Townsville Bulletin

Franking credits build up for heavyweigh­ts

- NICK EVANS AND LACHLAN MOFFET GRAY

AUSTRALIA’S biggest listed companies have built up a staggering $66.4bn war chest of franking credits, adding almost $27.2bn since the start of the pandemic in early 2020.

The figures come from an analysis of financial reports issued by members of the S&P/ ASX 100 index, and show Australia’s top listed companies are building up a massive bank of tax credits for shareholde­rs.

It suggests shareholde­rs in major mining and banking stocks are in pole position to cash in on an anticipate­d dividend and buyback bonanza over the next few years.

Designed to eliminate double taxation of company dividends, franking credits are generated through the payment of corporate taxes and passed on to shareholde­rs when dividends are paid, allowing them to reduce their own tax liabilitie­s or, in the case of some self-funded retirees who pay little or no income tax, receive a cheque from the federal government to their value.

The incredible $27.2bn build-up over the past two years has been driven by soaring iron ore prices and restrictio­ns put in place by the banking regulator on shareholde­r returns to shore up the sector’s financial stability through Covid uncertaint­y.

Australia’s major listed iron ore miners – Rio Tinto, BHP, Fortescue Metals and Mineral Resources – saw their franking credit balance lift by a combined $19.17bn since June 30, 2019, representi­ng more than 70 per cent of the net gain made by the entire ASX 100.

The big four banks plus

Macquarie added $5.53bn to their franking credit balance over the same period, meaning together the banks and miners accounted for more than 90 per cent of the net gain made by the ASX 100.

The surge of additional corporate tax payments that has underpinne­d the build-up of franking credits over the past two years has undoubtedl­y put a smile on the face of Treasurer Josh Frydenberg, helping offset some of the more than $311bn cost of Jobkeeper and other Covid measures.

But the franking account balance also sits on the other side of the federal government’s balance sheet, as the cash returns to shareholde­rs with lower tax rates grow.

The Treasury refunded about $1.9bn in franking credits in 2006, with the figure more than tripling to $5.9bn in 2015.

Fund managers expect the franking credit balance at major companies to unwind quickly as the economy opens.

Michael Price, equity income portfolio manager at Ausbil, said he listed companies were unlikely to sit on their higher franking credit balances.

ARIES MAR 21 - APR 20

‘Congratula­tions. You must be pleased’. When we know that someone’s invested huge time and effort in achieving something, but we can’t see the value of it, we try to acknowledg­e their effort with as much gusto as we can find. But it isn’t easy… and any lacklustre response usually sounds hollow; it falls short of what they’re expecting us to say. It takes courage to explain that we don’t ‘get it’. You might have to risk upsetting someone’s apple cart today. But if you’re sharp you’ll provoke an honest exchange. Completely free audio and video forecasts. Go to ozfree.cainer.com.

LEO JUL 24 - AUG 23

Life would be much easier if we didn’t have to deal with other people. They’re so disruptive. They’re interferin­g and distractin­g. They ask awkward questions at pivotal moments that make us rethink our decisions. Yet, without teamwork, we’d be nowhere. Of course we’re going to get on each other’s nerves sometimes. But it’s important to respect one another’s feelings and find ways to talk through our irritation­s and difference­s of opinion. By demonstrat­ing that you care for how someone feels you’ll make a valuable ally today. Completely free audio and video forecasts. Go to ozfree.cainer.com.

SAGITTARIU­S NOV 23 - DEC 21

Why is it that we only count our blessings when thing’s go wrong? Why can’t we count them every day? There’s so much to celebrate - in the big things, in the little things, in the idiosyncra­sies that make each day different. Our world is beautiful beyond belief. If only we were able to train ourselves to appreciate it, imagine how happy we’d be. Although a change in your world seems, at first glance, to be trivial, if you take a more careful look, it represents a big shift. Once you’ve really seen it, you’ll appreciate the potential it holds. Free audio and video forecasts. Go to ozfree.cainer.com.

The phrase spice of life expresses how we all need excitement. Although calm waters can be a welcome respite, without drama and intrigue we stagnate. Today, Venus is spending its last day at home in Libra where it has been focused on beauty, diplomacy and harmonious connection­s. Tomorrow, as it enters Scorpio, its influence will change. We needn’t worry that it will stop playing nice - it’s becoming more naughty but nice. Life is about to develop a more interestin­g flavour.

TAURUS APR 21 - MAY 21

You matter. You make a difference. In one particular subject at least, you don’t just have expertise, you’re the absolute authority. I’m talking about the art of being you. No one else comes close to knowing as much about that particular subject. And what’s so good about being you? Do you have reasons to feel proud of what you’ve achieved. Absolutely. Don’t waste time listing your faults today. As Venus prepares to change signs, if you recognise and celebrate your assets, you can convert them into tangible advantages. Completely free audio and video forecasts. Go to ozfree.cainer.com.

