The House of Representatives standing committee on economics has announced an inquiry into the implications of removing refundable franking credits.
Chair of the committee Tim Wilson MP said that refundable franking credits were core to the financial security of many retirees.
“The ability for investors, including individuals and superannuation funds, to claim their full credits is an established feature of our tax system and is core to the financial security of retirees,” he said.
He said that there were legitimate concerns about the proposals to remove the cash refunds and argued that it amounted to a tax on retirees’ savings.
“The committee is examining what impacts the removal of refundable franking credits would have, particularly on retirees who have made long-term retirement saving decisions based on their ability to claim refunds on their franking credits and whether it will compromise their financial security,” said Mr Wilson.
The terms of reference for the inquiry are to inquire into and report on the use of franking credits, including an analysis of who receives refundable franking credits and the opportunities it provides.
The inquiry will also investigate how refundable franking credits support tax principals and if they were removed who would be impacted and the implications it would cause.
In March this year, Labor leader Bill Shorten announced that under a Labor government, individuals would no longer be able to claim cash refunds on excess imputation credits.
The move was widely panned by the financial service industry with SMSFA chief executive John Maroney telling InvestorDaily’s sister title Nest Egg that the proposal unfairly targeted a sector of the super system that had worked towards self-sufficiency.
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