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

Indexation implications – key changes to 2026/27 super thresholds

Stay on top of the latest changes to superannuation rates and thresholds for 2026, including increases to transfer balance cap, concessional contributions cap, and non-concessional contributions cap.

Has Australia wasted the last 30 years?

The 20 years after Peter Costello left Treasury have been deemed wasted...by Peter Costello. The missed opportunities for Australia began long before.  

The refinery problem: A different kind of energy crisis in 2026

The Strait of Hormuz closure due to US-Iran conflict severely disrupted global energy supply chains. While various emergency measures mitigated the crude impact, the refined product market faces unprecedented stress.

3 ways to defuse intergenerational anger

With the upcoming budget increasingly likely to include bold proposals to alter the tax code I’ve outlined three incremental steps with fewer unintended consequences.

Navigating the next stage of life in retirement

Retirement planning is more than just saving enough money. Long-term care needs, housing choices, and social networks are just as critical for a happy and enjoyable life.

The missing 30%: how LIC returns are understated, and why it matters

The perceived underperformance of LICs compared to ETFs is due to existing comparison data excluding crucial information, highlighting the need for proper assessment and transparent reporting.

Latest Updates

Superannuation

Do super funds need a massive wake up call?

UK retirement expert, Guy Opperman, believes super funds are failing at supporting members in deaccumulation. Here is what Australia should do about it. 

Retirement

Sequencing risk resurfaces for retirees

A retirement strategy must consider how both the timing of cash flows and the sequence of returns impact the final dollar outcome from which a retirement is funded.

SMSF strategies

Meg on SMSFs: Payday super – why should SMSF members even care?

Not filing your SMSF annual return on time can mean missed contributions under the new Payday super regulation. 

Strategy

There will be no permanent underclass

Worries about AI causing mass job loss are misguided. Far from creating a permanent underclass, Like other technological innovations AI will improve living standards around the world.

Taxation

Reforming the taxation of wealth and wealth transfers

As the budget approaches debate continues about the need and method for addressing wealth inequality. Could reinstating wealth transfer taxes be the answer?

Investment strategies

The biggest oil shock in history. Why isn't the price higher?

While increases in oil prices are dominating media coverage of the turmoil in the Middle-East it is worth exploring why prices haven't gone up more. 

Financial planning

Structured giving's new moment

A big year for philanthropy has seen multiple tax changes impact the approach donors are taking. For those with the intention to give generously there is a third structure available in the structured giving landscape.

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.