Labor’s retiree tax

Joint media release with
The Hon Kelly O’Dwyer MP
Minister for Revenue and Financial Services

The Labor party’s latest bright idea, a $59 billion raid on imputation credits, is a direct attack on retirees, pensioners and low income earners that will mean dividends are no longer protected from double taxation.

As well as the more than one million individuals who will have their income squeezed, Labor’s proposal will also impact around 40 per cent of all SMSFs, and retirement savings held in approximately 3.5 million super fund accounts.

Despite their suggestion that recipients of imputation credit refunds are “typically wealthier retirees”, the fact is 97 per cent of individuals who receive refunds of franking credits have taxable incomes below $87,000.

What’s more, over half of all individuals who receive refunds of franking credits have taxable income below $18,200, including pensioners, part-pensioners and self-funded retirees who have worked hard to support themselves during retirement. Labor’s policy would completely extinguish a vital income stream for these low income earners.

If Labor were serious about preventing the distribution of refundable imputation credits on the basis that entities haven’t paid tax, why does their policy still allow hundreds of millions of dollars’ worth of franking credits to be refunded to income tax exempt organisations like trade unions?

Late last year, Bill Shorten said,

“I think Australians pay enough tax at the moment. I don’t believe that another tax is going to be what Australians need or want at this stage”.

Incredibly, today’s announcement means he has now proposed more than $200 billion worth of new taxes – that’s a tax hike roughly equivalent to the entire GDP of New Zealand, and that’s what we know so far.