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How Labor can't touch these multimillionaires and their franking credits

2 4 0
17.05.2019

In the lead-up to this election, it seems everyone is getting fired up over refundable franking credits and they aren’t holding back on their criticism.

However, I have learnt over the past few months that most still don’t understand how the imputation system works and exactly how the proposed policy from Labor will affect different situations.

Replay

There is also a misconception that the proposal by Labor reverts the rules back to how they used to be. This is not so - this proposal has exemptions and specific rules that make it very different.

While there is also a lot of criticism around self-funded retirees enjoying tax-free income and “lapping up” benefits from the government, it appears the proposed policy is missing the mark when it comes to putting an end to “wealthy welfare”, as Mr Bowen calls it.

Let’s take Barry and Lesley as an example. Multimillionaires with all their superannuation sitting in their two large APRA-regulated funds totalling $3 million.

They are both 67 years old and draw an income of $150,000 a year from their super fund, which sits in pension phase.

They don’t pay any tax personally and their super fund is tax free. Better still, their super balance each year is topped up by franking credits of nearly $13,000.

Compare this with Gloria, a 53-year-old divorced mother of three. She has very little in superannuation, a cash emergency fund and a share portfolio worth $300,000 from........

© Brisbane Times