Liberal govt to grab billions from Aussie investors

All the focus seems to be on the Labor proposal re franking credits with different takes on the issue.

In endeavouring to research the issue further I came across the following article which tells us that if the govt’s proposal to cut company tax goes ahead it will diminish franking credits and reduce the earnings to super funds.



"SMSF investment: Franked dividends to lose some shine

March 20, 2018 by Trish Power 10 Comments
The Liberal government is reducing the company tax rate to 25% for smaller companies (annual turnover of less than $50 million) by July 2026, and which is already law. The federal government is also proposing to reduce the company tax rate to 25% for all companies currently paying 30%, including large listed companies (subject to legislation).

Such a change also means the tax benefits of franking credits from franked dividends will reduce, snuffling billions of dollars from the savings of Australian investors.
Fully franked dividends paid by companies come with franking credits associated with pre-paid company tax, that can then offset income tax payable by the investor.

SMSF and other direct share investors, and all members of large super funds, will be affected by the drop in the company tax rate, due to the correlated drop in franking credits (assuming they invest in companies benefiting from a lower company tax rate, especially if listed companies also receive the company tax cut). We explain how franking credits work in the next section.”

https://www.superguide.com.au/superannuation-topics/accumulation-phase