In 2019, “franking credits” were the hot topic leading up to the federal election. What are franking credits? It's tax already paid by Australian companies on dividends paid to their shareholders.
In 1987 Paul Keating created the dividend imputation scheme. It was introduced to do away with the government’s double taxation. Before the scheme was implemented, a company made a profit, paid tax and paid dividends to shareholders who then paid tax again on the same dividends. In effect the government was double-dipping. Then in 2000 the then Liberal Treasurer Peter Costello expanded the scheme so that taxpayers whose franking credits were more than they had to pay in income tax would receive a refund cheque from the Tax Office.
It is this refunding of excess franking credits which the Labor Party was advocating to remove if it won government in 2019. Facing a backlash, it promised to exempt already existing pensioners on a government pension (even if only on a part-pension of as little as one dollar) but not pensioners who had retired on their own self-managed superfund (SMSF) nor future government pensioners. As Chris Bowen argued, "If you don't like it, don't vote for us!" And we didn't and they lost the election!
Chris Bown was Shadow Treaurer in 2019. The Labor Party has won the 2022 election and Chris Bowen is now the Minister for Climate Change and Energy. The Labor Party's new Treasurer is Jim Chalmers who has been wise to stay away from re-opening this particular can of worms.
I started my own self-managed superfund (SMSF) in 2005 on the strength of the then Liberal government's franking credit arrangements, first with Superannuation Accounting Services. I had read enough about concessional and non-concessional contributions to stop them from involving me in a huge tax bill - click here - and, having lost confidence, I switched to SuperHelp in 2007 who've given me excellent service since.
If you want to start your own self-managed superfund (SMSF), contact SuperHelp's managing director Sandra Lee. You'll be in capable hands!
