Jim Alsop, Mount Macedon
I take exception to the paid advertisement placed in the March 12 edition of the Midland Express, ‘Labor’s plan for tax reform’ under the authority of Lisa Chesters MP.
It is false and misleading in explaining the current treatment of taxation for shareholders relying on dividends and franking credits for income.
If the franked dividend amount is $65,000 and the $27,000 franking credit added on to the individual’s gross income, as it is required to be, then this gives a total taxable income of $92,000. Tax on this amount is $21,537 so the retiree would be entitled to a refund of $5463. As well as carrying the risk of capital loss.
The truth is, the self-funded retiree takes all the risks, at no cost to the nation, and is taxed as a wage earner, in addition to any capital gain liability.
Why does Labor single out self-funded retirees as being different to those on a part pension? Their franking credits are only fully refunded if they are under the tax threshold, otherwise, the credit must be used to pay the tax liability.
Labor has recognised the need to ‘grandfather’ existing properties that investors have negatively geared. How about some common sense and phase in the percentage of refundable franking credit over five years? This would allow investors to assess how they are being affected over time. It would also alleviate any knee-jerk reaction to share prices. After all, every superannuation fund is heavily invested in local shares.