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The Labor’s plan of making the franking credits non-refundable is being criticized by the shareholders, and the policy would severely impact the one million retirees. The fund manager named Geoff Wilson has shown his criticism in Wilson Asset Management shareholder briefing. The fund manager has been trying to convince the Labor to dump or at least modify the changes related to the franking credits. According to Mr. Wilson, the policy, which the Labor is planning to act upon, would significantly impact the lives of the Australians. Some of the people have shown their criticism and have expressed their views at the hearing of House Economics Committee which is analysing the implications of the changes which have been proposed. The people who have criticized stated that it is quite objectionable that the Labor is demanding to remove the franking credit refunds which are for the Australian investors. Mr. Geoff Wilson had earlier stated that Labor has been working for the changes because, according to them, only the rich would be witnessing the negative impacts and would lead to robust savings for the government.Â

However, the people who are getting the age pension would still qualify for the refunds, and the Labor calls it as “pensioner guarantee”. The SMSF or Self Managed Super Fund Association is of the view that numerous people would witness the impacts even with pensioner guarantee. The clients of Mr. Wilson would largely be impacted by the changes which could severely impact the business. The Labor has plans to retain the tax credits, but they are of the view that the refunds need to be ended which would increase the revenues of the federal government.

As per the estimates of PBO or parliamentary budget office, in 2014-15, the refunds related to the franking credits amounted to $4.9 billion, and these were refunded to the super funds as well as individuals. They also added that the impact of the budget impact related to making the franking credits non-refundable will be smaller than the amount mentioned as there would be a need to factor in the adjustments that super funds, as well as individuals, will be making with respect to the investment strategies.

The retirees who have been impacted by the changes have stated that they would be spending down their assets so that they become eligible for government funded-age pension. However, the Labor’s decision is being backed by Industry Super Australia or ISA. The funds of ISA would be largely unaffected by the proposed changes. ISA stated, in the submission which has been made to the House Economics Committee, that the present arrangements might inappropriately incentivize the retirees who are having the lower income. They might be incentivized to go for the risky portfolios, and their portfolios might be overweight towards the dividend-paying stocks.


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