Labor’s plan to scrap refundable imputation credits has captured the ire of one financial adviser, who says the policy would actually hurt lower income Australians.
Yesterday, the Opposition Leader revealed a new policy to abolish the ability for individuals to claim cash refunds on excess imputation credits that had not been applied to offset tax liabilities. Mr Shorten said the abolition of the benefit – which was introduced by the Howard government following the Keating government’s establishment of the dividend imputation system in 1987 – would result in an additional $5.6 billion to the federal budget bottom line and reduce “unfair revenue leakage” that allegedly disadvantages voters in lower income brackets.
However, speaking to Heart1Stop, Stu Varidel, Principal Adviser of Heart Financial Advisers, said the policy would result in precisely the opposite.
“The policy of dividend imputation is fairly simple,” he said, explaining that shareholders may pay additional tax on dividends or receive a tax refund depending on whether their marginal tax rate is greater or lesser than the company rate.
“By denying the lower income tax rate taxpayer a chance for a refund of the imputation credits, Mr Shorten is actually denying a low-income person the tax credit whilst still taking more tax off the higher income taxpayer,” Mr Varidel said.
“Imputation tax credits on dividends actually redistribute wealth to lower income investors and take wealth off higher income investors. Mr Shorten clearly doesn’t understand the practical implications of the policy and demonstrates a clear disregard for plight of low income earners.”
From the perspective of all Australians working hard to set up themselves for retirement, these comments do not inspire confidence and the attacks on super needs to stop if we are going to be serious about encouraging self-funded retirement!
This information is current as at 14/03/18.
This article has been prepared by Heart1Stop, a social media brand owned by Heart Mortgage Services and Heart Financial Advisers. The information contained in this article is an overview or summary only and it should not be considered a comprehensive statement on any matter nor relied upon as such. The views expressed here are not those of Heart1stop, Heart Mortgage Services, Heart Financial Advisers, shareholders, directors or staff and associated contractors and business associates. This article has been prepared without taking into account any person’s objectives, financial situation or needs. Because of this, you should, before acting on any information contained in this article, consider its appropriateness, having regard to your objectives, financial situation or needs. Any taxation information contained in this article is a general statement and should only be used as a guide. It does not constitute taxation advice and is based on current laws and their interpretation. Each individual’s situation may differ, and you should seek independent professional taxation advice on any taxation matters. While the information contained in this article may contain or be based on information obtained from sources believed to be reliable, it may not have been independently verified. Where information contained in this publication contains material provided directly by third parties it is given in good faith and has been derived from sources believed to be accurate at its issue date. It is not the intention of Heart1Stop or Heart Mortgage Services and Heart Financial Advisers that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. To the maximum extent permitted by law: no guarantee, representation or warranty is given that any information or advice in this publication is complete, accurate, up to date or fit for any purpose; and no party of Heart1Stop or associated entities as mentioned is in any way liable to you (including for negligence) in respect of any reliance upon such information. This article may also contain links to websites operated by third parties ("Third Parties") who are not related to Heart1Stop. These links are provided for convenience only and do not represent any endorsement or approval by us.