Labor to abolish dividend imputation ­refunds from ATO, hitting 1 million retirees

MORE than a million taxpayers, many of whom get the aged pension, will see their income tax refunds cut under a Labor government.

MORE than a million taxpayers, mostly retirees, many of whom get the aged pension, will see their income tax refunds cut under a Labor government.

Opposition Leader Bill Shorten will announce today that, if elected, Labor will ­abolish dividend imputation ­refunds from the ATO.

The policy will also hit 200,000 self-managed superannuation funds.

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The refunds, introduced by the Howard government, see money paid to those whose marginal income tax rate is lower than the rate of company tax paid on dividends from shares they own.

The vast majority of the refunds are paid to self-funded retirees with gross incomes of up to $87,000 a year. But Labor concedes that refunds are also received by low-income retirees, some of whom get some level of the age pension.

The change, to apply from July next year if Labor wins, will save the Commonwealth $11.4 billion in just two years.

In a speech in Sydney today, Mr Shorten will claim the plan will vastly improve Labor’s ­fiscal position — meaning the party is well-placed to match the government’s Budget figures over forward estimates.

Opposition Leader Bill Shorten will announce today that, if elected, Labor will ­abolish dividend imputation ­refunds from the ATO. Picture: Kym Smith

“This change only affects a very small number of shareholders who currently have no tax liability and use their imputation credits to receive a cash refund,” Mr Shorten will argue.

“These people will no longer receive a cash refund, but they will not be paying any additional tax.”

But the move — coupled with changes to negative gearing and family trusts — threatens to reignite a class war by again axing concessions perceived to benefit the wealthy.

Labor insiders argue it also lets them match any promise from the Turnbull Government of tax cuts, believing it could “snooker” the government as Labor is not saddled with a $65 billion hit to the Budget with company tax cuts.

Mr Shorten will use his speech at Sydney’s Chifley Institute to reinforce his economic vision, which he says sets higher levels of economic growth, increases productivity, produces a stronger Budget and creates “fairer” wages.

Opposition leader Bill Shorten will claim his plan to abolish dividend imputation ­refunds from the ATO will vastly improve Labor’s ­fiscal position. Picture: AAP/Mick Tsikas

He will say that as long as Australia’s tax system continued to be an “opt-out” for those with the most money and resources, then more and more of the taxation burden would “fall on the shoulders of ordinary Australians”.

“Every dollar that slips through these loopholes is a dollar that cannot be invested in the Australian people and their potential,” he will say.

“Every dollar allocated to tidy little arrangements for people who already have millions of dollars is a dollar that can’t be used to repair the Budget and bring Australia back to surplus.”

He will argue the ­Coalition has failed at genuine Budget repair as the deficit ­remains at over $23.6 billion.

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