Labour's Proposed Removal of Franking Credits for SMSF (Essay Sample)
Please make an essay about Labour's Proposed Removal of Franking Credits for SMSF
source..Labour's proposed removal of franking credits for SMSF
Intro
Australia is amongst the few countries that still maintain a franking system-and to some extent franking cash rebates- despite the numerous flaws it contains. In that regard, the Labor Party decided to put a spotlight on the franking credits through its policy proposal. Such a proposal seems harsh to the SMSF trustees who might be receiving franking credits.
What is a franking credit?
A franking credit is a tax credit linked to shareholders' paid dividends. Franking credits usually offsets the income tax that a company already pays. The main intention for this credits is to avoid double taxation - as a shareholder pays an individual tax rate on profits.
Background of franking credits
The idea of franking credits came into force in 1987 as a way to address the double taxation on dividend issue. In that regard, Australian investors were allowed to claim a certain amount of credit tax share that an Australian company pays for its corporate earnings, and use the claimed credit to offset their tax bill.
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