If I own my own company in Australia and my turnover is less than $2 million I pay 28.5% tax.
If I buy shares in an Australian company that company that I am a part owner of pays taxes at 30%.
In both instances I am the owner or part owner of a business that pays taxes on my behalf as the owner of the business. In return for this I receive a franking credit for the taxes paid. The advantage of this is that the Government collects the taxes off one source say BHP instead of the millions of individual shareholders or part owners of the business.
Now if Billy Bob Shorten and the Labor Party get rid of this and I stand to loose many thousands of dollars I have a couple of questions
1) Fairness: Remember when Tony Abbott wanted to introduce the the GP co payment? My cost was limited to $320ish. Bull$hit bill and the ALP said this was unfair. It was too high an expense for pensioners who were some of the most vulnerable in our society.
So how is taking Thousands of dollars away from retirees with SMSF fair? Remember the only ones who would pay it are the poorest waiting on the franking credit. The rich ones with higher income claim the franking credit on their tax return and get the money.
Personally I find it bizarre that Labor considers a person paying an extra $320 as unfair but en extra $4k plus is fair. Remember in both instances it is a person on the same gross income
2) Why would I leave my money in my super fund or indeed continue to invest in my super fund. There is no encouragement for me to save for my future under this system.
Option 1 Borrow money and buy a bigger house. (So much for encouraging me to downsize). Then when I retire and my SMSF would not be able to use the franking credits I would just cash my super fund out and pay off the loan for the bigger house. I am debt free and entitled to a full pension. My bigger house will eventually be sold and pay zero tax. Family home is exempt.
Option 2 (Looking for feedback pleasse)
Would I not consider investing in a qualified ETF in the US.
If it is a qualified fund it would be taxed at 5% to 15% in the US. So I can buy shares in a dividend paying ETF in the US and pay the same or less tax as my super fund.
