Interesting, just been speaking with my accountant about the taxes that will be paid on a SMSF over the $1.6 million cap. He said that this alone will create a huge headache for many trustees and will give a considerable increase in revenue to the Government. Although he is already working on a strategy to minimize this and he feels sure it won't bring in as much as the Gov't thinks.
Then spoke about the Shorten's policy of franking credits, he maintained that Shorten is dishonest in that its virtually impossible for a SMSF member who pays no tax to get the refunds that Shorten suggests. The reason why its impossible is that the amount that SMSF members can deposit into the SMSF can never equal the amount of franking credit refunds that Shorten states.
To receive $2.5 million in Franking credit refunds would mean that the entire SMSF funds would be invested in dividend shares and the amount invested would need to be $120 million. The only way to get this amount of money into a SMSF in the first place would be through a combination of maximum contributions as well as huge capital gains in the process. Huge capital gains are unlikely in dividend stocks. Huge capital gains are more likely in growth companies.
If it were possible , then it would only be 1 or 2 people, but this will not catch them anyway as since they are already over the $1.6 TBC then they will be paying tax at the rate of 15% on those dividends and 10% on capital gains on stocks that are held for more than one year, or 15% if held less than one year.
Sorry Billy Shorten, you have stuffed up big time. Its the Mum and Dad SMSF holders who have less than $1.6 million who will bear the brunt of Shortens stupid policy.
