The SMSF Association has labelled Labor’s proposed policy to disallow franking credit refunds to some individuals a disincentive to save.
During a recent member webinar, association head of policy Jordan George highlighted individuals whose assets are close to the part pension threshold would almost certainly have to weigh up the merits of putting more into their fund versus being able to receive imputation credit refunds.
“We’ve presented numerous case studies where someone who has assets just over the part age pension threshold of $150,000 would be better off having a part pension and still receiving franking credit refunds,” George said.
“So on an income basis some people would be far better off having fewer assets and receiving the pension and franking credit refunds rather than having more assets and not receiving franking credit refunds or getting any pension.
“That’s a real bizarre message to be sending people saying you’d be better off having fewer assets from an income perspective.”
In a further criticism of the policy, he said allowing SMSF members the ability to keep being paid franking credit refunds if they were receiving the age pension before 28 March 2018 while denying other members imputation credit refunds who were not receiving the age pension at this date would lead to additional problems.
“This seems to be a totally bizarre outcome that you can determine a certain date for someone to receive the age pension as to why you get a certain tax treatment,” he said.
“It also creates a ridiculously complex two-tiered tax rule for self-managed fund members.”
Earlier in the week, SMSF Association chief executive John Maroney criticised Labor for using pre-transfer balance cap legislation data in the formulation of the proposed policy.