The boss of S&P/ASX 200 Index (ASX: XJO) dividend share Harvey Norman Holdings Limited (ASX: HVN) has joined voices slamming the federal government's proposed changes to franking credits.
The law proposes to disallow companies from offering franking credits on dividends funded by capital raisings, as my Fool colleague Brendon reported. Thus, it has the potential to discourage companies from offering special dividends.
But what's really got the billionaire fired up are suggestions the law could be applied retrospectively. That could force Aussie investors to repay franking credits from as long ago as 2016.
Let's take a closer look at what's got Harvey Norman chair Gerry Harvey fired up.
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ASX 200 retail boss hits out at proposed franking change
Gerry Harvey has spoken out against a proposed law that could close a loophole at the expense of past dividend recipients.
The change has been tabled to stop companies offering franking credits on dividends worth more than the income they've paid tax on.
The head of the ASX 200 retail giant has slammed any suggestion of backdating the change. Speaking to 3WA, he said:
This is totally mad … [its] about as bad as you can get.
If you want to change the law, and it's a bad law, that's fine, but you can't make it retrospective. That's not right.
Questions surrounding past Harvey Norman dividends
If the law is passed, it could see those invested in Harvey Norman shares facing a tax bill.
The ASX 200 share reportedly paid out more in dividends than it brought in profits in financial year 2020. That lead the Australian Financial Review to question whether the company would continue undergoing capital raises to grow its payouts.
The company offered investors 33 cents per share in dividends that fiscal year. The offerings followed a $163.8 million capital raise undergone in October 2018 and another $173.5 million capital raise in October 2019.
