The government may discreetly target superannuation by cutting the corporate tax rate in order to reduce franking credits and generate billions in revenue, according to one Australian fund manager.
Head of Clime Asset Management Michael Kloeckner said the most “well-hidden way in which the government can hit super” is by reducing the corporate tax rate from 30 to 25 per cent.
This would mean the calculation of franking credits will also be reduced from 30 per cent to 25 per cent, he said, which would reduce yields for super fund members in pension mode.
“The government wouldn’t have to say anything about the loss of franking credits [to the public] because they’re just reducing the corporate tax rate,” said Mr Kloeckner.
If the government does propose a cut to the corporate tax rate, it is likely it would reduce tax to 25 per cent for small businesses, while large businesses with a turnover of around $100 million would pay a 5 per cent levy in place of the reduction in the tax.
“That way the company still keeps paying 30 per cent but the super fund holder is down to 25 per cent,” he explained.
The government would then likely retain the 5 per cent levy from these larger companies for revenue, he said.
“So then you’re actually benefiting the small guys, which is what Malcolm Turnbull would be happy to do, and [with] the big guys you say, you’re big and you can afford to pay tax,” he said
“But in the meantime the amount in franking the [government will] save from super is going to be in the billions.”
SUBSCRIBE TO THE SMSF ADVISER BULLETIN
- 26 Sep 2017ATO set to add new items to SMSF watch listBy Katarina Taurian
- 26 Sep 2017ATO tipped to scrutinise property development and unit trustsBy Jotham Lian
- 26 Sep 2017Statistics reveal full impact of events-based reportingBy Staff Reporter
- 26 Sep 2017Tax advice exemption discrepancy driving away accountantsBy Jotham Lian
- 26 Sep 2017Consultant flags strategies to negate complex ECPI calculationsBy Miranda Brownlee
- 25 Sep 2017Survey results point to major concerns with new reportingBy Miranda Brownlee
- view all
- ATO tipped to scrutinise property development and unit trusts
One big four accounting firm says the ATO has started to zoom in on property development in unit trusts being held in SMSFs and the calculat...read more
- Statistics reveal full impact of events-based reporting
Analysis conducted by SMSF software provider BGL Corporate Solutions has indicated that around 290,000 SMSFs will be affected by the events-...read more
- Tax advice exemption discrepancy driving away accountants
A discrepancy in ASIC’s treatment of licensed and unlicensed accountants in relation to the tax advice exemption instrument is driving acc...read more
- view all