Govt to examine implications of scrapping franking credits
The House of Representatives Standing Committee on Economics on Wednesday announced an inquiry into the implications of removing refundable franking credits.
The committee’s chair, Tim Wilson MP, said there has been “legitimate community concern” about proposals to remove cash refunds for the full allocation of credits for individuals and super funds, and that it amounts to a tax on the savings of retirees.
“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,” Wilson said.
“The committee is examining what impacts the removal of refundable franking credits would have, particularly on retirees who have made long-term retirement saving decisions based on their ability to claim refunds on their franking credits and whether it will compromise their financial security.”
In a statement, Wilson said the committee will inquire into and report on the use of refundable franking credits, their benefits and the implications of their removal, including:
• analysis of who receives refundable franking credits, the opportunities it provides to offer alternative savings and investment vehicles to low and middle-income earners, and the impact it has on lowering tax bills;
• consideration of how refundable franking credits support tax principles, particularly implications for tax neutrality, removal of double taxation and fairness; and
• if refundable franking credits were to be removed, who it would impact and the implications from expected behavioural change by investors.
Submissions are being sought by 2 November 2018 although submissions will be received throughout the inquiry, Wilson said.
Recommended for you
Government has introduced a bill to Parliament to legislate the first stream of the QAR reforms.
ASIC now has a 1:1 ratio when it comes to court success in the enforcement of crypto activities and more action is expected as Treasury seeks to introduce a regulatory framework.
A leading governance body has hit out at “specialist interest groups proposing ad hoc law reform” when it comes to reforms of financial services legislation and believes an independent body is needed.
The release of ALRC’s final report into financial services legislation has highlighted financial advice as a “significant” focus as it seeks to reduce costs and help advisers understand their obligations, alongside the Quality of Advice Review.
