Tax refunds from shares capped under ALP plan to save $11 billion

WEALTHY retirees would be cut off from generous tax refunds in a Robin Hood-style cash grab Bill Shorten says will save $11 billion from the Federal Budget.

WEALTHY retirees would be cut off from generous tax refunds in a Robin Hood-style cash grab Bill Shorten says will save $11 billion from the Federal Budget.

The Federal Opposition Leader will today double-down on his attacks on the top end and announce a cap on a tax concession some shareholders use to claim a refund.

Federal Labor leader Bill Shorten. Picture: AAP / David Mariuz

The move builds on Labor’s other proposed reforms particularly aimed at high income earners including limiting negative gearing to new properties.

In a speech today, Mr Shorten will accuse the Turnbull Government of increasing income tax on working Australians “instead of winding back unsustainable largesse for high-income earners”.

Currently shareholders can claim tax credits from shares as a deduction to lower the amount of tax paid. The “dividend imputation” scheme essentially stops company profits being taxed twice.

But Labor’s plan would end a situation where people who pay a low tax rate, including self managed super funds, use the system to claim a cash refund.

“This change only affects a very small number of shareholders. These people will no longer receive a cash refund — but they will not be paying any additional tax” Mr Shorten said.

Parliamentary Budget Office modelling showed the move would save $11 billion over four years and $59 billion over 10 years.

Mr Shorten said about 92 per cent of Australian taxpayers did not receive cash refunds from this system, known as dividend imputation.

Instead most shareholders use it to reduce their tax bill, which Labor had no plans to change.

“As long as Australia’s tax system continues to be opt out for those with the most money and resources, then more and more of the taxation burden will fall on the shoulders of ordinary Australians,” he said.