Australian Federal Election - 2019

overhang said:

I have to laugh at the irony of some on here who complain that Labor were going to run a welfare state while at the same time being relieved that their franking credits aren't going to be taken away. You do realize that franking credits are a form of welfare?

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Nope. You get the credits because the tax has already been paid. Not to mention people who have managed to accumulate some shares are taking it upon themselves to ensure they are financially secure in their retirement and not relying on welfare. This is the sort of thing that should be encouraged not discouraged, people taking responsibility for their lives. Unless the left have another agenda of course.

Miss Hale said:

Nope. You get the credits because the tax has already been paid. Not to mention people who have managed to accumulate some shares are taking it upon themselves to ensure they are financially secure in their retirement and not relying on welfare. This is the sort of thing that should be encouraged not discouraged, people taking responsibility for their lives. Unless the left have another agenda of course.

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As I have said before ,I receive franking credit,but there are other ways to save for your retirement without franking credits.Beware the share market crash and what would be the opinion then?Will watch Power and Hawks closely tomorrow...though a Crows supporter.Depends which game Hawthorn bring-I would favour them though.

Miss Hale said:

Nope. You get the credits because the tax has already been paid. Not to mention people who have managed to accumulate some shares are taking it upon themselves to ensure they are financially secure in their retirement and not relying on welfare. This is the sort of thing that should be encouraged not discouraged, people taking responsibility for their lives. Unless the left have another agenda of course.

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But then the tax isn't paid..... meaning that proportion of company tax has resulted in zero tax. Whilst this would never happen it is possible under the current system that company tax could basically be reduced to zero on profits if the franking credits were all paid to those meeting the income criteria for the rebate. That's a terrible policy that can allow that to be possible.

As for the self sufficient retirees, I have spoken to several people recently in their late 50's that are trying to budget so that they can retire at 60 or early 60s, draw down on their super to get them through until they are eligible for the pension. With an aging population this isn't exactly assisting the economy.

Responding to various recent comments:

My primary concern is for those with investments outside of superannuation. That is, investments made using money earned from working, which has already been taxed, and where income and any capital gains will also have been taxed whilst that person is working.

Then that person reaches say age 56 and is made redundant. In reality for many that's it, that's the end of their working career since the odds of anyone employing them at that point are fairly slim.

In saying that I'll note the first of the class distinctions. If you're a white collar professional earning big $ then very likely someone will employ you yes. On the other hand, if you're a blue collar worker with no qualifications beyond a few tickets to use machinery etc well then you're stuffed and for practical purposes unemployable and there's a huge number of such people who've ended up in that situation over the years. Age discrimination is technically illegal but it's rife in practice - experience ends up being a liability not an asset. To be polite, those living in the inner suburbs and who wear a suit to work are plausibly living in a bubble in that regard and won't see the problem.

For anyone who's seen others go through that, and I've seen plenty, there's a rather strong motivation to invest outside superannuation so as to be self reliant. I can imagine nothing worse, both from an an economic perspective and in terms of mental health, than ending up on Newstart and having to jump through the ludicrous hoops and deal with Centrelink to receive a pittance. God help anyone in that situation.

It must also be said that life is for living. For a lot of people their health isn't great by their early-mid 70's so this idea of having people work until age 67 or 70 when they're close to being stuffed is missing the point of life I think.

Now about those dividends, the objection I raise is about the double standards.

*Whilst I have a job, both sides of politics agree that dividends are my personal income and I need to pay the relevant rate of Income Tax on them.

*Should I become unemployed, Labor says no sorry but now you'll have to pay Company Tax instead.

That's a very "heads I win, tails you lose" sort of an argument and it hardly seems just that someone who loses their job then gets hit with a special high rate of tax because they've planned ahead, saved and won't be claiming Newstart or the Age Pension. The same person if they hadn't saved wouldn't pay a cent in tax and would be on Newstart or the Pension - that's a huge "tax refund" for someone paying no tax.

If the argument is that there shouldn't be a 0% Income Tax rate up to $18,200 well then get rid of it for everyone. Not that I'm advocating that but it would be better than singling out one group.

What's not reasonable is having a special high tax rate just for someone who's only income is from franked dividends. That's ridiculously pedantic and it's akin to, for example, putting a special tax on red lawnmowers or on peanuts sold in 375g bags. All of a sudden no manufacturer will be selling mowers painted red and peanuts will be sold in any size bag so long as it's not 375g. End result is it collects no tax but distorts the market.

My concerns aren't based on personal circumstances, the policy has no impact on me at least now, but on the principle of fairness. Personally well I've done blue collar work and I've done white collar work and for the record I'm a member of a union but that doesn't mean I agree with Labor on this or everything.

