Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 306

Cuffelinks Firstlinks Edition 306

Welcome to the Firstlinks Newsletter Edition 306
Graham Hand

Graham Hand


We start our final election coverage with a reprise of Mark Ellem's article explaining the differences in investing and superannuation policies of the two major parties. Then we move on to fresh insights into Labor's proposals:

Colin Lewis explains why the extra contributions tax will impact more people than is commonly understood. Do you know how to calculate the cost?

Tony Dillon says members in pension phase should not assume the trustees of large funds will refund excess franking credits, and he quantifies the impact of the policy on capital gains tax.

Rodney Brown believes the loss of franking credit refunds may increase corporate tax evasion.

* Finally, we bring together seven strategies to manage the impact of the loss of franking credits.

(There are no new Coalition superannuation policies proposed in the election campaign).

Regardless of whether you are for or against the basic principle of Labor's franking policy, it's a strange outcome when wealthier people are not affected. Trustees with large, diversified SMSF portfolios where the amount in accumulation will always exceed the pension tranche can use the credits to pay tax. I also have a friend who is a tenured university academic with healthy retirement savings held by Unisuper. Their website says: "Based on our current understanding, we expect to continue to use franking credits to offset our income tax liability." 

These people, including myself, are unlikely to be adversely affected, yet Labor's motivation is 'fairness' and a move against 'the top end of town'. Meanwhile, a Centrelink pensioner who established an SMSF in the last year loses the franking refund. It's likely the policy will not survive in its current form in the face of Senate opposition. Expect a minimum allowed refund of say $5,000 to satisfy the cross-benchers, which will dent the number at the top of this list.  

 


When Cuffelinks surveyed its readers on franking credits, over half the 2,000 respondents said they would change investments or super structure if Labor's policy is adopted.

Implementation of these policies has major consequences for the budget as the revenues finance new spending on cancer treatments, child care, dental care and infrastructure. By 2030, franking credit refunds alone are worth $7 billion a year.

If it's correct that industry funds will not be affected, their power will multiply across all sectors. For example, within five years, AustralianSuper expects its funds under management to double to $300 billion, and it will bring more management in-house to reduce its costs.

Moving right along ...

If you're tired of the election coverage (and yes, franking credits), let's check some research on ways to drive better investment outcomes.

Jack Gray and Steven Hall describe 10 'rules of thumb' often used by professionals to help make decisions during uncertain times.

Shane Shepherd explores with David Laibson how investors make irrational decisions, and changing their environment can be more effective than changing their behaviour.

Michael Collins looks at the ethical issues of Artificial Intelligence, or AI. We're only just starting to appreciate the consequences while AI is off and running. We're all being watched.

This week's White Paper below is a review of global ETFs from BetaShares, showing good growth while 'mutual funds' face outflows, and the rising popularity of fixed income ETFs. In Australia, the sector is close to $50 billion, a doubling in only two-and-a-half years.

The 'Additional features' section below carries a wide range of reports on hybrids, ETFs and LICs.

Congratulations to Sydney-based Andy Kuper of Leapfrog Investments, who recently closed the largest ever private equity fund by a dedicated impact fund manager. The $1 billion raising will invest in healthcare and financial services to reach 230 million people in emerging markets.

Graham Hand, Managing Editor

 

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

 

  •   17 May 2019
  •      
  •   

 

Leave a Comment:

banner

Most viewed in recent weeks

2 billion reasons to fix retirement income

A proposal to address Australia's 'stranded balances' in retirement by requiring super funds to transition members to pension phase at 65, boosting retirement income and reframing super as a source of income.

The ultimate superannuation EOFY checklist 2026

Here is a checklist of 28 important issues you should address before June 30 to ensure your SMSF or other super fund is in order and that you are making the most of the strategies available.

Noel Whittaker’s take on the budget

Marketed as a fix for inequality and housing affordability, the latest budget instead delivers a tangle of tax changes that leave everyday Australians worse off.

Two months into retirement

A retirement researcher's take on retirement and her focus on each of her six resource buckets to stay engaged during the transition and beyond.

Welcome to Firstlinks Edition 662 with weekend update

The debate over the budget is increasingly shaped by frustration and perceptions of unfairness, rather than clear-eyed assessment of policy outcomes.

Australia has no death duties. Technically.

Australia may not levy formal death duties, but a growing web of tax measures is quietly shaping what wealth passes between generations. Now, the 2026 budget adds another layer.

Latest Updates

Investing

Markets without a margin for error

From US fiscal pressure to China’s shifting growth model and Australia’s structural constraints, markets are yet to reflect a less forgiving global investment landscape.

Investment strategies

The investment mistake killing your returns

Retail investors face an increasingly complex product environment, but simplicity may be the most overlooked advantage in building a portfolio you can actually live with.

The ticking clock on oil reserves

A sustained disruption through the Strait of Hormuz is forcing a rapid drawdown of global inventories. Without a resolution, the arithmetic points to a supply shock by early August and a sharp surge in the oil price.

Infrastructure

Managing the impact of the Middle East conflict on listed infrastructure

The outbreak of conflict in the Middle East in February 2026 marks an historic shock for oil and gas markets, with major implications for inflation, interest rates and ultimately for listed infrastructure companies.

Economy

Rent inflation and the missing policy

The government plans to remove negative gearing to help renters buy homes. For those who remain renters, the wrong levers are being pulled to try and increase rental unit supply.

Investment strategies

The Risk-Wealth Paradox: Why more money means you should take less risk

As wealth grows, so does the assumption that risk should too. But in reality, the opposite may be true: once you understand how the value of money changes over time, the case for taking less risk becomes far more compelling.

SMSF strategies

SMSF estate planning: Eight things to consider

As super balances grow, SMSFs are becoming central to retirement outcomes. Without proper planning for “Armageddon” scenarios, even well-structured funds can unravel when it matters most.

Sponsors

Alliances

© 2026 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.