Once upon a time in a strange land Super Funds did not pay taxes. It seems the political elites of the country wanted all citizens to save for their retirements and they allowed these super funds full franking credits on the dividends received from their investments.
The super funds invested their member’s funds in the local stock market. As such they became owners of local companies which provided valuable services and paid taxes to the government. Then out of their after tax profits these businesses paid dividends to the tax free super funds, who paid pensions to their members.
As time passed a new treasurer decided to cancel the franking credits for these tax-free super funds. This of course meant that these tax free super funds paid taxes as the owners of the businesses that they invested in. It also meant that they paid taxes again on the income they received, which meant they could not provide the money that their members needed to pay for their retirement.
As a result of this the tax-free super funds decided to change their investment strategies. One year later the Government realised what they had done. The treasurer taxed super funds at 15% and decided to encourage the super funds to invest in local companies by granting them access to imputation credits.
Can anyone name the treasurer?
Hint Super funds began paying taxes at 15% IN 1988
