Negative sentiment in the industry around Labor’s proposed franking dividends reform is still running high as Federal election predictions heat up, at least amongst advisers in the self-managed superannuation fund (SMSF) sector.
A consistent theme across sessions at the SMSF Association National Conference in Melbourne this week was frustration at the reform, with many delegates and speakers alike reiterating comments now well-worn in the industry that it’s an unfair policy.
Few other topics covered by the Conference sparked as many comments and questions from audience members in talks, with just the Financial Adviser Standards and Ethics Authority’s education requirements garnering as much discussion.
Common concerns amongst delegates were that the policy was unfair toward their retired clients, that their clients had made investment decisions prior to retirement in the believed that franking credits would be available, and that it seemed to be politically motivated move.
Such was the frustration at the policy that delegates at a session on restructuring portfolios for a post-dividend credit reform environment had to be reminded to keep questions focused on investments, rather than on the policy proposal itself.
In a panel discussion on Thursday morning, Mercer senior partner, Dr David Knox, reflected what many advisers were thinking in saying the policy posed “horizontal equity issues” as it meant that two people who were in the same situation would not always be paying the same amount of tax.
SMSF Association head of policy, Jordan George, backed this up, saying that if an individual shifted their assets from their self-managed superannuation fund to their personal accounts, for example, the consequences to franking credits would be different.
“We’ve never seen before such a blunt way of targeting a particular type of tax payer so unfairly,” he said.
Knox said that he wouldn’t be surprised to see some movement on the details of the proposed reform when it reached the Senate, should Labor win this year’s Federal election.