Subject: OPPOSITION TO THE AUSTRALIAN LABOR PARTY’S FRANKING CREDIT POLICY
Monday, 11 June 2018
Dear Mr [redacted],
I recently received in my post box a brochure from you saying that you stood for a “fair go”. I was a ten year old when my grandfather told me why he was a labor man and it was because the labor party stood for a fair go for everyone. Clearly this is not the case in regard to the labor parties proposed policy on franking credits. This proposed policy will severely damage the quality of life my wife and I may expect in retirement. Apart from supporting Jo Vallentine in the Senate during the 80’s I have voted labor up until this point in time. No more.
The current franking credit rules make sure that taxpayers receiving company profits are taxed at their marginal tax rate on this income. This is a fair result under our tax system and it offends me to hear it described as a “loophole” or a “rort”.
The refunding of excess franking credits has been a long-standing feature of the Australian tax system, having been introduced with bipartisan support in 2000. This has seen people saving for retirement factor in having franking credit refunds as part of their retirement income.
Retirement planning does not happen overnight. It takes decades, and is not easily turned around. I planned and saved diligently according to the rules of the day. There is much I would have done differently had I known of Labor’s intent to change the treatment of franking credits. I am horrified by your unfair shifting of the goal posts for vulnerable older Australians who have no like capacity to shift their retirement strategy or increase their income stream in the final years of their lives.
Labor’s announced Pensioner Guarantee does nothing to protect SMSF members, like me, who are self-sufficient and are not eligible for the Aged Pension. This reduces the incentive for people to save for retirement as I did, and in fact punishes me for saving in order not to rely on the Age Pension. It also creates an unequitable two-tiered approach for SMSFs; with an SMSF becoming less competitive, tax wise, than an Industry fund. This is unfair.
My wife and I have worked hard, paid considerable tax, and played by the rules. Now, your changes will result in a considerable loss to our comfortable, yet modest retirement income. We will lose $6250 and I can’t see any practical way to replace it To see your rhetoric about these changes being aimed “at the rich” offends me greatly.
I have spoken with a Financial Planner who tells me that if we withdrew capital from our fund and purchased a more expensive home and spent some of our capital that we would qualify for a part-pension and retain our franking credits. I find this advice personally offensive to my values. Interestingly I hear of a number of people I know planning on this strategy. It seems I would be cutting off my nose to spite my face if I do not follow. Albeit at a cost to the Australian taxpayer.
I am in your electorate and voted for you at the last election. Fremantle is a safe labor seat so my changing my vote will not have any effect. However at the next Federal Election for the first time I will be assiduously numbering my Senate Ballot paper and placing the labor candidates at the end. I’ve an email distribution list of 197 people within Australia with whom I share articles of interest. I’ll be putting out on that my proposed Senate voting strategy for 2019. I already know from conversations with friends that they plan to adopt this strategy. There will be a multiplier effect in all of this.
I wish you well in the coming by-election as I know that you’ve been an assiduous local member. I will not be casting my vote in your direction.