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!
Disclaimer
This information is current as at 14/03/18.
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