That won't work in all cases. If you have franked dividends from direct share investments and you are too old to make super contributions, the franking credits are lost, assuming your income is below the tax threshold.

If it is legislated as designed, I will lose my franking credits entirely. I do not qualify for the age pension because of the asset test, but my assets are insufficient to earn as much as the pension. The only option is to spend to reduce my assets so that I qualify for maybe a part pension. Then I will be able to claim the franking credits. Labor fails to recognise it is creating a new poverty trap with this appalling retiree tax.

Maybe Labor won't get elected. If they are elected, maybe this policy won't get through the Senate or at least will be drastically altered.

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This just shows the total inequity of the Labor proposal. Have your investments in a SMSF entirely in pension phase and lose all your franking credits, have them in an industryfund with plenty of other members in accumulation phase and you get to keep them. What happen to the principle of horizontal equity? Oh that's right, it got taken away by Labor as a handout to their union masters.

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Wrong Andyb, if you were not a pensioner March 2018, then you will never qualify for franking credit refunds.

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If I am poor but own some share, say Telstra, but earn less than tax free threshold, I lose my credits.
If I am poor but own some share, say Telstra, but earn modest wage say $40,000, I lose most of my credits.
If I am a wealthy high wage/salary earner, I get 100% refunded.
If I am SMSF retiree in pension phase, I lose 100% of my credits.
If I qualify as a pension after March 2018, I lose 100% of my credits.

Who could possible devise such a scheme that favours the rich?

Surely not a Labor government?

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So in an industry fund there's always someone losing out!

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Whatever happened to equality? Why should people who have chosen to hold an SMSF to save for their retirement lose their franking credits, & those who hold their super in an Industry Fund still be entitled to receive franking credits into their superannuation balance?? If this Policy comes in, it is going to cause those with an SMSF, just over the threshold or close too it, think well "may as well spend up on lots of holidays, buy a nicer house" and go on the pension. The government is not rewarding those that have worked hard, saved for their retirement, paid taxes all their working lives!! They are taking away, what we have worked hard for & entitled to. Instead of taking it away from those who possibly don't deserve to have hand outs, or are younger and quite capable of doing any sort of work. Save money by starting "work for the dole". And stop wasting so much of our money on their Political Campaign's, everyday for weeks, I have had at least 3 automated Political phone calls & mail. Ridiculous!!!

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In regard to horizontal equity, In all scenarios there is no tax refund as a result of franking credits, only the reducing of the tax liability to $0.

The franking credit scheme has been generous to all who can afford shares.

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Actually Richard that March 2018 criteria applies only to members of a SMSF. AndyB is talking about losing franking credits on his personally held shares and obtaining a partial age pension anytime in the future would enable him to claim the franking credit refunds at that point.

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That's not what horizontal equity means in my view Jane. The intention, since 2000, is that share dividends (including the franking credits) are taxed at the taxpayer's marginal rate. This sees some taxpayers pay additional tax, where their marginal rate is higher than 30%. Others receive a partial refund of tax where their marginal rate is less than 30%. Where a taxpayer's total earnings, including share dividends AND including the franking credits amounts to a total that is less than the threshold for paying tax, the marginal rate is zero and franking credits are refunded because it turns out that tax is not due.

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For clarity, I'm both AndyB and Andyb above. I'm also a fat finger typist.

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AndyB
I believe that you have summed the different scenarios correctly.
My wife and I are both self-funded retirees and earn less than the taxable threshold, including our share dividends, and are able to claim the franking credits each year up until now.
This helps us to remain self-funded and not to have to burden the government with any pension payments.
I hope that Labor has dug itself a hole with this one.

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So sell down the shares in the SMSF. The rest of us who have conventional super face a declining balance over time. Your SMSF shares are already in a tax sheltered vehicle specifically to provide for retirement but have the view that the capital can't be touched. Super of any form wasn't designed as a method of capital preservation or as legacy planning. You are wingeing about a tax refund on tax you haven't paid. You want all the retirement funding risk to be carried by someone else which just makes you selfish and self entitled. Sell your shares to fund your retirement rather than expecting company tax normally used to fund the country redirected to support you.

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Jane, equality? Surely you realise how ridiculous you sound. You want a tax refund on tax you don't pay. What a Rort. Franking credits - welfare for the self-entitled. We spend more on your Rort than on funding for public schools. Shame.

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Why did Paul Keating (Labor) introduce franking. Because being a share holder (part owner of a company), if the company pays the full tax rate of 30% on it's profits, then why should a share holder then pay tax (again) on their divided. Paul Keating referred it to "double taxation" THATS WHY FRANKING WAS INTRODUCED. By reducing the benefits of franking credits Labor will be forcing retirees into their Industry run super funds. WHY CAN"T PEOPLE SEE THIS.

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