Labor's ‘appalling' super tax changes to hit franking credit refunds, Reliance Auditing Services' Naz Randeria declares

Sky News AU

30-05-2025

Labor's 'appalling' proposed super tax change will hit franking credits, a leading accountant has warned as the re-elected Albanese government sits in striking distance of legislating the controversial proposal.
The government is looking to double the tax rate on funds in super accounts above $3 million and also capture unrealised gains on assets.
This means Aussies pay tax on the increase in assets within their super account above this threshold – such as properties, shares or farms – despite not reaping the paper gain from it.
It also means franking credits in super fund, that are issued to avoid double taxation, will be hit by Labor's tax as it captures the increase in value of all money above the threshold in an account.
Reliance Auditing Services' managing director Naz Randeria dived into how the changes will impact franking credits during an appearance on Sky News' AM Agenda.
'Franking credits are due to the taxes paid by the companies and we avoid double taxation,' Ms Randeria told host Laura Jayes.
'So you get these credits back on your tax return and people will get those refunds.
'But the way this Division 296 tax works is once the franking credits are received, it goes towards the member balance. It is credited to the account of the member balance. So it becomes a part of the net earnings.
'Now the earnings in the member balance will include unrealised capital gains, the cash income that is received and also the franking credits.'
She tore into the proposed tax which has taken the spotlight since Labor's sweeping victory.
'It is ridiculous,' Ms Randeria said.
'This is a tax on a tax refund and it's something I've realised once I've actually sat down to do the calculations.
'It is appalling.'
Franking credits, along with the mandatory superannuation scheme, were introduced under Paul Keating's government to eliminate double taxation on company profits.
The credits were extended under the Howard government to ensure those who pay no income tax could also reap tax-backs under the scheme.
Labor attempted to end this in 2019, however, it backfired and played a significant role in former leader Bill Shorten's election loss.
The proposed super tax has stirred uproar amongst economists and investors who warn targeting unrealised gains will hurt small businesses and startups in Australia.
Wilson Asset Management's founder Geoff Wilson, who spearheaded the attack against Mr Shorten's proposed changes in 2019, warned investment will tighten under the change.
'People will move away from taking risks. They'll restructure their investments. It could be more money into the family home or their children's homes or their primary place of residence or their grandchildren's homes," Mr Wilson told SkyNews.com.au.
'More money away from risk capital and supporting corporate Australia - small and medium-sized companies in corporate Australia. It's the lifeblood of Australia.'
After Labor's sweeping election victory, the Albanese government now only needs the support of the Greens to get the super tax legislation through the Senate.
The Greens called for the threshold to be lowered to $2m, but indexed over time.