Thursday, 3 January 2019

Thinking Of Solutions - Labor's Proposed Stop To Franking Credit Refunds

Daughters. Folks.

Legislation changes. It always has and it always will. Get over it I say. It is time to let our inventive minds think of elegant solutions to legislation changes.

As you may or may not know, the Australian Labor Party has advised that when it next gets into power it will change the legislation on franking credit refunds. 

In its simplest form, this new legislation can be explained thus: 
Under the Labor proposal, franking credits (company tax already paid on dividends) can still be used to reduce your tax payable, but if no tax is payable, excess franking credits will not be able to be refunded to you.

Blogs, newspapers, forums and rallies have been yelling very loudly about this proposed legislation change. I personally think it is iniquitous, but that is besides the point as there are many legislation changes that I believe to be iniquitous, not just this one.

So, instead of belly-aching, perhaps think about some elegant solutions to soak up all your potentially unused franking credits. One possible solution is to buy dividend growth shares that are either not franked or only partially franked and add these to your current portfolio. 

Here is a list of companies that offer dividend growth and have either NO dividend franking or are only PARTIALLY franked. This list is only an example, there are many more companies that have good dividend growth and are not franked or are partially franked.

SYD Sydney Airport
SKI Spark Infrastructure Group
GOZ Growthpoint Properties Australia
AVN Aventus Retail Property Fund
VVR Viva Energy REIT
AMC  Amcor 
BWP  BWP Trust
CMA  Centuria Metropolitan REIT
TCL Transurban Group
ORA Orora 
CTD Corporate Travel Management 
BLD Boral
AGL AGL Energy
MQG  Macquarie Group
TWE Treasury Wine Estates 
MFF MFF Capital Investments 
SHL Sonic Healthcare

As I am not a financial adviser and this blog post is not advice - always do your own research :-)

Such research will create changes that will respect our future selves.



  1. Some pretty solid income shares there Phil, some of which we own in our super portfolio :)

    Fair point though, no benefit to complaining, either make some changes or suck it up and continue plodding along.

    1. Hopefully you do a post on how you are organising your Super one day. That would be interesting. We are on the verge of going across to greenfrog SMSF provider due to the increasing opaqueness of industry super funds ..... just a little more research to do first however.