Tony and Joe’s sleight of hand attack on retirees. Many big corporate taxpayers, like banks, pay around three quarters of their profits out in dividends and there is constant pressure from retirees for companies to payout more, especially now interest rates on bank deposits have been reduced. Most dividends (but not all) are fully franked because they come out of tax paid profits. So a superannuation fund obtains a franking credit equal to the tax paid by the company. Those franking credits are currently calculated at a tax rate of 30 cents in the dollar. When the Abbott- Hockey plan is introduced the franking credits will be calculated on the basis of 28.5 cent in the dollar. They are worth less and so the retirees and those saving to pay for retirement cop the bill because Abbott and Hockey have simply swapped a tax for a levy aiming to lower the franking credit. It is a clear attack on the older generation to benefit the up and coming generation. Those struggling retirees and those saving to retire will be horrified that not only are the older generation helping those with mortgages via lower interest rates but they are now seeing their franking credits reduced to help the younger generation. The sad thing is that neither the bulk of the media nor the ALP understood what Abbott and Hockey were doing.
Posted on: Mon, 09 Sep 2013 14:31:14 +0000
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