The last time I worked in tax legislation was about 15 years ago but I decided to do some research.
First, the term "Tax Credit" is not a defined term in the Income Tax Assessment Act 1997.
Second, the Income tax Assessment Act 1997 defines the meaning of the term "Tax Offset" (section 4-10 and section 13-1 of the Income Tax Assessment Act 1997) and a tax offset can be both refundable (see Item 40 section 63-10(1)) and non-refundable. Division 67 of the Income Tax Assessment Act 1997 set out the "Refundable Tax Offsets Rules" of which one of them is "Refund Tax Offsets - Franked Distributions". Then you you need to go to section 205 "Franking accounts, franking deficit tax liabilities and the related tax offsets" (which, inter alia, defines the term "Franking Credit" in section 205-15), followed by section 207 "Effect of receiving a franked distribution". The term "Imputation Credit" is not a defined term in the Income Tax Assessment Act 1997. Also, the term "Tax Rebate" is not a defined term in the Income Tax Assessment Act 1997.
Anyway, the point is tax legislation gives effect to the policy position decided by the Government. It sets out a framework to implement the policy position using defined terms and the various rules. So I don't know what you are saying by the statement "What Mr Shorten & Mr Bowen want to do is turn a franking credit (imputation credit) into a franking offset", other than I think you are just putting your own interpretation of what you think various terms mean. But when you are interpreting tax law (or any law) you have to use how each term is in fact defined in the legislation and then you need to look at how that term is used in the legislation.
