Quote:

Labor will live to regret its unfair retirement tax policy I think it is fair to say that in Australia we believe tax policy should be equitable, progressive and reliable. The Labor Party’s plan to scrap full tax refunds on dividend income fails each of these principles by reintroducing double taxation and changing the rules on Australians who have worked, saved and planned for their retirement under a system that has remained fundamentally unchanged for 18 years. Shadow treasurer Chris Bowen’s assertion last night that the current arrangements are "welfare for the wealthy" is dismissive and arrogant. It demonstrates contempt for individuals with valid concerns that their lives will be grossly impacted – and he may come to regret it. Our poll of the 30,000 signatories to our petition to maintain the current dividend imputation system found that 83 per cent of respondents who vote Labor would change their vote, in many cases for the first time ever, because of the retirement tax. Former prime minister Paul Keating established the current dividend imputation system in 1987 to remove the double taxation of company profits at the corporate and shareholder level. In 2001, the Howard government improved the system by ensuring that individuals who were subject to a marginal tax rate below the company rate were appropriately compensated for the tax they had paid at a higher rate. The current proposal by Labor to remove cash refunds for excess tax paid on dividends would adversely affect all Australians. This is because the system not only removes double taxation but also promotes economic stability by discouraging corporate debt and encouraging investment in Australia, which creates jobs, resulting in more tax being paid. While the nation would be negatively impacted by this policy, low-income earners and modest retirees would be the hardest hit. Low-income earners looking to get ahead by investing in the equity market will be the greatest losers under this scheme as the current imputation system appropriately reimburses them for the excess taxation represented by the difference between their marginal tax rate (0-19 per cent) and the large company tax rate (30 per cent). Labor’s proposal would remove this benefit from low-income earners while retaining the full benefit of franking credits for those on a high marginal tax rate. Labor’s amendment to the policy to exclude individuals receiving the age pension in an SMSF before March 28, 2018, is an admission of its draconian nature and it is a highly discriminatory exclusion. We have been contacted by hundreds of people who will slip through the cracks and their stories are often tragic. Of all taxpayers over the age of 75, 70 per cent receive franking credits, with an average value of $6347 a year. These individuals would lose this income if they were not receiving the age pension. Retirees who are unable to return to the workforce will have to look elsewhere to supplement their loss through riskier investments or government support. Women would be more severely impacted than men as women generally enter the pension phase with lower balances than men. As at June 2016, the average self-managed superannuation fund member balance was $511,000 for women and $641,000 for men. The discrimination continues by creating a two-tier superannuation system where union-supported industry superannuation funds can claim cash refunds but SMSFs cannot. Labor’s policy is deeply flawed. It should be abandoned because low-income earners and modest retirees should not be collateral damage in a poorly designed plan to generate cost savings that will ultimately fail to come to fruition. https://www.smh.com.au/national/labor-will-live-to-regret-its-unfair-retirement-tax-policy-20190117-p50rvn.html

This idiocy from labor will only hurt those with low incomes it will have no effect on those with taxable incomes greater than $37K a year where the tax rate jumps to 32.5 %.


Removing the refunds is like saying they cannot get tax returns for paying more income tax than required if this comes from Franked shares.

Nonsense.  I would trust people in Labor who include economics professors in their rank to work out the effect on the overall picture.

And even if the poor is affected, the tax collected is reallocated back to them if necessary.

People are pretty dumb to look at each thing on its own.  It is what the government does afterwards that should be considered.

Much like the coalition who wants to cut tax.  Afterwards, there wouldn't be enough for government services which then are cut.

This idiocy from Labor will only impact those who earn less than $37K a year, it will have no effect on those earning greater than $37K a year.

Why are Labor screwing those on less than $37K a year with this idiocy?

stunspore wrote on Feb 7^th, 2019 at 5:33pm:

I would trust people in Labor who include economics professors in their rank to work out the effect on the overall picture. And even if the poor is affected, the tax collected is reallocated back to them if necessary.

Fancy comparing Bill to Economists. ;D ;D ;D

Rather like Bill at the AWU. Took the Cleanevent workers to the cleaners. That disadvantaged them. Trying it now on a larger scale.

Was Bill on a performance agreement back then? He got more union members on the back of it. That would have been advantageous to him. ;)

Labor have released this policy very early, even before an election has been called....There is a possibility they might amend it to accommodate lower income earners....I will wait until we see the full policy once an election is called???

:-? :-? :-?   

Too many claims and counter claims.  You merely picked a claim that suits your political purpose.  As do others like me i suppose.

philperth2010 wrote on Feb 7^th, 2019 at 5:47pm:

There is a possibility they might amend it to accommodate lower income earners.

"Bill Shorten has declared the Labor Party's position on ending refundable tax credits is "not for turning", saying there was no logic to them."

https://www.smh.com.au/politics/federal/we-re-not-for-turning-on-franking-credits-shorten-20190203-p50vcy.html

You mean he is lying? ::)

philperth2010 wrote on Feb 7^th, 2019 at 5:47pm:

Labor have released this policy very early, even before an election has been called....There is a possibility they might amend it to accommodate lower income earners...

