Labor Proposed Super Change

Regarding the labor proposed super change, you answered a question as follows: Answer (by Paul Rickard): I can’t quite see why some commentators would recommend this strategy. Industry super funds won’t be in a position to receive cash refunds – so I guess this is more about an option to consider if you don’t want to manage your own SMSF.

I am not a super expert, but my fund (Australian Super) says they paid $1.4 billion in tax in 2017 (google Australian Super’s tax transparency report). My interpretation is that they could therefore accommodate a lot of new members – being current SMSF who will lose imputation refunds under Labor’s proposal and still remain a net tax payable fund.

A: Yes, they are a material tax payer, and their overall tax bill would be reduced if the funds you transferred were invested by them in franked shares.

The question I have is whether pension phase members will receive the benefit of these “additional” franking credits, given that the “exempt pension income” will remain exempt. There is no change to this treatment.

It is an “allocation issue” – only Australian Super can answer how they will apportion these benefits.

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