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Franking credits policy “unAustralian”
The single biggest problem with policy proposals to remove refundable franking credits is that it treats people differently depending on where they’ve got their retirement savings, according to SMSF Association chair and Queensland academic, Professor Deborah Ralston.
Giving evidence before the House of Representatives Economics Committee inquiry into the Federal Opposition’s policy approach to the removal of franking credits, Ralston was asked whether the policy was being driven by industry funds with a view to undermining self-managed superannuation funds.
While stating that she did not like to see industry funds typified as “union-backed funds”, Ralston said there was no doubt that the single biggest problem with the Labor policy was that “it treats people differently depending on where they've got their retirement savings, and that's inequitable”.
“It's so un-Australian to say that people on the same income will be treated very inequitably because of where they've put it, whether it's in an SMSF, it's self-funded, or it's in an institutional fund,” Ralston said.
“Australia doesn't have policies that treat different classes of people differently. Our tax system should be horizontal, have horizontal equity and treat everybody in a neutral fashion.”
Asked whether it was unfair, Ralston agreed it was “unfair”.
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Giving (union) Industry Fund members the advantage of franking credits to enhance income and disallowing excess franking to be used by SMSF members is not just unfair and discriminatory. It is unconstitutional. If Labor wins a landslide victory and gets control of both houses and puts this conflicted abomination of superannuation legislation forward, I would like to see a High Court challenge on the basis it is unconstitutional to treat tax payers differently based on their political preference.
The relentless, advertising by industry funds over more than a decade in response to the rapid growth of SMSFs has been paid by Industry Fund member contributions and the earnings on those contributions. Clearly there are members who do not understand how their returns have been impacted. Those who do understand have already rolled their balances to SMSFs. I have never seen an industry fund statement disclose the deduction from a member's balance for contributions for their indirect payment of advertising costs nor the donations to the Labor party which pay for the advertising for Labor candidates. Where are the fee disclosure statements for these organisations? How has APRA allowed this to proliferate? Why has ASIC not shut this rort down?
I doubt FASEA forcing Industry Fund managers to enrol in a $10,000 ethics unit will stop the hidden donations to the Labor Party or the hidden indirect payments for advertising.
If there is to be true change and transparency, industry fund members should be able to opt out of donating to the Labor Party and opt out of paying for industry advertising. Make these institutions put their accounting records before the Royal Commission so we can see how much has been paid in advertising and Labor donations and how it has been paid. What were the raw fund earnings before advertising. This is a farce.
This proposed new ruling also effects people who have shares out side super and with rebates for over 65 low income etc don't have a taxable income until $ 30,000 income, but because we cant get the pension we are discriminated against , people on a pension don't pay tax yet will get a tax imputation credit. we are not a burden on the tax payers as we get no pension and no imputation credits, but pensioners who a burden on the taxpayers get the imputation credits, what is equality in this?