After analysing 2017 and 2018 franking credit data for SMSF tax returns lodged through Simple Fund 360 software, BGL Corporate Solutions has found that for a full pension fund with balances under $1.6 million, the average franking credit refund jumped from $3,343 in 2017 to $5,460 in 2018.
For a fund with pension balances over $1.6 million, the average franking credit refund has gone from $19,470 in 2017 to $18,333 in 2018.
The data also showed that 77 per cent of SMSFs have balances under $1.6 million.
BGL managing director Ron Lesh said that some of the behaviours by SMSF trustees, particularly those with larger funds, have already changed in response to Labor’s proposal to remove cash refunds for franking credits.
“BGL analysed the data for three types of SMSFs: those in full pension mode, those in part pension mode and those in accumulation mode,” Mr Lesh said.
“The data clearly shows larger SMSFs have already changed their investment strategy to reduce franking credit refunds.”
Mr Lesh said that Labor’s policy was a “ticking time bomb” for the superannuation industry.
“People who have saved all their lives, put their money into super as successive governments have told them, are now having money taken out of their back pockets. The proposed policy is simply unfair,” he said.
The Shorten class warfare campaign targets “the big end of town”, a political slogan.. It may well be that those with large Super balances will be affected but the larger number of us with more modest balances will be collateral damage. We’re not necessarily preserving our capital to leave to our children. We don’t actually know how long we’re going to live and would like to preserve our independence. Our capital will be depleted sooner and we’ll have to access the aged pension earlier.
Labor will win in May. There will then be a stampede out of Australian equities that provide f/f dividends. And a corresponding rush to find alternative investments, in my opinion
While pre-selections are still continuing, it will be important to know the position of cross-benchers on this matter as we can only hope that this proposed theft of imputation credits will be blocked in the senate
Why would anyone change an investment strategy based on an Opposition Announcement? The election is yet to be called and, even if the ALP is elected, what sort of parliament will we have. If the past 10 years are any indicator, it will struggle due to a lack of a working majority. So, we have uncertainty about what the future holds but, we know what the current policy settings are so, why would you make dramatic investment decisions prior to the legislation be implemented?
I suspect that changes in investment strategies may have something to do with the point in the cycle. Tilting out of AEQ may well have happened regardless of any announcements.
For those that have tilted away from AEQ due to the ALP announcement, they run the risk of loosing another year’s franking credit refund and, for what benefit?
I suspect this is a bit of a media (social) mock-up.