Plato Investment Management has started an online petition to help protect the dividend imputation system and ensure positive financial outcomes for retirees in light of the federal opposition’s policy proposal to scrap excess franking credit refunds.
The petition, which can be found at www.plato.com.au/petition, has already attracted over 500 electronic registrations.
The investment manager has called on the government and the opposition to guarantee no changes are made to the imputation system, stating Labor’s proposal is discriminatory against mature super funds, particularly SMSFs.
Plato analysis implies super funds with more than 70 per cent of assets in pension mode would likely lose some of the value of franking credits.
Further, the proposed change would have the greatest impact on self-funded retirees who fall just outside the asset test thresholds of $837,000 for a couple who are homeowners or $556,500 for a single person who owns a home.
Plato managing director Don Hamson said the policy would be unfair to retirees who have already developed their retirement income on plans based on existing rules and legislation.
“We’re encouraging people to sign our petition to maintain the system, that is, don’t change it, don’t amend it,” Hamson told a media presentation in Sydney today.
“SMSFs are going to be at a distinct disadvantage going forward, and even if you only had $100,000 in the fund and every member in the fund was retired, you wouldn’t get any franking credits at all, but if you had $100,000 in your own name and you’re retired, you would get the franking credits on that.
“It also depends on the type of super fund, such as a retail fund. So it’s not a level playing field.
“If Labor is seeing these so-called ultra-wealthy funds, which there are a few of, then actually target them rather than have this blanket ban that affects those who are not as well off.”
In addition, he noted such a change could see SMSF members reduce their investments in Australian shares in favour of global equities, property and even cash.
“Labor’s proposal could also result in SMSFs circumventing changes by transferring the Australian equities part of their portfolio into a wrap type of fund that will then be able to refund the imputation credits,” he said.