VIRGO AUG 24 - SEP 23

Are you really sure you know what you’re saying? Are you confident of what you’re hearing? You’re in the middle of an extraordin­ary conversati­on. Vital ideas are being shared. Important thoughts are being exchanged. Even though much of this has been said before, it has never been properly articulate­d and understood. What’s being discussed will lead to lasting change. That may seem daunting; but it’s an essential part of a positive process. Be as honest as you can be, and focus. The opportunit­y you’ve been hoping for is being revealed. Free audio and video forecasts. Go to ozfree.cainer.com.

CAPRICORN DEC 22 - JAN 20

A long buried secret is threatenin­g to bubble to the surface. There’s a truth that needs to be revealed, a fact that needs facing. As Venus prepares to move into a new sector of the sky, it brings a revelation. That’s exciting but, understand­ably, it’s also a bit scary. Suppose it rocks the foundation­s you’ve so carefully constructe­d? What if people don’t understand? Yes… telling the truth has consequenc­es. But you might not have to say anything to anyone. You just need to listen open-heartedly. What you hear will encourage you. Completely free audio and video forecasts. Go to ozfree.cainer.com.

GEMINI MAY 22 - JUN 22

Closure. New beginnings. Rebirth. You’re reaching a pivotal point in your life journey. As one door prepares to close, another is beginning to open into a new realm of possibilit­ies. Although you feel as if you’re losing your influence in one area, you’re gaining something much more valuable; the chance to take effective action in a part of your life that has been the cause of stress. You’re starting to understand something that has been a long-term source of confusion. Stay calm. There are more exciting discoverie­s ahead. Don’t miss out… completely free audio and video forecasts. Go to ozfree.cainer.com.

LIBRA SEP 24 - OCT 23

No one else is in your shoes. You’re doing something amazing. How could anyone take on what you’ve taken on? How would they handle such a unique set of circumstan­ces? Yet, you’re not convinced that you’re doing particular­ly well. Your critical inner voice is telling you that someone else would do a better job of it. Don’t kid yourself. You’re courageous. It’s not easy, but you’re making progress. You’re bound to have to take occasional steps backwards. Just remember all the steps forward you’ve already taken. And keep going. Completely free audio and video forecasts. Go to ozfree.cainer.com.

AQUARIUS JAN 21 - FEB 19

It’s amazing what illusionis­ts and magicians do. They can make almost anything look like almost anything else. Yet their success depends on the willingnes­s of their audience. We need to be prepared to buy into their illusion. No one can be fooled by anything or anyone unless they secretly want to believe in what they’re being told or sold. Someone in your world is telling you that your dream is unachievab­le and that your ambition can’t be realised. That’s only true if you want it to be true. If you don’t, don’t give up. Just keep trying. Completely free audio and video forecasts. Go to ozfree.cainer.com.

CANCER JUN 23 - JUL 23

Whose rules are you playing by? If they’re not yours, you need to have a closer look at them. When you’re the instigator, you have the right to redefine them. If someone else set them, your investigat­ion will reveal a loophole. It’s time to liberate yourself from a set of restrictio­ns that have been holding you back. As Venus prepares to move into a new sector of the sky, there’s a more inspiring way of looking at what’s unfolding in your world. To see it, you just need to stop looking at it from someone else’s negative perspectiv­e. Completey free audio and video forecasts. Go to ozfree.cainer.com.

SCORPIO OCT 24 - NOV 22

We all have different strategies for coping with stressful situations. Some people do everything they can to avoid them. Others feel that the best way to avoid them is to be one step ahead of the game. Rather than waiting for trouble to find them, they create it; that way, they’ve got an advantage on everyone else. In your life now, someone’s apprehensi­on is making you feel apprehensi­ve. With Venus preparing to move into your sign, you don’t need to feel afraid of anyone or anything. Be confident. The right things are happening.

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PISCES FEB 20 - MAR 20

When it comes to keeping ourselves fit and building muscles, they advise us to ‘use it or lose it’. Exercise our bodies. Keep our minds sharp. Yet when it comes to our emotions, those rules don’t apply. We may not feel a particular way for years. But when we need to draw on that feeling again, it’s right there, without any practice. Just because it’s been a while since you’ve allowed yourself to really trust someone, you haven’t lost that ability. As Venus prepares to change signs, a relationsh­ip can deepen into something special. Free audio and video forecasts. Go to ozfree.cainer.com.

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