If I was running Labor then I'd be looking to move very much away from the sort of thing that interests wealthy people in the inner suburbs and instead focus on the practical concerns of the masses. Get out there, go and talk to people working on farms or in mines or run of the mill office workers, listen to what they've got to say and actually do something about it.

rederob said:

Nothing changes, nor was proposed to change to SMSFs in accumulation.
Where did it say different?

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hey

"A Shorten Labor Government will close down the concession created by Howard and Costello, and return to the arrangement first introduced by Hawke and Keating – so that imputation credits can be used to reduce tax, but not for cash refunds."
"The top one per cent of self-managed superannuation funds received an average cash refund of more than $80,000 in 2014-15."
"Charities and not-for-profit institutions, such as universities, are exempt from these changes." edit: welfare recipients were added to this exemption list.

those 3 quotes are straight from the ALP website. the credit refunds are currently done through tax laws (not super laws). the labor proposal was to change the tax laws so that no tax entity was able to get a cash refund from franking credits (except welfare recipients, charities and not-for profits. Accumulation funds are trusts that are taxable entities (which is why they have tax liabilities at the associated legislated tax rate of 15%). They were NOT exempt from the ending of credit refunds.

I will just say that the labor intention was that any tax entity (other than the 3 nominated exemptions) would not get a cash credit refund - that is how super trusts got caught up in this and that includes both pension and accumulation trusts (refunds currently exist for any fund that has more credits than tax liabilities cos any entity NOT a company gets a cash refund - companies do NOT get a cash refund but roll forward unused credits).

As explanation: do u remember everyone saying how smsf's in pension phase may be better off transferring into an industry fund to get some franking benefits? or how smsf accum funds needed more unfranked income via bonds or overseas investments etc or more members joining the fund? The proof of my position is in the explanation as to why those things were being suggested (and noting that industry funds are NOT part of the exempted 3).

not sure if i have convinced u but anyway - it is the truth...........
cheers

for brevity:

"A Shorten Labor Government will close down the concession ... so that imputation credits can be used to reduce tax, but not for cash refunds." (ALP policy website)

if you have a super account in accumulation phase that has more imputation credits than tax liabilities (at legislated 15% tax on combined income and concessional contributions) then the ALP was NOT going to give you a cash refund for the excess credits.

HelloU said:

for brevity:

"A Shorten Labor Government will close down the concession ... so that imputation credits can be used to reduce tax, but not for cash refunds." (ALP policy website)

if you have a super account in accumulation phase that has more imputation credits than tax liabilities (at legislated 15% tax on combined income and concessional contributions) then the ALP was NOT going to give you a cash refund for the excess credits.

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Succintly put.

SirRumpole said:

Whatever the debate about franking credits , the country has much bigger problems, including the price of electricity, one of the highest in the world which is shutting down industries, making us globally uncompetitive and putting people out of jobs.

Unless Scomo solves this problem as a priority, we are in a much worse position than we should be if the economy goes sour.

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Agreed.

At the wholesale level the excess cost is over $1 billion a month and it's more once you add in networks and retail.

Gas costs have gone up ~$3.5 billion a year separate to electricity costs (so not including gas used in power stations).

It's killing our economic competitiveness that's for sure. There are some industries where closure is now pretty much locked in, they've failed to undertake necessary investments since it just wasn't viable and are now running the plant into the ground, and for others the issue is pretty much guaranteed to come up during this term of government.

Then there's the physical supply side of it all. A near miss over there, an incident somewhere else. Dwindling reserves of all kinds too. Odds are it'll end in tears all of a sudden at some point.

Politically well neither side seems keen on doing what's needed so it'll need a proper crisis to force it.

Smurf1976 said:

Agreed.

At the wholesale level the excess cost is over $1 billion a month and it's more once you add in networks and retail.

Gas costs have gone up ~$3.5 billion a year separate to electricity costs (so not including gas used in power stations).

It's killing our economic competitiveness that's for sure. There are some industries where closure is now pretty much locked in, they've failed to undertake necessary investments since it just wasn't viable and are now running the plant into the ground, and for others the issue is pretty much guaranteed to come up during this term of government.

Then there's the physical supply side of it all. A near miss over there, an incident somewhere else. Dwindling reserves of all kinds too. Odds are it'll end in tears all of a sudden at some point.

Politically well neither side seems keen on doing what's needed so it'll need a proper crisis to force it.

