Franking credits are still available to pay down any tax owed by the shareholder who receives them. In the case of someone with an annuity from a super fund tax liability is zero so it currently all gets refunded to the account of that superannuant.
It is only the component of franking credits which are being rebated that will be lost to shareholders. Franking credits to the value of tax liability is very useful to those who get them, particularly those with low income, but the REFUND OF CASH as a result of excess to one's tax liability is what is being proposed as no longer happening.
There are people all over these discussion groups re this issue who do not understand it. No other country has this "rebate" of unused franking credits. Other countries though do have some form of our franking credits, in order to prevent double taxation, firstly by the company at 30% and then by the shareholder once part of the company profits is transmitted as a dividend to the shareholder.
It was tinkered with in 2001/2 to pass on these unused portions of the franking credits to shareholders. It should never have been. It is unique across the world and Australia can no longer afford to return these unused portions. However, it will hit self-funded retirees the hardest and after more than 15 years, its reversal will affect far more individuals, those who are approaching retirement, those who are self-funded but with large portfolios in their own names, etc etc etc. It means financial planning becomes problematic when the goal posts keep changing. No grandfathering means there is indeed retrospectivity involved and those with sufficient funds will be able to undertake some asset reallocation. Some may elect to remove all their super and use it for other purposes. Harder for those seeking aged pension (full or part) as there is a rule against gifting one's own money to relatives, family, etc which may catch those doing so (Deprivation of Income for pension purposes). However, there are others, like myself who could simply cash in all my super money and upgrade the property in which I live. That would improve my own standard of living and enable me to continue to hold an asset which bears no cap.gain taxation as it is my own residence.
Shorten is kind of back tracking somewhat and now suggesting there may be some modification. $5,000 cap., for example, on the rebated amount. The numbers of people involved and the percentage of them affected adversely is now becoming more evident to him.
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Labor to scrap franking credit refund...This will be front page news today...., page-89
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