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  • Gavin Murray

Will I lose my franking credits?

Rather than go into a complex explanation about what a franking credit is, perhaps it’s best to focus on whether Labor’s plans to axe franking credit refunds will affect you.

Just to clarify, the concept of dividend imputation isn’t going to be abolished. Labor only plan to remove the return of excess franking credits. The most common scenario we see of this is where a SMSF is in pension phase paying nil tax on earnings, and at year end they receive a tax refund due to these franking credits.

Since Labor first introduced their plans to axe the refund of franking credits, they have made a few amendments in that people on Age Pension, Charities and Not for Profit institutions would be exempt. Only one member of a couple needs to be in receipt of the Age Pension, and the same applies for SMSF, where only one member needs to be in receipt of Age Pension.

It would appear that the group of people mostly affected by this will be self-funded retirees with no eligibility for Government benefits. And, if the proposed changes do occur, people in this position will need to look to draw this shortfall from their assets to retain the same lifestyle.

Disclaimer: The information provided in this presentation is of a general nature only. It does not take your specific needs or circumstances into consideration. You should look at your own personal situation and requirements before making any financial decisions. Please seek personal financial advice prior to acting on this information.

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