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20/01/20
07:49
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Originally posted by squidd
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Hi oldbull26,
Negative gearing changes were being grandfathered, imputation credit policy changes were not as far as I am aware.
For example, a person could have structured their affairs in 2010 so that in retirement they were receiving $40k of dividends and $15k of franking credits, for a total annual income of $55k .
Post a Labor victory and after the implementation of Labor's policy re imputation credits, the $15k of franking credits would no longer be receivable by the retiree, reducing their total annual income to $40k.
For this policy to not be retrospective, it would need to be grandfathered in the same way negative gearing was going to be;
- If the shares were purchased prior to a certain date, the franking credits were still refundable. All franking credits on future dividends on shares purchased after the date could not generate a refund, only reduce tax to nil. The sale of the shares, or the death of the shareholder, means the franking credits attached to future dividends change to being non-refundable. It's exactly the same logic as the negative gearing grandfathering.
The issue is that Labor had already spent the money it was going to be receiving by making imputation credits attached to dividends on shares currently held non refundable.
Labor got too greedy and were going to affect too many people with their NG, CGT & IC changes. If Labor had have just picked one policy change, had the settings correct from the start, and explained it properly, they'd now be in Government. They could've then picked a second tax policy change to take to the following election.
Cheers!
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Squid, you are correct that the franking credit tax would have been retrospective in effect and no grandfathering was offered.
The dumb Labor proposal was even worse because it was discriminatory against SMSF members. Superannuation members in industry funds were still going to get the benefit of the franking credit refunds with a tax credit whereas SMSF members were to be denied the same benefit because it was in cash. That just showed how stupid Chris Bowen was and demonstrated he was not fit and never will be fit to be Treasurer of Australia.