Alan Parsons Tea Gardens, opinion of Franking Credits

Opinion

 

Dear News Of The Area,

BILL Shorten has proposed to remove refunds for ‘unused’ or ‘excess’ franking credits.

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Instead of paying a 100% dividend directly to shareholders, Australian and New Zealand Companies pay a 30% tax to the Government. No taxes are paid on dividends in Singapore.

Other investments, such as fixed interest, pay 100% of dividends directly to the taxpayer.

In order to avoid a double taxation on Company dividends, the 30% is passed on to the shareholder as a franking credit for tax paid.

At tax time, the total of the shareholders franking credits is added to their taxable income, so the shareholder pays tax on all their franking credits at the shareholder’s marginal tax rate plus medicare levy.

The proposal is an additional tax on lower to middle income investors, it will not affect those in higher tax brackets.

It is difficult to understand how politicians, such as Bill Shorten and Chris Bowen, plus journalists, do not comprehend, or avoid the fact that shareholders pay tax at their marginal rate on their entire franking credits.

Alan Parsons
Tea Gardens

2 thoughts on “Alan Parsons Tea Gardens, opinion of Franking Credits

  1. Well said Alan couldn’t agree more and because of investments and by everyday people it actually enables people in low to middle tax bracket to retire without the burden on relying on government pensions.

  2. I was wondering how many of us are actually affected by a future Labor Government making the tax system fairer by closing down a concession that gives cash refunds for excess dividend imputation credits. The Cash Concession refund was a Howard/Costello initiative. In my opinion only to buy votes and never in all Australians best interest, the country must have other priorities now. Maybe some research is required before scare mongering before the upcoming election. Dave K. Tea Gardens.

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