Government analysis shows 60,000 South Australians would be hit if Labor cut cash refunds for franked dividends

More than 60,000 South Australians would be stung by Labor’s “retiree tax”, according to new figures.

More than 60,000 South Australians would be stung by Labor’s “retiree tax”, according to new figures.

It is estimated that the Opposition’s proposal to axe cash refunds on franked dividends for individuals and superannuation funds would snatch thousands of dollars from retirement funds.

Treasurer Josh Frydenberg will launch a fresh attack on the policy, which would have a big impact in marginal seats, including Boothby.

The analysis shows 63,457 South Australians would be affected by the policy, proposed to take effect from July 1 next year if Labor wins office.

Defence Minister Christopher Pyne’s electorate of Sturt, in Adelaide’s eastern suburbs, would be the hardest hit under the changes, with 8235 people expected to face average losses of $2200 a year.

Opposition Leader Bill Shorten in Question Time. Picture: Kym Smith

Defence Minister Christopher Pyne with Prime Minster Scott Morrison. Picture: AAP / David Mariuz

Sturt would be followed closely by the formerly blue-ribbon Liberal seat of Mayo, now held by Centre Alliance, with 7643 people affected. In marginal Boothby, 7570 people would face the new tax blow.

Mr Frydenberg said the policy was a raid on retirement nest eggs.

“The people they are hurting most are those on lower taxable incomes, with about 84 per cent of the individuals impacted having a taxable income of less than $37,000,” Mr Frydenberg said.

“This is another shameless tax grab by Labor from those who have done the right thing, grown their nest egg and planned to provide for their own retirement.”

Mr Frydenberg in September asked a standing committee on economics to investigate the implications of removing the refundable franking credits.

Submissions to the inquiry from people with self-managed superannuation funds revealed grave financial concerns from South Australians who said they had set themselves up so they would not receive a pension.

Millions of people across the country invest in Australian shares as part of their retirement nest eggs. Eligible retirees who receive dividends on shares get a refund known as a franking credit on the company tax that has already been paid on their behalf, so they are taxed only once.

Labor treasury spokesman Chris Bowen said Australia was the only OECD country with a fully refundable dividend imputation credit system.

He described it as “a concession which has grown at a rapid rate and now costs the budget more than $5 billion dollars a year”.

Mr Bowen said no pensioners would be worse off under Labor’s changes.

“Politics is about choices. Australians don’t want the best tax loopholes in the world. They want the best schools and hospitals in the world.”

Mr Bowen had previously said affected shareholders could “adjust their investment decisions to limit any impact from this policy”.

He has also described the concession, implemented under the Howard government in 2000, as an “unfair revenue leakage”.

— with Anthony Galloway