Dick Smith slams government over ‘outrageous’ $500K franking credit refunds

Aussie businessman and multi-millionaire Dick Smith has labelled $500,000 of franking credit refunds he received in just one year as an “outrageous” use of taxpayers’ money, claiming everyone should be subject to means testing to ensure millionaires such as himself don’t end up thousands of dollars richer.

The 75-year-old admitted to receiving the whopping amount in the 2016-17 financial year, as well as $250,000 the year after, in what he deemed an absolutely “ridiculous” move, The Sydney Morning Herald reports.

Smith, who admitted he was unaware of what franking credits were before noticing the payments, told the news outlet he was that angered by the money that he complained to the Australian Tax Office about the concept of the rich getting even richer.

“I found I was getting this ridiculous money from the government,” he admitted to The Sydney Morning Herald.

“That’s wrong, I said – I’m wealthy. My accountant said ‘that’s how it works, that’s what you have to do’. I can’t stop it. I think it’s outrageous for wealthy people to be getting money from the government.”

Franking Credits, also known as imputation credits, are a type of tax credit that allows Australian companies to pass on tax paid at the company level to shareholders. The benefits are these franking credits can be used to reduce income tax paid on dividends or potentially be received as a tax refund.

Earlier this year, in the lead up to the federal election, then leader of the opposition Bill Shorten vowed to introduce legislation that would scale back the tax credits allowed under dividend imputation rules. He announced the plans in March 2018, however, following backlash from the public and criticism from then prime minister Malcolm Turnbull, he later announced an exception for around 270,000 pensioners, along with people in receipt of other welfare payments, from his proposed changes.

Smith also took the opportunity this week to slam Labor over the idea, claiming the party “sold the whole thing incompetently”.

“They should also have put a threshold on it, so wealthy people like me would pay the tax, but pensioners and less well-off would not meet the threshold,” he explained.

Read more: Labor’s ‘reckless’ franking credits plan slammed for ‘punishing’ retirees

His comments come after the Morrison government warned last November that as many as 800,000 retired Aussies could be set to lose out financially if cash refunds for excess franking credits are axed, stripping them of an additional income stream that a large number of senior Aussies rely on to boost their finances in retirement.

Following his appointment as treasurer, Josh Frydenberg also invited concerned senior Australians to write to the Standing Committee on Economics about any concerns they may have about the proposed policy.

Margaret Menzies wrote: “I am concerned about Labors threat to franking credits. These are important to us to fund our retirement. I feel this is most unfair. We do not wish to live on the age pension.”

Peter and Evelyn Turner said: “It is unbelievable that Labour would even consider penalising those with a SMSF by removing the rebate of the dividend imputation. We have saved all our working lives and are fully self supporting. Our income is supplemented by the refund of the dividend imputation. Should this labour policy be implemented, it is conceivable that many more current independent retirees will end up accessing the government pension.”

What do you think of Dick Smith’s comments? Do you think means testing should be in place to ensure millionaires don’t receive hundreds of thousands of dollars a year in franking credits refunds?