Labor's Retiree Tax

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 900,000 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

FACTS

"Unfortunately, Labor's policy continues to impact on vast numbers of self-funded retirees who have worked and saved hard under the existing tax rules to self-fund their retirement. Because the majority of self-funded retirees own shares hundreds of thousands will be affected." - National Seniors, 26/10/2018

"For self-funded retirees and SMSF members this is a cruel blow... they will lose up to 30 per cent of their income in one hit... the end result will be to drive many retirees onto welfare." - The Alliance for a Fairer Retirement System Chair, Deborah Ralston

"This hit on retirement incomes... can substantially damage the lifestyles of retirees who have prudently saved and are carefully drawing down on their retirement savings." - Self Managed Super Funds Association, 13/2/2018