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What I like is the different ways, you explain the problem and all that seems to happen, is people respond with the same rubbish.
When the $hit hits the fan, they will have the perfect excuse, ignorance.
Non are so blind, as those who don't wish to see.
The only non technical person, who has seemed to grasp the issue, is Rumpy.IMO

sptrawler said:

They could simply get it down, by removing $850 and upgrading their house, which is probably how they got it to $1m in the first place, I know I did.

Most people I know, including myself has done this, with interest rates at 2% how else can a reasonable income be achieved?


I would like to point out as I did earlier, it is better to give partial assistance, than to carry the whole burden.
With the Governments plan, a smsf pension couple with say $500k in term deposit and $500k in shares, they would earn $10k from term dep and $21k at 4.2% dividend return = $31k.

On a full pension with $200k in shares earning 4.2%, they would earn $36.6k pension + $8.4k div + $2.5k franking = $47.5k

All ball park figures, just to show the ludicrous effect, absolutely dumb politics. Unless you want everyone on welfare.

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Hey overhang, you seemed to have missed responding to my answer, to your points? Post 936 about 5 pages back

sptrawler said:

What I like is the different ways, you explain the problem and all that seems to happen, is people respond with the same rubbish

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I'll keep out of any debates concerning individuals and just note that the big problem with all this is that many have a focus on one aspect of the detail and a reluctance to see and understand the overall picture.

That applies to many things in life, investing included.

sptrawler said:

Hey overhang, you seemed to have missed responding to my answer, to your points? Post 936 about 5 pages back

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I had a few replies and was struggling to keep up with all, don't take it personally.

They could simply get it down, by removing $850 and upgrading their house, which is probably how they got it to $1m in the first place, I know I did.

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This seems considerable expense to go to just to lower ones assets, not everyone needs to upgrade their house.

Most people I know, including myself has done this, with interest rates at 2% how else can a reasonable income be achieved?

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If it were me I would invest in some property from regional towns, it's quite easy to pick up houses for $200-250k that have a 7-8% or greater yield. These houses won't see capital gains but that doesn't really matter for retirement purposes, hell it's a lot more stable than stocks in the current environment.

I would like to point out as I did earlier, it is better to give partial assistance, than to carry the whole burden.
With the Governments plan, a smsf pension couple with say $500k in term deposit and $500k in shares, they would earn $10k from term dep and $21k at 4.2% dividend return = $31k.

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I did point out that the policy wasn't without it's flaws, it's the bricklayer type with the stuffed back that has setup their early retirement based on franking credits I really would be concerned for. It is a poor policy when there are these types caught up in the cross hairs but lets not pretend that a large proportion of those affected by the change are wealthy retirees. None of this at the end of the day changes the fact that the current arrangement is a welfare subsidy, it's funny some of the very people on here who over the years have commented on how difficult it is to take welfare entitlements away from the recipients, welfare state and all that and then they kick up a stink when their own tax payer funded cash cow is targeted. Just shows that most people are self serving.

overhang said:

I had a few replies and was struggling to keep up with all, don't take it personally.




This seems considerable expense to go to just to lower ones assets, not everyone needs to upgrade their house.



If it were me I would invest in some property from regional towns, it's quite easy to pick up houses for $200-250k that have a 7-8% or greater yield. These houses won't see capital gains but that doesn't really matter for retirement purposes, hell it's a lot more stable than stocks in the current environment.



I did point out that the policy wasn't without it's flaws, it's the bricklayer type with the stuffed back that has setup their early retirement based on franking credits I really would be concerned for. It is a poor policy when there are these types caught up in the cross hairs but lets not pretend that a large proportion of those affected by the change are wealthy retirees. None of this at the end of the day changes the fact that the current arrangement is a welfare subsidy, it's funny some of the very people on here who over the years have commented on how difficult it is to take welfare entitlements away from the recipients, welfare state and all that and then they kick up a stink when their own tax payer funded cash cow is targeted. Just shows that most people are self serving.

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Thanks for the honest answers, I understand where you are coming from, I've worked from the ground up and you do go through phases in life.
If I had my time over, I would pay for my house and then have a whale of a time, I wouldn't save.
You may say that is a selfish attitude, but as you point out I have saved and skrimped all my life, and I'm now seen as selfish because I want to enjoy the retirement I've saved for.
When in reality I could have enjoyed spending my income through life, and would be held in higher regard, plus would generate a much higher income from welfare.
So I would suggest you think carefully, before you go the self funded route, it may end in tears for you. IMO

The election result proved the poor still aspire to do better, and the rich love to vote to appease their conscience, while smugly looking on. Just my opinion.

overhang said:

it's funny some of the very people on here who over the years have commented on how difficult it is to take welfare entitlements away from the recipients, welfare state and all that and then they kick up a stink when their own tax payer funded cash cow is targeted. Just shows that most people are self serving.

