“What’s said in the lead-up to an election is not necessarily what gets legislated, and they’ve firstly got to win the election and whilst they’re favourite, it will still be a fair election for them to lose, so I wouldn’t be making changes right now based on what they’ve promised,” Mr Draper said. 

“If they do get in, they’ve also got to get it through the Senate and there are a lot of cross benchers that don’t like the policy.”

It’s also possible, he said, that amendments are made to the policy if it is legislated to reduce its impact.

If the policy was to be amended or watered down, Mr Draper said that there could be changes such as a carve-out that allows individual investors to keep the first $10,000 of their franking credit refund.

“That would be one of the easiest carve-outs they could make because it would be easy to administer. I think the problem with any carve-outs, and we saw this with GST, is that once you make a carve-out, the administrative burden goes up materially, but I think that would be relatively straight-forward to have a carve-out,” he said.

“They’ve already carved out age pensioners which would require the tax system with Centrelink system; however, the two systems already do that on some level.”

Another potential carve-out could be for the Commonwealth Seniors Health Card, that holders of that would qualify for franking credit refunds, he said, as that would be relatively easy to pick up in the system. 

Mr Draper said that it is also important to remember that, with certain investments, it may be easy for the investment company to change the tax structure in response to the policy.

“It would be very easy for listed investment companies, for example, to change their tax structure and turn themselves into a listed investment trust and pay unfranked income and that problem is solved,” he explained.

“So, I think the next step for advisers will be to go through asset by asset and assess what what is actually paying franking income and be mindful of the fact that it’s quite possible for listed investment companies to remedy that situation before you even start.”

He also expects the impact is unlikely to be as significant on the Australian equity market as some have suggested.

“I’ve heard people talk about a 30 or 40 per cent devaluation in Australian shares as a result of this. I think that’s a bit far-fetched,” he said.

“I’m not of the view that the whole Australian share market will get sold down as a result [of this measure] because it’s only impacting a relatively small percentage of the total investor base.”