Proposal to remove refundable franking credits can adversely impact LIC investors
Skip to main content
Your browser is not up to date. We encourage you to change or update your browser to ensure the best possible experience on our site.
Investing - what matters

Proposal to remove refundable franking credits can adversely impact LIC investors

Proposal to remove the refund of tax paid on franking credits would result in an uneven playing field between LIC’s and Unit Trust Structures. Whatever the investor preference, all things being equal, the impact for an investor from a tax perspective should be neutral.

Like many shareholders of listed investment companies (LICs), the Directors of Platinum Capital Limited (PMC) and Platinum Asia Investments Limited (PAI) as well as Platinum Asset Management, the Investment Manager of PMC and PAI, have been closely following the debate on the Australian Labor Party’s proposal to remove the use of refundable franking credits.

Platinum is concerned that the proposal, if implemented in its current form, would result in unfair outcomes disadvantaging investors in LICs vis-à-vis investors in unit trusts, particularly those LIC shareholders who are members of self-managed superannuation funds in retirement phase or self-funded retirees.

As such, with the support of the Directors of PMC and PAI, Platinum made a written submission to the House of Representatives Standing Committee on Economics in October 2018, expressing these concerns and urging policymakers to either reject the proposal or, alternatively, exempt LICs from the proposed franking credit rule.

The Committee’s Inquiry into the Implications of Removing Refundable Franking Credits is ongoing. Investors who feel strongly about the issue can attend public hearings to voice their objections or make written submissions to the Committee Secretary. Details are available on the Parliament’s website at https://www.aph.gov.au/Parliamentary_Business/Committees/House/Economics/FrankingCredits.

Disclaimer DISCLAIMER: The above information is commentary only (i.e. our general thoughts). It is not intended to be, nor should it be construed as, investment advice. To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information. Before making any investment decision you need to consider (with your financial adviser) your particular investment needs, objectives and circumstances.
Author

From the journal

View all
View all