bigdog
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Promises by Billy
Dividend franking credits
- Thread starter Joel1st
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Promises by Billy
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It is just giving taxpayer funded advantage to union run funds, which in itself isn't a bad thing, but it is when it creates an unlevel playing field with public money.
Add to that, taking the franking credits off the stay at home mum, yet giving them to people who qualify for welfare.
FFS where the hell are they taking society, they say middle class welfare is bad, well they are making welfare that attractive who the hell would want to be middle class?
My rant for the month, unfortunately it is early in the month, so there is a possibility of another.
tinhat
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The problem with this country is that there are too many old people!
PZ99
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That problem is only going to get much worse in the future.
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Given time, you will understand.
bigdog
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Apart from screwing retirees for franking credits, these folk are in the trough for bigger things and spending our money!
Pick which one has been seen at Macdonald's!
Pick which one has been seen at Macdonald's!
Bill M
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The problem in this country is the welfare mentality. It really gets me when I see unemployed 18 to 25 year olds sitting around in parks drinking and talking about their dole collections. For Gods sake, get off your friggin ar$es and try to get a job and do something for yourselves. If only you spent as much time knocking on doors as you do hanging around in the park you might just strike it lucky.
It was quoted on TV the other night that 50% of all Australians get some sort of Government payments. My God that is terrible.
Why is it "us bad old people" can come out of the woodwork at the drop of the hat and work in jobs we have never done before? How is that? It's because we never give up and we are not afraid of hard work. Right now I am making a few dollars for non descript, non qualified work because I pushed myself to be proactive. Honestly I am just sick of hearing that young people can't get a job. There is plenty out there if you try, saw an older couple in their 70's the other day going out cutting lawns for a few $$. Says it all, just too easy to say the world is against me and spend all day chasing free money from Centerlink.... Now I got something off my chest too.
Bill M
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I guess what I am trying to say is that I am against the theft of franking credits from older folk who have saved and invested all their life to give it to those who will not get of their ar$es for free. Rant Over!
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Agreed although I’m a strong supporter of the concept of welfare for those who, due to whatever unfortunate circumstances, genuinely need it.
There’s a big difference between “tried but failed” versus “can’t be bothered to try”.
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I didn't think that there was "free welfare" these days for able bodied people.
The spiel from the government is that people have to be actively looking for work, studying or doing volunteer work to qualify for the dole.
That sounds fine in theory, but how well it is policed is another matter, and what resources are required to adequately police it ?
PZ99
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Agreed. But only one thing.... some people cutting lawns and doing other stuff are earning cash money and still claiming full welfare. That's the rub
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Silly Billy said he is getting rid of work for the dole and the welfare card, apparently it makes it all too hard, for those on welfare.
Bill M
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I walk a lot for exercise so I get about a bit. It is always the same young people hanging around so they are repeat offenders. On my walks I have never ever seen a work for the dole crew, never. Not cleaning graffiti, not cleaning trains and certainly not pulling weeds in parks so I don't think the work for the dole happens anymore but I would love to be corrected. If it does go on I would like to know where and what they do and how well it is enforced, but I doubt it happens.
Bill M
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I saw on TV where they have trialled it. They interview a recipient and she said "how dare they tell me how to spend my money". Yeah right, talk about entitlement. How about this, you can go and earn your own money and then you can spend it on whatever you like. They did a poll on this and 56% of respondents said they agree with welfare card and 44% disagreed. It seems to me logical that welfare recipients should not be able to use tax payers money on alcohol and cigarettes, but some people are against this, why?Silly Billy said he is getting rid of work for the dole and the welfare card, apparently it makes it all too hard, for those on welfare.
bigdog
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https://www.afr.com/business/bankin...will-dodge-labor-franking-hit-20190204-h1au8z
Bell Potter says high-yield switch will dodge Labor franking hit
By Jonathan Shapiro
Feb 4, 2019 — 11.00pm
Labor's proposed policy to stop paying cash refunds for surplus franking credits to investors with no income will drive up the cost of capital for banks and force investors into high-yield bonds that could significantly reduce the potential tax saving.
That is the view of research analysts at Bell Potter who have told clients that by switching out of bank hybrid securities to a listed high-yield corporate bond fund that does not benefit from franking, investors who will lose thousands of dollars of refunds under the policy can actually maintain the same income.
