Question 1. I’ve seen a lot of debate about Labor’s proposed change to franking refunds and suggestions SMSFs should close their fund and transfer to an industry or corporate fund. Isn’t this just jumping from the frying pan to pot, as there will be significant fees to be paid to that fund more or less offsetting any franking credit loss? This is without considering the loss of control in decision making etc.
Answer (Paul Rickard). Most industry super funds, if not all, are net taxpayers. If you transfer your super monies and they use your funds to invest in a similar mix of assets including shares paying fully franked dividends, then their tax bill should reduce.
How they will apportion this benefit is not clear. I have seen no statement that says that they will pass on the tax benefit (lower overall tax cost) to the superannuant who transferred the funds (remember: this a person in pension phase who is not paying any tax).