The House of Representatives Standing Committee on Economics inquiry into the implications of a proposal by the Labor Party to remove refundable franking credits will highlight how the proposal would financially hurt millions of Australians, the Alliance for a Fairer Retirement System said.
The Alliance, a group formed to represent millions of senior Australians, shareholders and self-funded retirees, said it has identified seven groups that would be hurt by Labor’s proposal – not just the wealthiest 10 per cent of self-managed super funds (SMSFs) as Labor claims.
Alliance spokesperson, Professor Deborah Ralston, said that based on the group’s analysis of Australian Taxation Office (ATO) and Treasury data, the proposal has wide-ranging financial implications for: Australian shareholders on incomes less than $65,000; self-funded retirees; age pensioners investing through unit trusts; SMSFs, small APRA (Australian Prudential Regulation Authority)-regulated funds; large retail APRA-regulated funds; and retired small business owners with equity in their companies.
“What this means is quite the opposite of Labor’s rhetoric about only targeting the wealthy. Instead, it’s those individuals on modest incomes who will be most affected,” Ralston said.
“In fact, the wealthiest SMSF members with more than $1.6 million in super will be paying tax at 15 per cent on some of their income and in many circumstances will still receive the majority of the value of their franking credits.
“The policy is unfair to everyday Australians who have made sacrifices and saved throughout their lives so that they can have some dignity in retirement. “
Ralston also said that even those taxpayers not directly impacted by the proposed policy would be affected by broader effects of the proposal, such as impacts on equity prices and the potential increased reliance on the age pension, driven by weaker incentives to be self-reliant in retirement.
Ralston said the Alliance believed the inquiry would provide the ideal forum in which to fully examine the financial consequences of Labor’s proposal on millions of Australians.
“The Alliance will prepare a submission for the inquiry and encourages all Australians who believe this proposal will leave them financially worse off to make their views known to the committee,” she said.