Bell Potter's hybrid analyst, Damien Williamson, showed clients an example of how investors could potentially maintain the same cash income after tax by shifting half of a $600,000 investment in Westpac's Capital Notes, which pay a margin of 5.25 per cent, into Neuberger Berman's listed global high-yield bond fund, which also pays a margin of 5.25 per cent.
A $600,000 investment in the Westpac hybrid would generate $22,050 in cash and $9450 in franking credits. A self-managed superannuation fund would then pay 15 per cent tax (or $4725), which would offset half the franking credits, resulting in a $4725 surplus rebate and an after-tax income of $26,775.
Under Labor's proposal the rebate would fall away, leaving a lower $22,050 of cash income after tax for the SMSF.
Portfolio shift
But Bell Potter said that if that investor shifted half its portfolio, or $300,000, into the high-yield bond fund with the same 5.25 per cent yield, the gross income would remain the same at $31,500. This would comprise $11,025 of cash and $4725 in franking credits from the Westpac hybrid, and $15,750 of cash interest from the high-yield fund.
The franking credit entirely would offset the $4725 of tax payable to ensure a zero tax bill.
But the cash income of $26,775, made up of $11,025 from the hybrid and $15,750 from the bond fund, would allow the investor to maintain the same after-tax income than if the policy was not changed.
The analysts therefore argued that as investors shifted into other investments the potential savings for the government may be less than assumed while the reduced attractiveness of hybrids to some investors would increase the margin banks would have to pay for this funding.
"Reallocating investments away from the capital structure of banks to an offshore high-yield income trust is likely to increase bank funding/capital costs," Mr Williamson said.
"This investment strategy also brings into question the quantum of revenue this policy will generate."
Thousands affected
Fixed-income research firm BondAdviser estimated the policy change would directly impact more than 1 million individuals, 200,000 SMSFs and more than 200,000 pensioners.
Morningstar's John Likos said in a note at the time that the policy will "strike hardest at the heart" of the bank Tier I hybrid market.
"These hybrid securities are often fully franked, a strong selling point for retail investors, particularly self-managed super funds, or SMSFs."
A change in the policy therefore could reduce the attractiveness of hybrids and at the time the policy was announced in March 2018, margins on hybrid securities were sold off to the point where margins increased by nearly a quarter of a percentage point.
As the opinion polls point towards a Labor victory the change appears more likely.
Labor leader Bill Shorten said the party was "not for turning" on the policy while shadow treasurer Chris Bowen told those destined to lose out because of it "are perfectly entitled to vote against us".
Bell Potter says high-yield switch will dodge Labor franking hit
By Jonathan Shapiro
Feb 4, 2019 — 11.00pm
Labor's proposed policy to stop paying cash refunds for surplus franking credits to investors with no income will drive up the cost of capital for banks and force investors into high-yield bonds that could significantly reduce the potential tax saving.
That is the view of research analysts at Bell Potter who have told clients that by switching out of bank hybrid securities to a listed high-yield corporate bond fund that does not benefit from franking, investors who will lose thousands of dollars of refunds under the policy can actually maintain the same income.
Bell Potter's hybrid analyst, Damien Williamson, showed clients an example of how investors could potentially maintain the same cash income after tax by shifting half of a $600,000 investment in Westpac's Capital Notes, which pay a margin of 5.25 per cent, into Neuberger Berman's listed global high-yield bond fund, which also pays a margin of 5.25 per cent.
A $600,000 investment in the Westpac hybrid would generate $22,050 in cash and $9450 in franking credits. A self-managed superannuation fund would then pay 15 per cent tax (or $4725), which would offset half the franking credits, resulting in a $4725 surplus rebate and an after-tax income of $26,775.
Under Labor's proposal the rebate would fall away, leaving a lower $22,050 of cash income after tax for the SMSF.
Portfolio shift
But Bell Potter said that if that investor shifted half its portfolio, or $300,000, into the high-yield bond fund with the same 5.25 per cent yield, the gross income would remain the same at $31,500. This would comprise $11,025 of cash and $4725 in franking credits from the Westpac hybrid, and $15,750 of cash interest from the high-yield fund.
The franking credit entirely would offset the $4725 of tax payable to ensure a zero tax bill.
But the cash income of $26,775, made up of $11,025 from the hybrid and $15,750 from the bond fund, would allow the investor to maintain the same after-tax income than if the policy was not changed.
