Telstra Corporation Ltd shares are heading lower on Labor’s tax threats

It’s a favourite of fully franked income seekers in retirement across Australia but the Telstra Corporation Ltd (ASX: TLS) share price is down 2.5% to $3.32 today on the back of Labor’s threat to stop cash refunds from franking credits being available to some Australians in retirement.

Let’s face it, Telstra doesn’t have much going for it as an investment other than fully franked dividends and those franking credit benefits could soon become a lot less attractive to cashed-up superannuants in retirement.

Many Australian couples or individuals are likely to have whopping superannuation balances after a lifetime of work and will have deliberately weighted their investment portfolios to take advantage of the generous tax refunds available to them via franking credits when they are earning little other income in retirement.

As such some may be selling their stakes in Telstra down today out of fear that there’s more selling to come if Labor wins the federal election likely to take place within a year or so. They say in investing it’s better to be six months too early than six seconds too late and this could be the case if Labor does win power.

Telstra has enough problems of its own making under the management of ex-CFO and numbers guy Andy Penn who’s grip on the tech sector seems moderate at best. I’d rate Telstra and the indebted telco Vocus Group Ltd (ASX: VOC) as sells right now, while their main listed rival TPG Telecom Ltd (ASX: TPM) may still be able to deliver investors good returns under its founder-led leadership.

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Motley Fool contributor Tom Richardson owns shares of TPG Telecom Limited and Vocus Communications Limited.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia owns shares of and has recommended Telstra Limited, TPG Telecom Limited, and Vocus Communications Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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