The Financial Services Council (FSC) has backed the recommendation of a parliamentary inquiry which has opposed the removal franking credit refunds.
The FSC, however, criticised the report – released by the House of Representatives Standing Committee on Economics – stating it doesn’t address the impact of franking credit refunds on large superannuation funds.
“The recommendation clearly rejects the removal of refundable franking credits on the basis it is inequitable. However, we note the report doesn’t address the impact of franking credit refunds on large superannuation funds,” the Council stated.
Commenting on the recommendation, FSC CEO Sally Loane said: “The removal of franking refunds would result in the unfair treatment of millions of Australians who invest their retirement savings in some large super funds.”
“Figures highlighted in the FSC’s submission to the Inquiry show that up to 2.6 million Australians were in large super funds in 2015–16 who received refunds and up to 3.5 million in 2014–15,” she said
“It is therefore somewhat ironic that the report underestimates the number of people affected by changes at about 900,000,” Loane added.
Loane also pointed to a survey conducted by the FSC, and detailed in the FSC’s submission to the Inquiry, which showed the removal of refunds could on average cost $850 per year for retirees in affected large funds.
Criticising the report’s oversight of the impact on superannuation funds, Loane said: “A removal of rebates could result in numerous super investors facing significant financial loss, and an unfair result where many self-managed super funds and some large super funds lose access to refunds – while other large funds are unaffected.”
“Despite the FSC’s reservations about the report, we nevertheless still support the main recommendation of the majority report that franking refunds should continue.”
