This thread was started to cover franking credits. Arguing about CGT and negative gearing simply creates noise – these two topics can have their own threads.
Allowing franking credits is in my view inherently fair, just as fair as recognising PAYG contributions. Small businesses are required to pay ATO-deemed tax at the start of the year, and this, correctly, is recognised at the end of the year. The idea of putting a limit on franking credits is like putting a limit on the the tax refunds that the foregoing two sets of taxpayers get because they paid tax in advance.
Dividend income should not be treated differently to the two classes of earnings mentioned above . The tax that the ATO has collected in advance from dividend paying companies should be recognised in the final tax assessment. The current system does not give franking credits for dividends that have no company tax deducted and remitted to the ATO, so dividends from foreign companies that do not pay Australian tax receive no franking credits.
Except the final party, even the GST allows each party going up the value chain to deduct the GST payments made further down the chain.
Can anybody ethically argue that franking credits now recognised are unfair? I would especially like Dave R to elucidate why he thinks dropping franking credits is “fundamentally right”, or “fundamentally the right thing to do” as he has averred. Ethical arguments in favour of caps would be welcome too – Looka29 mooted a $10,000 threshold, and WangChang wrote, “Labor’s removal of the refund for excess imputation credits was simply crying out for a fair cap.”, and elsewhere he posted “. . . allowing refunds of excess imputations credits, but with a cap . . .”
