Labour's Proposed Removal of Franking Credits for SMSF (Essay Sample)

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.