Industry group lobbies for changes to franking credit policy
An industry lobby group has told Labor that if its franking credit policy is intended to apply so that only those with a tax liability receive them, then it should be applied at an individual level across all superannuation funds.
Alliance for a Fairer Retirement System spokesperson Deborah Ralston said that, while there may be a legitimate debate about whether franking credits are a withholding credit or a final company tax, the policy unfairly targets individuals choosing to use an SMSF as their retirement.
Ms Ralston said that if the policy rationale is that franking credits should only be allocated to those members of superannuation funds who give rise to a tax liability, then the policy should be designed to 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,” Ms Ralston said.
“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.”
Ms Ralston said that SMSFs are an integral part of the Australian superannuation system, providing an important source of choice, control and competitive tension within the superannuation system.
“Any proposal that puts the 1.1 million SMSF members at a disadvantage is not only discriminatory but removes an important element of competition from the superannuation system,” she said.
She also noted that some large superannuation funds may not be able to pass full franking credit refunds to members under Labor’s proposed if they have a large proportion of members in pension phase, and consequently insufficient tax liabilities to offset the tax credits.
“In essence, an individual’s tax treatment will depend on what type of super fund they have,” she said.