franking credit changes affect smsfs

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    Not only SMSFs and retirees will be hurt by the proposed changes to franking credits in SMSFs.

    Most people that have spent money to establish and manage a SMSF have done so for specific reasons which won’t change and SMSFs will continue to be used extensively.

    However, the stock prices of Companies that offer franked dividends may be affected as SMSF funds rebalance their portfolios. Without the benefit of franking credits some stocks are likely to be removed from portfolios (i.e. sold) because the removal of franking credits reduces the effective dividend causing the investment in these stocks to be transferred to other investments, which could be investment in overseas stocks or other sdectors.

    That rebalancing would affect the share prices, hurting Australian companies paying franked dividends and if capital flees to overseas investments it hurts the Australian economy.

    Looking at the risks and complexities that arise from the proposed changes to franking credit treatment in SMSFs, it seems to me to be an unwise move as we really don't know all the potential negative effects. It brings to mind an old saying: If it ain't broke, don't fix it.

    All IMO and DYOR .....
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