Labor’s Tax Refund Theft
16 Mar 2018
The tax refunds of New England pensioners, retirees and low-income earners are in Labor’s sights with plans to hit one million of Australia’s most vulnerable with $59 billion more tax.
“The Labor Party is planning to rip money from the pockets of pensioners, retirees and low-income earners to pay for its budget black hole,” Member for New England Barnaby Joyce said.
Labor has announced they will abolish tax refunds for share dividends if elected. This means that if you receive the pension, are on a low-income or have a small self-managed superannuation account, you will no longer get a refund from the Tax Office for tax already paid on your shares.
“Labor’s double tax on company profits will hit more pensioners, retirees and low-income earners in New England than any other group,” Mr Joyce said.
“Labor’s policy hits older Australians particularly hard, as more than half of franking credit refunds were paid to individuals over the age of 65. These Australians have worked hard, taken responsibility and saved for their retirement.
“Bill Shorten and the Labor Party have a dealt a cruel blow to them with this plan. Labor is slugging older Australians to pay for its unsustainable spending spree.
“Share ownership is for everyone. Tax refunds from share dividends help relieve cost of living pressures for many retirees and people on low incomes. That is why the Coalition Government is committed to keeping tax refunds for franking credits.
“We stand for fairness, opportunity and security. Our plan is to keep taxes as low as they can be, while guaranteeing the essentials to reduce cost of living pressures for Australians.”
At the moment, the Tax Office refunds the extra franking credits received from shares if your marginal tax rate is less than company tax paid. This is to prevent to the ‘double taxation’ of company profits.
This $59 billion tax hit means one million Australians will be worse off.
In 2014-15, ATO tax statistics show:
- More than half of franking credit refunds that were paid to individuals are over the age of 65
- 230,000 pensioners will be worse off as a result of these changes
- 97% of individuals who receive franking credit refunds have an income below $87,000
- More than half of all individuals receiving refunded franking credits have taxable income less than the $18,200 tax free threshold. Labor’s policy would extinguish a vital income steam for these low income earners.
- Labor’s tax hike will also impact around 40% of all SMSFs, impacting 370,000 member accounts, and affect retirement savings held in approximately 3.5 million super fund accounts.
- Labor’s policy abolishes these tax refunds. Under Labor’s policy, people with higher incomes will still be able to reduce their tax bill by the full value of their credits. This is deeply unfair and is a double tax on share dividends for low income earners.