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Retirees bitter over Labor?s franking proposal

Finance Markets / Market Trends

Australia

Mar 21 2018

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Seventy-one year old grandfather George Citer stands to lose a sizable chunk of his disposable income, under Labor’s plan to slash franking credits. 

The retired small business owner and his wife Emmy, 69 have a self-managed super fund, along with a parcel of Australian shares outside the fund, providing them with an income of $37,000. Last year they received a $10,000 refund on their franked shares, which would be lost under the changes. 

While the changes would remove any incentive to invest in shares that were 100 per cent franked, experts say the upside is that the policy should encourage investors to look beyond the 10 biggest stocks. 

A CommSec report suggests that the trend away from the big banks had already started, with the value of trades placed by SMSFs in S&P/ASX ASX20 companies falling from 40 per cent to 34 per cent over six months. 

The banking sector saw the most prominent decline at 15 per cent, which CommSec blamed on negative media coverage, along with the threat of reduced revenue and dividends from a slowing housing market.

The report showed the biggest increases in trade volumes by self-managed funds were in milk stocks, such as A2 Milk and Bubs Australia. 
Small resources stocks were also popular.

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