It only affects those on less than $37K a year, it has no impact on those in much higher tax brackets.


Why are labor phuking over low income earners?

The only party that has a proven record of screwing over the poor with increased taxes year on year are the Liberals and their Nat lapdogs. The last time a Liberal-led Coalition government increased the tax-free threshold without also hiking other taxes on the poor was the Fraser government in 1978. Bracket creep is the way they screw the poor harder and harder every year.

Bam wrote on Feb 7^th, 2019 at 6:04pm:

The only party that has a proven record of screwing over the poor with increased taxes year on year are the Liberals and their Nat lapdogs.

So Bill is out to prove he can do it too? ;D ;D ;D ;D ;D ;D

lee wrote on Feb 7^th, 2019 at 5:53pm:

philperth2010 wrote on Feb 7th, 2019 at 5:47pm: There is a possibility they might amend it to accommodate lower income earners. "Bill Shorten has declared the Labor Party's position on ending refundable tax credits is "not for turning", saying there was no logic to them." https://www.smh.com.au/politics/federal/we-re-not-for-turning-on-franking-credits-shorten-20190203-p50vcy.html You mean he is lying? ::)

Paywall!!!

I am saying Bill Shorten would not be the first politician to yield under public pressure and negative polling....I have not seen the policy have you???

:-? :-? :-?

Poor people should focus on getting a better job anyway - at least that's what Hockey said before.

Having shares usually indicates asset rich.  And if not, are shares really the best investment at an age where you shouldn't take risks?  Most super strategies are accumulation and then consuming the accumulation.  Not using it to generate perpetual and living income and upon death, pass the wealth down. 

This is just making the rich, richer otherwise.

philperth2010 wrote on Feb 7^th, 2019 at 6:21pm:

Paywall!!!

I get a login deal but still get the story. I still have 2 free articles remaining.


philperth2010 wrote on Feb 7^th, 2019 at 6:21pm:

I have not seen the policy have you???

Now SMH is bad mouthing Billy? ;)

stunspore wrote on Feb 7^th, 2019 at 6:30pm:

Having shares usually indicates asset rich.

So Mum's and Dad's still holding their Telstra shares are asset rich? ;)


stunspore wrote on Feb 7^th, 2019 at 6:30pm:

And if not, are shares really the best investment at an age where you shouldn't take risks?

Really? Let's see -

Shares pay about 6%/year. And have,currently, imputation credits.

Bank interest 3%. and pay tax from dollar one.

Banks have gone bust before as have companies. I believe the Australian Government Bank Guarantee is closed to new business.


stunspore wrote on Feb 7^th, 2019 at 6:30pm:

Not using it to generate perpetual and living income and upon death, pass the wealth down.

So you would argue that the portion not used in life should be paid as a death tax?

Yes.. shares are risky.  Not guaranteed capital growth or dividend payout.  Hence as we get older, you move out of shares to more stable and less risky assets.  Surprised you think that shares aren't risky.  Higher risk = higher return.  Of course more than banks.  Bank deposits though, are backed 100% so you will get your money back if it folds.  Shares you don't necessarily get back 100%.

And mum and dad holding telstra shares rich?  If you needed that few shares and reliant on a couple of hundred to make things meet, then those people really benefit from increased taxes.  Because collected taxes will go back to benefits - whether more medical/education/concessions to reduce cost of living, instead of trying to live like a miser while the coalition government keeps cutting and increasing cost of living (as they run out of money from reduced tax collection).

As for death taxes - that does exist in other countries.  In the case of defined benefits scheme...isn't that what happens with people's super?  You give money to govt, they pay you until you die?

Opposing taxes because 'it's my money' fails to take into account that everyone benefits from government services, even if it seems like you don't.  I don't see the benefit of politicians pork barrelling, or spending more than their fair share of infrastructure funding (NSW vs Vic) or travel allowances.  but if that's what it takes to make society works, whatever.

lee wrote on Feb 7^th, 2019 at 6:08pm:

Bam wrote on Feb 7th, 2019 at 6:04pm: The only party that has a proven record of screwing over the poor with increased taxes year on year are the Liberals and their Nat lapdogs. The last time a Liberal-led Coalition government increased the tax-free threshold without also hiking other taxes on the poor was the Fraser government in 1978. Bracket creep is the way they screw the poor harder and harder every year. So Bill is out to prove he can do it too?

A straw man argument. How puerile.

Bam wrote on Feb 7^th, 2019 at 6:04pm:

The only party that has a proven record of screwing over the poor with increased taxes year on year are the Liberals and their Nat lapdogs. The last time a Liberal-led Coalition government increased the tax-free threshold without also hiking other taxes on the poor was the Fraser government in 1978. Bracket creep is the way they screw the poor harder and harder every year.

It was Fraser that introduced indexation to bracket creep. Hawke pissed it off.

Bam wrote on Feb 7^th, 2019 at 7:41pm:

A straw man argument. How puerile.

