4 February 2019

More self-funded retirees are becoming aware of the implications of Labor’s proposal to remove the ability for individuals and superannuation funds to claim their full entitlement to franking credits and the Institute of Public Accountants (IPA) is questioning the unfairness of the proposed policy.

“The refunding of imputation credit policy has been in operation for close to two decades and removing it in a piecemeal way without dealing with the consequences is fraught with danger,” said IPA chief executive officer, Andrew Conway.

“Piecemeal change fails the fairness and equity test that policy makers generally strive for.

“Any policy change that has inconsistent outcomes (industry funds versus SMSFs; pension guarantee rule) will struggle to meet the fairness test. In addition, retirees with large balances in excess of $1.6M in superannuation are also less impacted than those with lower balances.

“More importantly we need to be looking at how we tax all forms of savings more consistently. A more holistic approach to taxing personal savings across all asset classes as recommended by the Henry Review would be more beneficial than changing one aspect in isolation.

“We do not support any changes in the removal of refundable franking credits unless it is associated with more holistic tax changes to the treatment of savings more broadly. A survey of our members also shows that 95 per cent of respondents do not support any change.

“The inquiry has put the spotlight on the policy proposal. The IPA was represented at the inquiry, putting forward our members’ views, along with our submission” said Mr Conway.