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The industry is cranking up its opposition to a plan by some large corporations as well as economists to reform dividend imputation tax, including scrapping franking credits, in favour of reducing the rate of corporate tax.
Controversy over the long-standing plan was reignited after Federal Treasury Secretary Ken Henry mentioned it during the consultation stages of his major taxation review as a possible topic for consideration.
Earlier this month, former Prime Minister Paul Keating lashed out at the proposed changes during a keynote presentation at the Securitor dealer group conference in Darwin.
Keating, who introduced imputation tax as Federal Treasurer in 1987 to remove the double taxation of dividends in the hands of shareholders, dismissed the proposal as “self-interest by the big end of town”.
Last week the Association of Superannuation Funds of Australia (ASFA) sent a series of letters to Federal politicians on both sides of parliament campaigning for the retention of imputation tax.
ASFA chief executive Pauline Vamos said scrapping the tax would “result in $3.5 billion (in franking credits being lost) and this would have a substantial effect on our members”.
“To remove this tax would also have a detrimental impact on Australians’ retirement balances because it does make up an important part of the tax concessions in superannuation.”
This week, Melbourne-based financial planning and accountancy group Pitcher Partners Advisors will release a survey that shows 95.6 per cent of its client base is not in favour of scrapping imputation.
Pitcher Partners executive director Ray Cummings said the survey results “reveal our clients clearly see the move to scrap imputation as coming from the big end of town”.
