Scrapping franking credits would trigger steep price falls of BHP, Telstra and Woolworths

Scrapping franking credits would trigger steep price falls of BHP, Telstra and Woolworths. Share prices of other widely held Australian companies which pay franked dividends, would slump by up to 30% if franking credits were removed, with no tax offset, seriously hurting investors and retirees. The Murray Inquiry into Australia's financial system has triggered fresh debate over whether Australia should scrap dividend imputations (franking credits). But there has been little focus on the impact removing them would have on the value of companies. Franking credits substantially increase the intrinsic value of Australian shares because the return on capital is increased by the franking credit. If imputation is changed and dividends became taxable then investors would be right to fear the consequences. Its abolition, with no offset, would make companies less valuable and trigger major share price corrections across the market. Read more: (VIEW LINK)