Date posted: 22/03/2018 5 min read

Labor’s moment of frankness a tax time client conversation starter

Labor’s proposed changes to franking credits will see Chartered Accountants fielding plenty of client questions

In brief

  • Our tax system continues to be reshaped in piecemeal fashion
  • Labor’s latest announcement on excess franking credits continues the trend away from grand tax reform
  • CAs will undoubtedly face a raft of client questions around this issue when tax time rolls around

Labor’s latest tax policy of denying individuals and superannuation funds refunds for excess franking credits continues the trend of targeting features of the tax system which, from a political perspective, benefit a small segment of the community.

Once again, we’ve seen a major political party trawling through tax data, identifying a particular tax break, and crafting an announcement assuring Australians that ‘someone else’ is bearing all the pain.

Both sides of politics play this game. 

Bit by bit, our tax system is changing without any attempt at a grand tax reform bargain with the community to create a sustainable tax system.

If politicians keep targeting those they perceive to be small, politically inconsequential segments of the taxpayer population – let’s call them foreigners, landlords, beneficiaries of discretionary trusts, tax agents, SMSF trustees and self-funded retirees – in a way which vilifies them as the undeserving rich, then I fear we’re heading for trouble in terms of societal cohesiveness. 

Whilst I admire Labor for putting its tax cards on the table, it shouldn’t come as a surprise that savvy CAs will start thinking about the implications for their clients should Labor win office. 

Personally, I reckon Australians are more knowledgeable about dividend imputation than politicians give them credit for. Not surprising really, given the whole population had been encouraged to become shareholders in privatised government enterprises. 

Personally, I reckon Australians are more knowledgeable about dividend imputation than politicians give them credit for. Not surprising really, given the whole population had been encouraged to become shareholders in privatised government enterprises. 

How will taxpayers react to all these proposed policy changes? Particularly when they piece together the various components of the major parties’ election tax policies? They should be talking to a Chartered Accountant.

Come Tax Time 2018, Chartered Accountants in public practice have an opportunity to model Labor’s tax policies in discussions with clients. 

Have your tax time responses ready

Michael Croker offers answers to client FAQs around Labor’s proposed changes to excess franking credits.

Click here to discover the answers to your clients’ tax time questions.

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