Labor’s reforms to excess dividend imputation credits will crack down on an unsustainable tax loophole that gives tax refunds to people who don’t pay income tax, while protecting pensioners and paying for better schools and hospitals.
Today, Labor is introducing a new Pensioner Guarantee – protecting pensioners from changes to excess dividend imputation credits.
The Pensioner Guarantee will protect pensioners who may otherwise be affected by this important reform.
Labor is cracking down on this tax loophole because it will soon cost the budget $8 billion a year.
Much of this goes to high-wealth individuals, with 80 per cent of the benefit accruing to the wealthiest 20 per cent of retirees. The top one per cent of self-managed superannuation funds received an average cash refund of more than $80,000 in 2014-15.
Labor does not think it is fair to spend $8 billion a year on a tax loophole that mainly benefits millionaires who don’t pay income tax – not when school standards are falling and hospital waiting lists are growing longer.
$8 billion a year is more than we spend on public hospitals or child care. It’s three times what we spend on the Australian Federal Police.
Labor will close this tax loophole to help pay for better schools, better hospitals and tax relief for working Australians – but we’ll protect pensioners with our Pensioner Guarantee.
We believe in a fair go for pensioners. We know they are struggling with the cost of living, especially with out of control power prices and Turnbull’s cuts to Medicare.
That’s why Labor is making sure pensioners will still be able to access cash refunds from excess dividend imputation credits.
The Pensioner Guarantee means 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.
Self-managed superannuation funds with at least one pensioner or allowance recipient before 28 March 2018 will also be exempt from the changes.
This means that every pensioner will still be able to benefit from cash refunds.
Labor has always protected pensioners – and we always will.
In contrast, the Liberals have cut the pension, increased the cost of living, and are trying to force Australians to work until they are 70.
- cut the pension for 277,000 retirees;
- kicked another 92,300 retirees off the pension altogether;
- cut pension concessions that help pensioners with costs including rates and registration; and
- is trying to cut the $365-a-year energy supplement for 400,000 pensioners.
Turnbull’s cuts will see more than $7 billion taken out of the pockets of Australia’s pensioners.
Turnbull has been the worst prime minister for Australia’s pensioners in living memory.
Labor’s policy is fair and responsible because it cracks down on an unaffordable tax loophole while protecting pensioners and paying for better schools and hospitals.
Mr Turnbull and his Liberals are protecting tax loopholes for millionaires, giving a $65 billion tax handout to multinationals, increases taxes for seven million working Australians, and cutting funding to local schools and hospitals. They are totally out of touch.
Labor’s policy will improve the budget position by $10.7 billion over the election forward estimates and $55.7 billion over the medium term. This is a reduction of $700 million over the election forward estimates compared to the original announcement, and $3.3 billion over the medium term.
Part of this saving will be used to fund Labor’s Australian Investment Guarantee – delivering tax relief for businesses investing in Australia and in Australian jobs.
Labor’s policy has been fully costed by the independent Parliamentary Budget Office. The Parliamentary Budget Office’s costings are based on the current budget baseline, which includes the effect of the $1.6 million balance transfer cap.
More information on Labor’s policy can be found here.