The Daily Telegraph: Federal election 2019: Labor’s proposed $56 billion retiree tax would affect retirees, new mothers
Thousands of pensioners will lose under Labor’s $56 billion retirement income raid despite Bill Shorten guaranteeing they wouldn’t.
An investigation by News Corp Australia also reveals new mothers will be caught by the Opposition’s obliteration of franking credits cash refunds, which experts say sets a dangerous “double taxation” precedent.
A further finding of the investigation is that large union-linked industry superannuation funds are entirely shielded from Labor’s move, while members of up to 50 retail funds are likely to suffer lower returns, including pensioners.
The effects of the cash grab are already being felt on the Australian Securities Exchange, with large businesses changing strategy in anticipation of Mr Shorten’s share swoop.
Meanwhile, some individual investors are weighing up selling their local holdings and buying foreign stocks instead.
The independent Parliamentary Budget Office has estimated Labor’s plan would save $7 billion less over a decade than the party expects and that it would affect 840,000 individuals, 210,000 self-managed super funds (SMSFs) plus some bigger funds.
Labor announced its policy on March 13 last year, claiming it would save the Budget $59 billion. Before the month was out, a backlash forced it to exempt 320,000 pensioners through a “guarantee”. The savings figure was revised to $56 billion.
At the time Mr Shorten said “pensioners will still be able to access cash refunds from excess dividend imputation credits.
“Pensioners and allowance recipients will be protected from the abolition of cash refunds for excess dividend imputation credits when the policy commences in July 2019,” he said.
Also, Labor’s franking credits policy document says the guarantee means “every pensioner will be able to benefit from cash refunds”.
However, that is not the case because the protection to those in SMSFs only applies if they were a full or part pensioner before March 28 last year.
Labor’s plan would create “two classes” of pensioner separated by whether they retired before and after that date, said financial services expert Michael Rice.
“They are the forgotten people,” said Plato Investment Management chief Don Hamson.