Life Begins At » Labour’s plan to scrap refundable franking credits
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Labour’s plan to scrap refundable franking credits

Does this affect YOU?

Kairos Property Group gives their insight into the looming changes and why investing in House and Land Packages make perfect sense.

Are you a retiree or shareholder who relies on the cashflow from your shares or superfund? Impending Labor policy changes proposed will remove the ability to convert share portfolio franking credits into cash and it is not just the wealthy or those with SMSF that will be impacted.

Everyday shareholders and retirees, like you, your mum or dad, son or daughter, may be affected. With the changes tipped to affect close to 875,000 retirees and ordinary shareholders, now is the time to reassess your investment portfolio and look at diversification.

What is a dividend imputation/franking credit?
When a company pays a dividend to its shareholders, it has the option of also providing a franking credit that recognises the tax the company has already paid to the ATO on its income. The franking credits can then be used by the shareholders to offset their tax obligation. Where a shareholder’s offset is higher than their tax bill they receive a tax refund from the Australian Tax Office.

This prevents double taxation – that is, the taxation of profits when earned by the company, and again when the shareholder receives their dividend.
The ability to receive a tax refund is not a ‘tax concession’.

What do the changes ACTUALLY mean?
Labor’s proposal undermines the dividend imputation system. By disallowing a tax refund, it does not allow the full value of the tax paid by a company to be passed on to low and middle-income retirees and other individuals on lower tax rates.

If you are on a low-income or have a small self-managed super fund, you will no longer get a refund for tax already paid on your shares. This means less money in the pockets of shareholders, retirees, low-income earners and pensioners, both now and in the future.

Labor’s back flip on refunding tax credits is unfair and is a disincentive for individuals to invest in Australian shares and manage their own retirement savings.

  • More than half a million Australians are on taxable incomes of less than $18,200.
  • Just over 40 per cent of individuals impacted are 65 years or older.
  • 85 per cent of the individuals impacted are on taxable incomes of less than $37,000
  • 96 per cent of the individuals impacted on taxable incomes below $87,000.
  • Around 40 per cent of all SMSF member accounts will lose their refunds.

To say this backflip is unfair is an understatement. It is un-Australian to try and pit Australians against Australian’s as Labor is doing. This is a brutal and unfair blow for low-income earners, retirees and pensioners. Tax refunds from share dividends are relied on by many to help pay their bills. Now is the time to start looking at ways to protect your lifestyle.

A way to lessen the impact on your portfolio is to convert some of your shares into property. New house and land packages can offer several benefits, especially when located in areas of high growth supported by local infrastructure and designed around creating a community lifestyle.

Top 4 reasons House and Land Packages make great investments!

  1. Minimal maintenance
  2. Tax deduct-ability and depreciation
  3. New homes attract quality tenants
  4. Up to 3 years rental guarantee in some developments

 

It is all brand new! Purchasing an existing or older property can come with hidden headaches – repairs and maintenance. With new house and land packages you are covered by the strict guidelines and 6 year builders warranty meaning you have less to worry about!

Kairos Property Group is more than just a company wanting to ‘sell you’ property. We take property investment seriously and have over 100 years of combined experience to back it up. We are passionate about offering everyone the opportunity to own and invest in property. There is no substitute for knowledge and research and we have both available to save you time and help you make the right decision.
Where, what and when to buy are key fundamentals of investing in property, along with how to structure the purchase. Infrastructure investment, population growth, economy and employment, supply and demand, amenities and transport are all key indicators to consider when determining potential rental yields and capital growth.
Legislation changes, impacts on investments and a genuine desire to find the right fit for our clients means that we are willing ‘to be frank’ and upfront about helping you create your lifestyle.

Contact Details:
Alan J Marshall, CEO – Kairos Group
M: 0418 910 100
E: alan@kairosgroup.com.au

www.kairosgroup.com.au

About the author

Life Begins At Editor

Life Begins At Magazine is the ultimate lifestyle publication for those who are retired, semi-retired or approaching retirement. But most importantly, those who believe that life really does begin at 50! Life Begins At has loads of features from celebrity interviews, domestic and international travel, home improvements and gardening, health and well-being, as well as financial tips and advice. The magazine is designed to meet the needs of a whole new generation of informed, healthy and active retirees.

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