Chair of the House of Representatives Standing Committee on Economics, Tim Wilson, will this Friday publicly compare the positions of Wilson Asset Management (WAM) and the Australian Council for Social Services (ACOSS) on Labor’s proposed franking dividend refund reforms, as the Committee considers the impact of the changes on retirees.
WAM would tell the Committee in a public hearing in Dee Why on Friday that the proposal to remove refundable franking credits was “regressive”, as “high-income earners would still receive credits to offset their tax liabilities, with low-income earners paying the price”.
The asset manager argued in its submission to the Committee that the current system of dividend refunds ensured that individuals subjected to a tax rate below the company tax rate were compensated for tax that had been paid at a higher rate.
In contrast, ACOSS planned to tell the Committee that relatively wealthy people would be most adversely affected by the proposed reforms. It would recommend that should the policy go ahead, investors with low income from dividends could be protected by allowing the refunding of imputation credits up to a modest annual limit.
The Committee last week heard that some retirees were worried they could lose up to a third of their income, forcing them onto the Aged Pension, if franking credit refunds were removed. Wilson called on members of the public to make “short statements” on whether the reforms would increase reliance on the Aged Pension this Friday.