The House of Representatives standing committee on economics has today announced an inquiry into the implications of removing refundable franking credits.

The policy was proposed by the federal opposition in March.

The inquiry may also look at expected behavioural change by investors, including increased dependence on the pension; and if there are carve outs applied, what this might mean for additional complexity to the system.

“The ability for investors, including individuals and superannuation funds, to claim their full credits is an established feature of our tax system and is core to the financial security of retirees,” said chair of the committee Tim Wilson. 

“There has been legitimate community concern about proposals to remove cash refunds for their full allocation of credits for individuals and superannuation funds, and that it amounts to a tax on the savings of retirees,” he said.

The SMSF sector has been particularly frustrated by this proposal. Technical experts believe it doesn’t achieve the policy objective of targeting wealthier taxpayers, and is therefore unnecessarily impacting trustees who have structured their portfolios in good faith.

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