Franking Credits....Will you make you mark in the correct square

[KeithB]

Several questions arise here.

1. If your money is in an industry fund, you still get franking credits.
2. If you have the same amount of money in a self managed fund you do not get franking credits.
Why the discrepancy?

3. The average balance per member in self managed super funds in September 2017 was $616,000. If you drew down 8% per year you have an income of $49,280 per year. You can live on that if you own your own home. But does that make you rich?

Franking credits arise when the company pays tax on behalf of the shareholder. The shareholder can then claim that credit against and tax owed. Income from a fund in pension mode is tax free, regardless of the balance of the fund. It will now be taxed at the company rate. In accumulation mode the tax is 15%. Changing the franking credit rule is not fair on people who have planned their finances ahead, according to the rules, and now have the goal posts shifted.

If the goverment wanted to be a bit fairer, they could either quarantine existing funds from the new rule or apply it only to funds that have a very large balance. In Australia, anyone with more money than me is automatically classed as "rich". It's class war politics of envy if you ask me.

[tar trekka]

Hi OT,

You are quite correct in your Statement below:-

Geeeeez TT..... you told us you have bought several new cars and vans and have more money now then when you started..... and don't pay any tax eh?

I paid PLENTY when working, but NONE since Retiring, see my "Sign Off" below.

I Have "Never Avoided Paying My Fair Share Of Tax", however like the Late Kerry Packer, "I Have Never Paid More Than LEGALLY REQUIRED".

Also like Kerry, I was never going to "Make A DONATION To The Tax Office For The Government To WASTE".

In 1991 my Business was "Audited For The Previous Five Years" & I was caught "Overstating My Expenses by LESS than $1-00" for that period.

The Auditor said it was the "Greatest Waste Of His Time That He Could Recall".

I have never seen or spoken anyone from the Tax Office since 1991, but they are welcome to come & Waste Their Time Again".

Tar Trekka.

CFP, Dip FP (Retired)

[Engel]

If the goverment wanted to be a bit fairer, they could either quarantine existing funds from the new rule or apply it only to funds that have a very large balance. In Australia, anyone with more money than me is automatically classed as "rich". It's class war politics of envy if you ask me.

You seem to define "wealthy" pretty well then comes the problem of "very large balances"

[Jeffie]

To answer the question,
Most definately - Yes
Almost anything would be better than the current mob.
Maybe we should all wait and see what "Shorten" will actually come up with.
I will loose just a bit re the franking credit scam but I will adjust.

[Old Techo]

3. The average balance per member in self managed super funds in September 2017 was $616,000. If you drew down 8% per year you have an income of $49,280 per year. You can live on that if you own your own home. But does that make you rich?

That's nearly 20 grand more than we earn. Despite a rental property worth about $750k and $350k in shares and cash it will not generate any more than $30k. So that's $15k each, hence no tax.

As a home owner we spend about $40-$45k a year, so much more than we earn. Unlike TT we are running down

Fortunately though.... before we run out of money we will die

[loub]

orry i can't agree with a lot that has been written. Cleanaway Bill is only interested with those that have their hand out.The small tax rebate we get is part of what we live on,we don't get anything from the government,we have paid our share of taxes.We are not wealthy but are warn out from working and trying to enjoy a bit of retirement,If you vote Labor you are a fool.More taxes ,more strikes ,more jobless,more boat people,You Labor people voted for Rudd,he was our local member,useless as tits on a bull,every thing he touched turn to dust and he stuffed up,he was no Bob Hawk,as long as labor needs the green preferences to get in to power ,its not a true labor party of old that looked after the worker ,its corrupted by the stupid greens,The green /labor alliance nearly destroyed Tassy .We need dams in north Queensland and ten are on the boards ,but are held up buy the greens,the adani mine is ready to go but state labor keeps moving the gold post and could drag the state in to a sovereign risk court case that could cost the tax payer billions in damages or a they just foxing so the whole adani thing is not a problem for Cleanaway Bill. IMHO(PS you can gather i don't like BS)

[Tripping Away]

OT, I have the feeling you do not know what franking credits are and why they are refunded.

