. ...Read more
Tax saving
ATO warns businesses of JobKeeper scam
The ATO is warning the community about a JobKeeper scam which is asking members to enter personal information. ...Read more
Tax saving
Why fast-tracking tax cuts won’t stimulate the economy
Treasurer Josh Frydenberg has flagged that previously legislated tax cuts could be moved forward in a bid to help stimulate the Australian economy. ...Read more
Tax saving
Last-minute items to check off before 30 June
With the end of the financial year almost here, an accounting firm has outlined key changes with tax returns this year and flagged some last-minute tax strategies to consider before 30 June. ...Read more
Tax saving
Australia’s richest owe the Tax Office $772m
Australia’s elites and private companies fell $772 million in taxes due to miscalculations and deliberate tax avoidance, the Australian Taxation Office has revealed. ...Read more
Tax saving
Do you have to pay taxes on a trust?
Trusts are usually set up for business, estate planning and investment purposes to separate the legal and beneficial ownership of assets held within the structure. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
