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Loss of franking credits will see SMSFs take investments offshore
Self-managed superannuation fund (SMSF) trustees plan to dump Australian shares should Labor’s franking credit proposal succeed, and it looks likely they’ll go global instead, according to SuperConcepts.
In a survey of over 600 SMSF trustees, over 72 per cent said they would change their investment strategy to compensate for the loss of franking credit income, and just under two-thirds (61.6 per cent) said they’d likely shift to international shares as an alternative to those on home soil.
SuperConcepts chief executive, Natasha Fenech, said this was a big concern for the Australian Stock Exchange (ASX), for local companies contemplating the cost of capital from overseas sources and for the future ownership of local firms if it were to be no longer viable for locals to invest.
Managed funds, term deposits, fixed interest and property were other alternative investment sources trustees named, and closing an SMSF was also a serious consideration.
“It is concerning that 14.5 per cent of respondents are thinking of closing their SMSF as a result of this policy which doesn’t apply tax policy consistently to individuals across different superannuation structures, while 1.4 per cent thought that they might withdraw their super and go to an aged pension,” said Fenech.
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TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Spire Oaktree Opportunities XI Second Close
61.07 3 y p.a(%)
2
Spire Oaktree Opportunities XI First Close USD
59.21 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.56 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
31.06 3 y p.a(%)
5
DomaCom 4/27 Crombie Avenue Bundall QLD 4217 Australia
26.81 3 y p.a(%)
Bowen is well aware of this and has stated such specifically in terms of making the Australian equity market less attractive as imputation credits are a “distortion”. So why would he advocate such destructive nonsense besides being a socialist idiot? Well because it creates another marginal advantage in the local market for industry super funds via less crowding out by other sources of equity funding.