TA, a rash assumption as your feelings are not always reliable.

I retired in 2000 and began my own self-managed super fund when they were just becoming fashionable. I legally needed an auditor and the guy recommended to me had just begun a business called Super 2000 Pty Ltd. That guy was the one who famously fainted when being quizzed at the banking Royal Commission. His audit fees on my super fund were so high I cashed in my super fund after a couple of years and not had super since. I still have the email where I asked him to convince me why I should not abandon super as the tax I would pay without the shelter of super would be less than his audit fees and I would not have a pile of paperwork to do every 3 months.

I was receiving and managing share franking credits in 2000 and for the next 18 years. The principle was simply to overcome double taxation of company profits.

When money topics like this pop up they inspire people to abandon the big picture and talk through their wallet.

If you are worried about money for the welfare bill then you will be happy to abandon franking credits.

A few words from Keating

Paul Keating, the architect of the dividend imputation system, has backed Labor’s proposed reforms to abolish cash refunds for excess imputation credits and labelled the provision introduced during the Howard government as “unnecessary largesse”.

Mr Keating was consulted by Labor leader Bill Shorten and Treasury spokesman Chris Bowen about the proposed reform, which he sees as a return to the system he introduced as part of a sweeping taxation reform agenda three decades ago.

“The imputation system I introduced did not incorporate ‘cashbacks’ for those taxpayers whose average income tax rate was less than the 30 per cent corporate rate,” Mr Keating told The Australian.

Mr Keating said the current system introduced by John Howard and Peter Costello needed reform because it saddled the country with huge imposts on the budget that are no longer affordable outside boom times. “This provision, introduced by the Howard government in its search for the grey vote, replete with budget surpluses a la the China boom, was simply unnecessary largesse, as was the concomitant removal of tax on large superannuation accumulations for taxpayers over 65 years of age.

I will make it a little clearer for you then, you definately do not understand the franking credits for SMSF's, especially after what you have told us in this post. Sad Old Techo, I thought you were smarter than the average bear, but no. If you do not realise than other than an an authorised person to do the audit, you can do everything yourself for precious little.

The one person I thought would have known that things do not run in automatic has let me down again...

[Old Techo]

I will make it a little clearer for you then, you definately do not understand the franking credits for SMSF's, especially after what you have told us in this post. Sad Old Techo, I thought you were smarter than the average bear, but no. If you do not realise than other than an an authorised person to do the audit, you can do everything yourself for precious little.

The one person I thought would have known that things do not run in automatic has let me down again...

Once again TA you are not paying attention

I stated... I legally needed an auditor and... I had a pile of paperwork to do every 3 months.

So I was doing everything myself. All the auditor did once a year was audit my accounts according to law.

So what bit didn't Sad Old Techo understand?

[diesel]

The way I see it, the 800,000 who will be "disadvantaged" by Labors proposed changes to franking credits would never vote for Labor regardless. Their loyalties lay with the party that supports the big end of town because that is where their money is invested, so they already know what box they will tick.

When you consider that almost 16 million people are on the electoral roll, those 800,000 who believe that they are losing an entitlement only represent 5% of the voting public - I don't think Bill Shorten needs to be concerned about voter backlash on this. There are more important issues that will decide the election.

Jeff

[Tripping Away]

I will make it a little clearer for you then, you definately do not understand the franking credits for SMSF's, especially after what you have told us in this post. Sad Old Techo, I thought you were smarter than the average bear, but no. If you do not realise than other than an an authorised person to do the audit, you can do everything yourself for precious little.

The one person I thought would have known that things do not run in automatic has let me down again...

Once again TA you are not paying attention

I stated... I legally needed an auditor and... I had a pile of paperwork to do every 3 months.

So I was doing everything myself. All the auditor did once a year was audit my accounts according to law.

So what bit didn't Sad Old Techo understand?

Old Techo, You do not understand the franking credits or how they work.