Boofta, I think you would be wise to look at the structure of big funds, and then you will understand where you have it wrong. If you are in , or approaching pension phase, proper understanding really important. Labor is not eliminating franking credits, they are eliminating refunds where the franking credits are in excess of the tax paid. This obviously is of importance to someone in a low, or no tax situation, ie smsf's So, the pooled fund contains members who are a mixture of accumulation and pension phase. The fund pays contribution tax and earnings tax on the accumulation phase members, but it offsets this tax of the fund using the franking credits of ALL the members. It then credits back to the pension phase members, the franking credits that were used to offset the tax of the whole fund. I could be talking about any big fund, retail or industry by the way. Industry funds do have an advantage however in this environment. They tend to have a higher proportion of members in accumulation phase, as well as higher proportions of investment in unlisted property and infrastructure. As I have said many times, this sanctuary from the franking credits changes, makes the projections on revenue gains from this policy, a nonsense. However, I will be very surprised if it doesn't reverse the tendency towards smsf's in pension phase. And that may well be a large part of the strategy.
As far as sleeping tight, I've pretty much got my mitigation strategies sorted , but I'll hold off implementing them until the changes look more certain.
And Hi Chrisman, I agree. I'm still not sure how the franking credit swaps occur within the funds on the direct and diy options, and on some brief chats with one large fund, I'm not sure they are either. I may end up selling all my franking credit shares, and parking them in the lowest cost aussie share fund I can find while waiting for the dust to settle. Don't be surprised if all the funds start coming up for lots more options attractive to pension phase smsf refugees.
