Letters: Cashing in on dividends and investing in infrastructure

Members query the 45-day rule on dividends, while one discusses the need for more infrastructure assets.

Dividends and the 45-day rule

In Ian Verrender’s article, How to cash in on bank dividends, he states that the 45-day rule does not apply to dividends received under $11,667.00. Is this the actual dividend received or the grossed up amount?

Also if an individual receives dividends and also is a member of a SMSF which also receives dividends does that impact on the individual? I realise that an individual and an SMSF are separate entities but one never knows the quirks of the tax act.


Ian’s response: You are exempt from the 45 day rule where total franking credits for the year are $5,000. This happens when you receive fully franked dividends of $11,667. I'm no tax expert but I would think your personal trading and your superannuation trading would be distinct.

Investing in infrastructure assets

I wholeheartedly endorse Robert Gottliebsen's article on the need for there to be infrastructure assets in Australia that self-managed super funds (SMSFs) can invest in (see: Infrastructure the route for DIY super). One major reason is that super funds must obtain a cashflow through investments that produce a good yield. Currently that cannot be done through bank deposits, and bonds with a good yield - often a major component in super funds overseas - are alas in Australia often too difficult to obtain. But bonds in any case have their own limitations, and we need to diversify, as investors, by not being dependent on just one asset class.Infrastructure assets can provide sound yields with solid ongoing earnings. It is amazing that many of our best infrastructure assets are falling into the hands of Canadian companies, meaning the supply of good infrastructure for Australians to invest in is diminishing at the very time that we need to see it increasing.


Eureka Congress

I am interested to know if there is going to be a Eureka Congress this year and if so, will it extend to Brisbane?


Editor’s response: Thank you for your letter. Eureka Report is planning on hosting another congress this year, and Brisbane is being considered as a venue. We will make sure to keep our members updated on any developments.

Pensioner discounts add up

Scott Francis' article on the age pension, Pension plan adds up to better returns, made for a very interesting read, but he overlooked all the discounts pensioners receive. Pharmaceuticals cost less at the chemist, doctors often bulk bill, and an amazing array of businesses give discounts to holders of pension cards.

Ian Harrison

Dividend experiment

I was most interested to read Ian Verrender’s recent article, How to cash in on bank dividends. I actually tried something similar last year, although I also included Telstra, and not just the banks. I managed a return on funds in total (dividends, franking credits and some capital growth) of 25% for the year, which I was very happy with until I did the sums on what the result would have been had I simply held on to the original TLS and CBA shares I had bought in January! I suspect it would not have been so much fun on a falling market, but luckily that was not the case in 2012. 

What really interested me in the article was that the 45-day holding period does not apply where the dividend received by an investor is less than $11,667. In my little experiment, I made sure I held each parcel for what I understood was the requisite 45-day minimum but as no dividend was much more than a couple of thousand, does this mean I need not have?  I would greatly appreciate some further clarification of this point.

Gaye McLeod

Editor’s response: The exemption from the 45-day rule only applies where total dividends received in a financial year are less than $11,667.

The pension safety net

Scott Francis’ article on the part-age pension, Pension plan adds up to better returns, was very interesting, but I don't think that taxpayers should be paying pensions sufficiently large so that recipients can afford to spend $10,000 on travel per year. Surely the pension is there as a safety net.

Name withheld

Self-funded retirees and the age pension

Scott Francis' article, A pension strategy where everyone can win, presents informative calculations of how Centrelink pensions are reduced by assets such as superannuation, but I find it interesting how much self-funded retirees really save the government.  For example, a home-owing couple with $600,000 in assets receives $16,000 per annum from the age pension.  If their assets are doubled, to $1.2 million, their income increases by $27,000 but they forgo $16,000 in pension payments. Thus their additional $600,000 in assets earns an effective $11,000 per annum, or a measly 1.8%. It’s very tempting to blow the extra $600,000 on a (very long) overseas cruise.

Name withheld

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