The false and distorted campaign regarding franking credits continues even after the election . A column by Alex Carey @carey_alexis, a "Finance Reporter" with news.com.au this week continued the false narrative of franking credits being "FREE MONEY". Anyone with the slightest knowledge of the tax system knows it is nothing of the sort, like any other tax payer it is a refund of overpaid tax on earnings.
In this case it is tax paid by a company prior to issuing dividends to its shareholders, the same as employers deducting tax from your salary prior to paying your salary, when you pay too much the ATO refunds the difference to you. In most cases where your taxable income is less than $20,000 you will normally get ALL the tax deducted from your earning refunded back to you.
Ms Carey is arguing self funded retirees in particular should be treated differently and not be eligible for this refund. She is arguing that possibly the most vulnerable members of our community with incomes less than $20,000 are not deserving of the same treatment the rest of the nation is entitled to received.
Words like loopholes and negative tax are bandied about in her article and how bank shares had risen as people bought up big on them after the election. Most of those people were those who sold out prior to the election thinking the ALP were a sure thing.
What she failed to mention the reason the "loophole" referred to in her article was introduced was as part of a compensation package aimed at self funded retirees with the introduction of the GST. She talks about the cost of franking credits but those numbers like many quoted during the campaign do not stand up to scrutiny. That aside what would the cost be to social security if the franking credit compensation not been introduced.
I unlike the well paid academia she quoted did not have to deal with clients in tears as they unlike Dr Grant of the University of Sydney, did see this as a retiree tax. An attack on their livelihood having worked and saved for their own self funded retirement under a set of known rules.
I challenge those people to live on a 30% reduction to your income and survive. See how you feel at the point of retirement to have the rules changed and your living standard dramatically reduced.
As a reported Ms Carey should stick the facts and present a balanced story or at the very least address her article as an Opinion piece.