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Cuffelinks Newsletter Edition 295

  •   1 March 2019
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After months of debate on franking credits in our articles and comments, it's time to collect some data. This week we have a six question survey on your attitudes to Labor's proposal, which should take two minutes to complete.   

Even if Shadow Treasurer Chris Bowen fully understands the impact of the proposed changes to imputation tax, how many of his Labor colleagues expected such an arcane subject to become a major political battleground? They must be asking if the fight is worth it. Wealthier people with large SMSFs will not be affected because they have taxable income from their accumulation assets, while many retirees with smaller, pension-only SMSFs will lose the franking refund. Is that true to Labor priorities?   

But neither side of politics is covered in glory on this. The Liberals led by Tim Wilson are using a parliamentary committee process to agitate against the refund policy, even requiring people who wanted to attend to register against the so-called 'retirement tax'. 

 

 


Wilson's Liberal colleague, Speaker of the House, Tony Smith, said Wilson's actions may be:

" ... seen to have caused damage to the committee's reputation and damage to the house committee more generally."

Over the months to the election, we need to see through the politics and into the principles, and watch for parties or media outlets turning more people off superannuation, such as on this poster.

There is a common perception that industry and retail super funds will retain franking credit refunds due to the amount of tax paid in a pooled structure, but this is not correct. Anyone contemplating switching should check which structures should retain refunds. And back on the parliamentary committee, a reader attended and was furious afterwards ... but not for the reason you might think. 

Jon Kalkman weighs into the debate by pointing out that franking credits form part of an individual's taxable income. Does Labor's policy change this basic principle?

Moving right along ...

Michael Collins believes we underappreciate the technical achievement of cloud computing, and forecasts its usage will double in the next few years.  

Since macro forecasting is not really our game here at Cuffelinks, we enjoyed Nick Griffin's argument that a company's S-curve of market traction will always beat the macro impacts.

Asset allocation techniques struggle to allow for multiple objectives, and Richard Rauch gives us a taste of his research into allowing for contrasting goals.

Most Australian investors have no money allocated to global high yield bonds, and Vivek Bommimakes the case for a diversifying investment with some unexpected characteristics. 

Professor Pamela Hanrahan provided significant parts of the background research that Kenneth Hayne's Commission relied on, so it's fascinating to hear her views on the Final Report.

This week's White Paper from Colonial First State is a more detailed technical piece analysing franking credits, and don't forget you can raise any other issues in Have Your Say

Graham Hand, Managing Editor

 

For a PDF version of this week’s newsletter articles, click here.

 


 

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