Families and singles rebates in Shorten’s sights: Frydenberg

Josh Frydenberg has warned that Labor may come after tax rebates for low income earners in light of its “retiree tax”.

Opposition Leader Bill Shorten. Picture: AAP

More than 127,000 families and singles would suffer cuts to their private health rebates if Bill Shorten’s rationale for targeting retirees’ franking credits were applied across the tax system, Josh Frydenberg has warned.

Amid accusations of a Labor “retiree tax”, the Opposition Leader insisted it was “crazy” for self-funded retirees to keep receiving cash tax refunds when they had no taxable income.

“The reason we’re doing this is there is no principle that says it is fair that a non-taxpayer gets a tax refund, a cash tax refund,” Mr Shorten said earlier this month.

The Treasurer said Mr Shorten’s justification raised questions about Labor’s commitment to the private health insurance rebate.

“As he should be aware, the private health insurance rebate is a refundable tax offset with a tax refund payable if your taxable income is below a certain level,” Mr Frydenberg told The Australian.

“Having come after retirees, is Labor also now coming after lower-income families and singles who get a cash refund?”

Assistant Treasurer Stuart Robert said other refundable tax offsets included the national rental affordability scheme, introduced by Labor in 2008.

Opposition Treasury spokesman Chris Bowen said: “We have no plans to make changes to other refundable tax offsets arrangements.

“This is a completely false analogy. The PHI rebate and NRAS operate very differently to dividend imputation, and cannot be compared,” Mr Bowen said.

“They typically don’t result in substantial cash refunds paid out to individuals who don’t pay any income tax.”

Whereas the PHI rebate is designed to offset money already spent on premiums, Mr Bowen said cash refunds for unused dividend imputation credits were essentially “taxpayer-funded cash handouts”.

“This loophole will soon cost taxpayers $8 billion a year — more than we currently spend on public schools. This is unfair and unsustainable,” Mr Bowen said.