Labor to scrap franking credit refund...This will be front page news today...., page-123

I'm sure its been said before - sorry for not trolling through pages of discussion!

Australia is in a bind. More and more of the population is retiring. They either get a pension, part pension, or tax free income. That is unsustainable (and believe you me: I'm entering that cohort soon, so I WILL be affected!).

The first step was to limit how much free income you can get. Rather than putting a figure on income, which is done for every other source of income, the limit was placed on how much you can invest in the pension phase (the $1.6M per person limit). Not logical, or aligned with other taxes, but there you go. All other super money above that $1.6M has to stay in an accumulation fund and pay the current 15% tax on earnings.

The wealthy will load up their accumulation phase super fund with fc paying divvies and unload their pension phase super of those fc paying divvies, so the govt will get no benefit.

The poorer are struggling to get anything like $1.6M in super. So once they go into the pension phase, they will lose big time. Labor's battlers, indeed!

The alternative? Well, you need the whole story, and I haven't got it, but heres my answer:

Get rid of cash refunds on fc. In compensation:
1. reduce the deeming rate
2. increase the hurdle where a part pension cuts out
3. Look at handing back some value - eg, a health card even if you're self funded, but only have super in a pension account (ie, no extra in an accumulation acct).

Of course, the devil is in the detail and you need to wrest those computers off mining bitcoins to calculate the rates you need to apply! The bottom line is with income tax reducing, a crisis will come. Dealing with it sooner than later will soften the blow.