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Franking credits expected to be spared in budget
Despite the significant deficit resulting from COVID-19, the government is unlikely to make changes to franking credits, although it may consider other tax and super changes, according to an expert panel.
Speaking at the SMSF Association Technical Day, Jeremy Cooper, chairman – retirement income at Challenger, said while there will be “winners and losers” in the upcoming federal budget, particularly in light of the huge deficit currently facing Australia, it is unlikely the government will look at changing the policy around franking credits.
“[The] two words retiree tax was one of the most clever ways of building up a fear campaign. People who didn’t even know what a franking credit was were scared they were going to be done over,” Mr Cooper said in a BT sponsored panel.
“I would be very surprised if the government, even in the [current] crisis, went back into that space, but who knows.”
Labor announced a proposal for removing cash refunds for excess dividend imputation credits back in 2018 in the lead-up to the federal election. The policy proposal faced considerable backlash from both the SMSF industry and retirees.
Speaking in the same panel, Rice Warner executive director Michael Rice said the government is more likely to tax the earnings of pensions.
Miranda Brownlee
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.
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