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Incorrect, I am happy with people getting dole payments, some for sure just can not get a job for a variety of reasons. I know that if these people did not get this support then buckle down because then they will be breaking into your house or beating you up and stealing from you, they have to eat. I know I would do anything to survive, the welfare is suppose to stop all of that so it should be there.

What I don't like is working my ar$e off all my life, doing O/T and 2 jobs to save and invest my money as we were told to all our working career and then having the rules changed once you retire. 30 years ago when I first started getting Super from my employers we had seminars from our providers. Put in more, you get more points and thus increasing your final payout. It was a big deal sacrificing your salary into Super when you still got a mortgage hanging over your head but at the same time I didn't want to work until 60 let alone 70. It was just work hard and get this mortgage paid for.

As time went on advisers were telling us shares was the best investments you could make because not only did you get dividends but the franking credits were refunded to if had an excess of them. It was a strategy we were encouraged to take up and have been using the last 18 years. Then when we have retired, some half witted policy comes along and wants to take away a substantial portion of my income because their leader thinks I am rich which I am not.

When implementing a policy you need to cover all basis. The people who have worked hardest and saved and invested should be looked after too. The "if you don't like it then don't vote for it" is not the way to treat an electorate, any wonder they lost.

sptrawler said:

Thanks for the honest answers, I understand where you are coming from, I've worked from the ground up and you do go through phases in life.
If I had my time over, I would pay for my house and then have a whale of a time, I wouldn't save.
You may say that is a selfish attitude, but as you point out I have saved and skrimped all my life, and I'm now seen as selfish because I want to enjoy the retirement I've saved for.
When in reality I could have enjoyed spending my income through life, and would be held in higher regard, plus would generate a much higher income from welfare.
So I would suggest you think carefully, before you go the self funded route, it may end in tears for you. IMO

The election result proved the poor still aspire to do better, and the rich love to vote to appease their conscience, while smugly looking on. Just my opinion.

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I have no doubt you and others are deserving of the franking credits, from what I can gather many on this site have worked bloody hard to get where they are, I don't think we have many born with a silver spoon types. I know if I was one of those affected by this change based on that stage of my life there is no way I would be voting for Labor, it's one thing to vote against your own interests for less of a tax cut in your working life but it's another if it affects your financial independence in retirement age.

The policy had it's merits but too many were targeted by the changes. yet another Labor policy that is a good concept and poorly implemented.

Bill M said:

Incorrect, I am happy with people getting dole payments, some for sure just can not get a job for a variety of reasons. I know that if these people did not get this support then buckle down because then they will be breaking into your house or beating you up and stealing from you, they have to eat. I know I would do anything to survive, the welfare is suppose to stop all of that so it should be there.

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Fair enough Bill, I guess it just frustrates me that a government who has targeted the most vulnerable over their time in government have been voted back in when all I read most election campaign was Labor's policies unfairly targeting more well off groups. Again I'm not saying Labor had a great policy. But robodebt was a disgrace, sending out automated debt notices where the burden of proof was on the recipient to prove the debt incorrect with many incorrectly targeted, that this debt collection was then outsourced to private companies.

That my old neighbor in her late 50s at the time with emphysema and obesity, requires an oxygen bottle at home, yet her disability pension was cut because under the Abbott government changes she was deemed suitable for employment because she did her grocery shopping without someone holding her hand, ffs this lady is unemployable, lives in a home worth about 180k and drives a 20 year old car and yet somehow she deemed to be taking the tax payer for a ride.

No, it wasn't a good concept mismanaged.

It was pure theft from hard working Australians. It was dealt with accordingly in the end.

A policy that results in zero company tax paid to the dollar isn’t a good policy regardless of how hard those worked for it. It’s middle class wellfare at its finest

Go figure this:-

Just as coal towns of the Appalachian Mountains ditched the Democrats, Labor suffered a backlash in Australian mining districts, haemorrhaging votes to minor parties such as Clive Palmer's United Australia Party and One Nation.

In sharp contrast, wealthy electorates with higher incomes swung Labor's way.

Labor enjoyed the biggest swings towards it in electorates with a highest level of franking credits — a broad proxy for share ownership.

In seats such as McNamara, Higgins and Curtin, where high-income earners make up about four in 10 or more of the voters, the Coalition suffered huge swings against it and Labor made big inroads.

https://www.abc.net.au/news/2019-05-24/scott-morrisons-trump-like-election-victory/11145406

It has nothing to no with company tax. The policy is about thieving from people.