The Alliance for a Fairer Retirement System (AFRS) has called for Labour Party’s franking credit policy to be applied across all members with a tax liability within all superannuation funds.
AFRS spokesperson professor Deborah Ralston said if the basis for the policy was that franking credits should only be allocated to superannuation fund members who had a tax liability, then the policy should apply at the individual member level within all superannuation funds.
“Any changes to the tax treatment of franking credits should be applied equally irrespective of their superannuation structure.”
“One recent superannuation policy change which did this was the introduction of the $1.6 million cap on tax-free pension accounts. In this case all superannuation fund members were treated equally, no matter how they invested their retirement savings.”
Ralston said while there is a legitimate debate about whether franking credits are a withholding credit or a final company tax, “this proposal unfairly targets those individuals choosing to use an SMSF as their retirement vehicle.”
She also pointed out that any proposal that puts 1.1 million SMSF members at disadvantage is not only discriminatory, but removes an important element of competition from the superannuation system.
Ralston reiterated the fact the policy will cause unequal treatment among pensioners as well.
“The simple fact is Labor’s proposal will not exempt all pensioners. Any individual who became an Age Pensioner after 28 March 2018 and has an SMSF will lose their franking credit refunds,” she explained.
“Those not involved in an SMSF, but who qualify for an Age Pension after 28 March 2018, would still be exempt from this proposal while they continue to receive an Age Pension.”