LABOR’S PROPOSED POLICY: HITTING SELF-FUNDED RETIREES
The Labor Party's proposal to end cash refunds for excess dividend imputation credits will hurt thousands of self-retirees - these are people who place no pressure on the pension system, according to the Institute of Public Accountants (IPA).
Dividend imputation provides the shareholder with a tax or imputation credit on a dividend which is equivalent to the company tax already paid on that dividend. If the imputation credit is higher than the tax they need to pay, the shareholder receives the excess as a cash refund from the ATO.
“Self-retirees or prospective self-retirees who seek to invest to secure a self-funded retirement plan; alleviating pressure on a government funded pension system, should be incentivised, not penalised,” said IPA chief executive officer, Andrew Conway.
“Australia should be looking at every avenue possible to reduce long-term reliance on government funded pensions.
“Considering the aging population factor in Australia, future governments will simply not be able to fund peoples’ retirements.
“Self-managed superannuation funds are a viable and important part of Australia’s superannuation system and this proposed measure will deter entrants from investing in their future self-funded retirement,” said Mr Conway.