Two things bammy

1. it was a question not an argument (statement).

2. you have learned a new word. ;D ;D ;D ;D

But you could answer the question. ;)

stunspore wrote on Feb 7^th, 2019 at 7:14pm:

Surprised you think that shares aren't risky.

You read something into my statement thar wasn't there. Both banks and shares are risky.


stunspore wrote on Feb 7^th, 2019 at 7:14pm:

Bank deposits though, are backed 100% so you will get your money back if it folds.

You missed that bit about the bank guarantee. It no longer applies to new deposits. Deposit taking institutions have to set aside funds. There is no guarantee it will cover all shortfalls.

" The FCS protection of $250,000 per account holder applies to the sum of all deposits held under each licenced institution, which includes any deposits held with the other banking trading names that are listed as dot points."

https://www.fcs.gov.au/which-adis-are-covered


stunspore wrote on Feb 7^th, 2019 at 7:14pm:

f you needed that few shares and reliant on a couple of hundred to make things meet, then those people really benefit from increased taxes.  Because collected taxes will go back to benefits - whether more medical/education/concessions to reduce cost of living, instead of trying to live like a miser while the coalition government keeps cutting and increasing cost of living (as they run out of money from reduced tax collection).

So being poor and losing the benefit of the imputation credit is a guarantee they will end up with more? ;D ;D ;D ;D ;D


stunspore wrote on Feb 7^th, 2019 at 7:14pm:

As for death taxes - that does exist in other countries.  In the case of defined benefits scheme...isn't that what happens with people's super?  You give money to govt, they pay you until you die?

Yes. It does exist in other countries; but we are talking about Australia, not other countries. Defined benefits- But that isn't the super schemes Billy is targeting, is it?


stunspore wrote on Feb 7^th, 2019 at 7:14pm:

Opposing taxes because 'it's my money' fails to take into account that everyone benefits from government services, even if it seems like you don't.

Where have I said I oppose taxes? I think everybody should pay their share. That doesn't mean talking money off the poor so that they MIGHT get extra pension.

You are claiming banks are less secure than shares?  Or that retired people should accept the higher risk levels of shares as compared to banks?

And 250K guaranteed isn't good enough for you?  I mean one should keep most of the assets in the super where it is mostly preserved anyway.  See a financial manager (who hasn't fallen foul from RC).

And yes we are discussing Australia.  We are discussing about Wealthfare, which is blowing or will blow the budget apart.  Unsustainable.
And comparing defined benefits to forcing people to either pay taxes on income or consume their super is a good comparison.  Because one causes more pain for the government in the future compared to the other.  Defined benefits have been removed because it has been causing headaches for investment companies - either because people live too long, or they payout  at a rate which the investment companies can't earn.  Super, though as it is, is putting the onus back on individuals - but it has also been abused by the rich as form of wealth retaining strategy.  And the more they retain, the less the government has to pay for services.

As for stating you opposing taxes ... i didn't.  I point out that taxes are raised for reason.  and that Labor has always looked out for the weak far more than the coalition. 

stunspore wrote on Feb 7^th, 2019 at 8:24pm:

You are claiming banks are less secure than shares?

No petal. I said they both have risks. CBA as a deposit institution and CBA as a shareholder led company. Different risks. But still risky. BTW - Risky doesn't bestow, of itself, a level of risk.


stunspore wrote on Feb 7^th, 2019 at 8:24pm:

Or that retired people should accept the higher risk levels of shares as compared to banks?

No petal. I didn't say that either. Each person has a risk profile which they are prepared to accept. Each person is different.


stunspore wrote on Feb 7^th, 2019 at 8:24pm:

And 250K guaranteed isn't good enough for you?  I mean one should keep most of the assets in the super where it is mostly preserved anyway.

And where do super funds park their money, petal?


stunspore wrote on Feb 7^th, 2019 at 8:24pm:

As for stating you opposing taxes ... i didn't.

stunspore wrote on Feb 7^th, 2019 at 7:14pm:

Opposing taxes because 'it's my money' fails to take into account that everyone benefits from government services, even if it seems like you don't.

You're trying to confuse.  Hiding money under the bed is also risky.  Converting it into "level of risk" is trying to hide the fact that shares are riskier than cash deposits.

As for different risk portfolios, pretty much 100% of any retirement plan states to move from riskier assets to safe assets i.e. cash when as one is older.  When you are retired, you can't afford to be risky - unless you have that much money to don't care.

Don't go with "different types of risk" - these are quantifiable and is attached to standard advice.  Risk is for the young to take, safety/conservative for the eldest.

stunspore wrote on Feb 7^th, 2019 at 9:24pm:

Converting it into "level of risk" is trying to hide the fact that shares are riskier than cash deposits.

How many times has CBA not declared a dividend?


stunspore wrote on Feb 7^th, 2019 at 9:24pm:

Risk is for the young to take, safety/conservative for the eldest.

And yet even conservative portfolios tend to have an exposure to shares. ;)

Usually adjusted to less in shares but not completely devoid unless specifically specified.