The Labor policy to deny refunds of surplus franking credits has received significant publicity, but self funded retirees with pension accounts may still need franking credits because of another of Labors super policy announcements.
Labor intend limiting the tax free earnings on assets supporting income streams to $75,000 per annum.
Therefore, franking credits will be required to offset tax liabilities on earnings in excess of $75,000 won’t they?
This is one of the dumber ALP policies (I think it has been around for more than 4 years). I don’t expect it will ever see the light of day because:
- Administratively, it could be a nightmare. Does it include only realised earnings, or realised and unrealised earnings? Is it net of deductions and tax offsets? What happens if you have multiple super accounts?
- The $1.6m cap on how much can be transferred into the pension phase effectively achieves much the same outcome. It depends on your assumption about investment returns.