Labor wants to abolish tax refunds on share dividends.
When retirees and low income earners get a refund on share dividends, it’s because the tax has already been paid by the company.
Under Labor, retirement savings would be taxed three times – going into super, in the fund and then again in retirement. This is a triple tax on retirement savings.
Labor would change the goal posts. They would punish those who work hard and save for retirement.
Labor’s Retiree Tax grab would remove franking credits from:
- Around 900,00 individuals.
- 200,000 self-managed super funds.
- 1,800 super funds.
On average, individuals affected would lose $2,200 a year. Self-managed super funds would lose $12,000 a year. Many would lose more.
This is short sighted and would lead to more people relying on the Age pension.
In the words of one retiree: “Why bother working hard and saving for retirement. I might as well spend and enjoy life and go on the pension.” (The Australian, 18/10/2018)
Most people who would be affected are not wealthy:
- 84% are on taxable incomes below $37,000.
- 96% are on taxable incomes below $90,000.
- Around half are 65 years or older.
- More than half of those affected are women and nearly half are single or widowed.
Around 50,000 pensioners will be affected:
- Pensioners who set up self-managed super funds after March 2018 will be affected.
- Those with self-managed super funds who become pensioners after March 2018 will also be affected.
Under Labor’s Retiree Tax, high income earners would still get the full benefit of franking credits. Those with lower incomes lose.
Furthermore, most union aligned industry super funds would be unaffected