Don’t Mess with a Retiree and Franking Credits



Nick Bruining 29 July 2018

One-hundred plus silver-haired devils are something you don’t mess with.  I was lucky enough to address the Mandurah chapter of the Association of Independent Retirees this week, and left the meeting with no doubt our politicians face a torrid time in the lead-up to the next election.

With a name like independent retirees, you might expect the car park to resemble an Alf Barbagallo showroom – BMWs jostling to squeeze out the Mercs and the odd Roll-Royce pinching two car bays, because they can.  But there were no Rollers to be seen.

We had a gathering of people who got to become independent retirees because they’re careful with their money.  They were driving Yaris, Getz and Toyota Prado, and getting two bucks out of them for the raffle was like asking them to part with their first-born child.

They’re thrifty, smart and their message was loud and clear.  They’ve worked hard all their lives and lived through some tough times.  Most in the room had lived through periods where interest rates topped 17 per cent, unemployment exceeded 10 per cent and their early years were peppered with mates who were shipped off to Vietnam, never to return the same.  They’ve saved money, lived frugally and paid taxes.  They reckon they’ve made a reasonable contribution towards the Australia we all enjoy today.

So when a politician of any persuasion suggests they might take something away, watch out.  We’re talking Franking Credits or, more importantly, the refund of them.  Months after Opposition Leader Bill Shorten announced modification to ALP policy that fundamentally stops the refund of unused franking credits for many, they’re not buying it.

And to recap what’s proposed for some, here’s how it works.

Let’s say you earned $1000 from bank interest this year.  $1000 goes into your tax returns and, if you earn enought to pay tax, you pay the tax.

Let’s say instead of putting money in the bank, you own shares in BHP.  Your share of the BHP profits this year total the same $1000 but instead of you pocketing the entire $1000, BHP sends $300 of tax to Canberra and you get a payment for $700.  The good news is that if you don’t pay tax, you fill in a form and you get the $300 back from the ATO

It’s called a franking or imputation credit refund.  Under the proposed ALP changes, Canberra will keep the $300 from some.

We’re not talking about cheques for hundred of thousands.   In many cases, the refund just covers the council rates or boosts the self-managed super fund’s returns to cover the withdrawals.

This is a mob that’s starting to get organised and they worked out long ago that politics is a game of numbers.

Watch this space, the AIR mob are gathering.  Who knows, reminiscent of truckies descending on the streets of Canberra, swarms of white Yaris and Getz could be on their way.



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