The analysts therefore argued that as investors shifted into other investments the potential savings for the government may be less than assumed while the reduced attractiveness of hybrids to some investors would increase the margin banks would have to pay for this funding.
"Reallocating investments away from the capital structure of banks to an offshore high-yield income trust is likely to increase bank funding/capital costs," Mr Williamson said.
"This investment strategy also brings into question the quantum of revenue this policy will generate."
Thousands affected
Fixed-income research firm BondAdviser estimated the policy change would directly impact more than 1 million individuals, 200,000 SMSFs and more than 200,000 pensioners.
Morningstar's John Likos said in a note at the time that the policy will "strike hardest at the heart" of the bank Tier I hybrid market.
"These hybrid securities are often fully franked, a strong selling point for retail investors, particularly self-managed super funds, or SMSFs."
A change in the policy therefore could reduce the attractiveness of hybrids and at the time the policy was announced in March 2018, margins on hybrid securities were sold off to the point where margins increased by nearly a quarter of a percentage point.
As the opinion polls point towards a Labor victory the change appears more likely.
Labor leader Bill Shorten said the party was "not for turning" on the policy while shadow treasurer Chris Bowen told those destined to lose out because of it "are perfectly entitled to vote against us".
the truth is that ALL super funds will be subject to the same rules ....... the noisy issue of refund loss is to do with smsf's in pension phase that pay nil tax, and do not have any members in accumulation phase to help use the credits. It is the current trustee/member chosen structure of these smsf funds that will not allow the refund to occur
(not sayin good or bad, that is the facts).
what else ....
i have never understood a society where old white men get together over many years to create a welfare system (takes maybe 10 years of laws and rules and long lunches and committees and policies and elections) .......and then take such pride in beating up the users of that system.
my point - old white men made that welfare system ....not the blokes in the park.
Bill M
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It's not only about smsf's, it's also about the little old lady who has nothing but the state pension and a 100K in CBA shares. Currently the grossed up divi is about 9%. It goes something like 70% franked income and 30% in franking credits. She receives back at tax time all of those franking credits which gives her a $9,000 grossed up dividend, or an income of 9K. Under the Labor proposals she looses the franking credits and now will only receive $6,000. Why should the old lady take a $3,000 pay cut? What did she do in her life to deserve that? It isn't fair.
Knobby22
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The savings will be massive (billions and billions) and lead to big tax cuts which they will roll out to win the election. they also will be able to raise the pension.
No other country in the world taxes a company and then gives the tax back to the owners of the shares.
the idea was to not be double taxed.
Most of the money goes to very few people who are already extremely wealthy. Everyone always trots out the little old lady thing but most of this money goes to a few thousand people.
As a working taxpayer I have to say that I understand where Bill is coming from.
(Cowers and waits for bricks).
No other country in the world taxes a company and then gives the tax back to the owners of the shares.
the idea was to not be double taxed.
Most of the money goes to very few people who are already extremely wealthy. Everyone always trots out the little old lady thing but most of this money goes to a few thousand people.
As a working taxpayer I have to say that I understand where Bill is coming from.
(Cowers and waits for bricks).
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Well if the TRUTH is that ALL super funds will be subject to the same rules, SMSF with 50% off the members in accumulation and 50% in pension, they should be able top apply the same logic.
Source: https://www.intelligentinvestor.com.au/industry-super-funds-1887411
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The reason why industry and retail superannuation funds would not be impacted is because they are pooled funds (with hundreds of thousands of members), so any franking credits received can be applied across the whole group to offset tax. By contrast, those running a self-managed super fund in pension mode are generally not paying tax, and cannot apply the credits to others.
hey
i think u need way more in accum than 50% to make it work ..... i do not know the numbers on that (expect too many variables to get numbers) ..........this is cos there is a $25K limit on non-conc contributions ....so u need a heap of those $25K contributing members.
i was just sayin that the rules will apply equally .... but agree it will be very very difficult for smsf to compete. for the trustees to grapple with if it comes .......
i think u need way more in accum than 50% to make it work ..... i do not know the numbers on that (expect too many variables to get numbers) ..........this is cos there is a $25K limit on non-conc contributions ....so u need a heap of those $25K contributing members.
i was just sayin that the rules will apply equally .... but agree it will be very very difficult for smsf to compete. for the trustees to grapple with if it comes .......
