I watched Bill Short-on and his intention to remove franking credits, IF he becomes the Prime Minister.
He does not understand that he will hurt as many aspirational ALP supporters as well, if he does this.
The franking credit system was a Keating policy to ensure that people paid the correct amount of tax.
Under the system, Franking credits are available ONLY to Individuals and NOT Corporations.
When a company determines its Taxable income, it pays tax at the rate of 30%. It is the ‘After Tax Profit’ that is then used to pay a dividend to its shareholders. This system is good because the Tax Office gets ALL of the tax up front.
Short-on facts Shorten knows this.
When an individual taxpayer receives the dividend payment, it includes a statement as to the amount of tax that HAS BEEN PAID in proportion to the dividend amount. For a tax payer to recover the tax paid (franking credit), the taxpayer HAS to lodge an income tax return.
If that person is say a pensioner, or a person on low income, they submit a tax return showing their income which will include both the dividend amount AND the franking credit amount. If the taxable income is below the amount required to pay any tax, then the tax office will refund the amount of tax already paid, which is; the franking credit.
Many pensioners of my acquaintance do this.
For Short-on to remove this system, will in effect make pensioners and other low-income people pay tax.
Is that fair. NO. Keating established this, and it is FAIR. Short-on is a FOOL.