This franking credits thing is becoming a fairly contentious issue isn't it. The half-truths and distortions around it in the press and on the campaign trails certainly isn't helping either. Although I was somewhat supportive of Labor's idea a few pages back in this thread, I've taken the time to understand what it actually does and I've come to the conclusion that it's actually not good policy.
First, the cunning rhetoric that it's a "gift", or "welfare" for the high end of town is just not right. Dividends from shares is just another income stream, just like your wage, interest from term deposits, rental income etc. At tax time, you tally it all up, work out what tax is owing and if you've paid too much or too little tax, you get a refund or tax bill accordingly. If a company that you own part of has already paid tax on it's (your) earnings and pays a franked dividend, that is taken into consideration at tax time - the company has already paid some tax on your behalf. If the dividends weren't franked, then the whole lot is declared in your assessable income and you pay your taxes or get a refund according to your personal circumstances. The point is the whole dividend including franking credits is YOUR money. It is very misleading of Labor to tell us that it is a gift as it was never "their" money - it's just taxes paid on people's behalf, no different to taxes paid by your employer that have been withheld from your salary.
Next, the idea targets the specific means of investing in Australian securities through a SMSF, with a healthy dose of "those with SMSF are all wealthy people who don't need this gift" spin to polarise voters who may not understand that those people who choose to be more hands on with their retirement savings are not necessarily rich, they just want more flexibility and control over their investments. Or they got stung by the industry and retail funds during the GFC and didn't want to trust their life savings to 25 year old economics graduates anymore. In an industry or retail fund, you have members still working and paying tax, as well as retirees drawing income from their nest egg. The fund invests its members money in a variety of ways to produce income and growth, including investing in Australian shares. The fund pays 15% tax on earnings because it has members in "accumulation" phase (still working), so when dividends from those share investments come back, the fund can claim franking credits against the overall tax liability of the fund, for the benefit of all members - including those that are retired. However, for a SMSF in which all members are retired, Labor is saying "you don't have any members paying any tax, so you shouldn't get a refund". The thing is the SMSF members are paying tax - franked dividends is earnings with tax paid on the shareholder's behalf. It was treated as income before you were retired, how does it suddenly not become income when you retire? Further, you would still get the benefits of franking credits as a retiree if you were in a industry fund, but not if you had your own SMSF - that doesn't seem fair, and you can see why some people are painting this as Shorten looking after the union aligned industry funds.
Finally (I know, I'm well past TL;DR), it targets self funded retirees (amongst others) - those that have worked hard, paid their considerable taxes over their working lives, saved and invested wisely and are now able to enjoy the fruits of their labour in retirement and not be a welfare burden by drawing a taxpayer funded government pension.
At any rate, Labor hasn't really outlined the scope or minutiae of this policy, which will be up to the Senate to decide anyway. Not much point arguing over the finer details at this stage.
I'm all for a fairer Australia and that fundamentally we are a relatively wealthy nation that can afford to provide social support to the needy. I just wish we had governments that would stop fucking it up all the time, wasting a fortune delivering inefficient and poorly conceived services with little accountability. Can they ever get past their own self-interest and make intelligent decisions for our long term prosperity? When grass roots Labor and conservative voters don't have faith in their own parties anymore and with the rise of the minors and independents, it doesn't say much for the faith we have in the way this country is being run. Expecting posts from Bull Shitten and Scummo in the fuckwits thread any time now...