The retirees ‘hung out to dry’

Have self-funded retirees been hung out to dry in the Federal Budget? Left to plot their own course through the COVID-wrecked economic landscape? And what about those tax cuts that analysts now say are “totally shifty”?

But self-funded and partially self-funded retirees first.

Most are precariously relying on income from super, the share market, property and bank deposits – and income and growth in all these areas is a challenge.

The Association of Independent Retirees (AIR) says older Australians have been overlooked in the government’s post-COVID-19 recovery plans, but has suggested some possible solutions to ease the pain.

AIR president Wayne Strandquist says retirees are not requesting special consideration but are “seeking fairness in government support along with the rest of the community while COVID-19 continues to seriously impact the economy”.

He says the association is seeking government support for a range of support measures “to assist retirees to come though the COVID-19 crisis and continue to fund their own retirement”. 

It is seeking the provision of offset assistance, the issuing of government-backed infrastructure bonds for retirees, a reduction in the deeming rate and in the Age Pension asset and income test taper rate.

The association is also calling for the introduction of continuous Centrelink valuation of assets for deeming and threshold purposes, more super drawdown flexibility for retirees over the age of 75 and an increase to the threshold for the Commonwealth Seniors Health Card card.

But about those tax cuts.

The Australian Taxation Office (ATO) has already started work on adjusting the pay-as-you-go income tax schedules after Labor said it would support the federal government move to bring forward the stage two tax cuts in the Budget. ATO officials say it will take six to eight weeks for employers to make the appropriate changes to their payroll systems. But The New Daily is reporting that the tax cuts are worth $1080 and not $2160 as announced by the Treasurer on Tuesday.

“Under our changes, more than seven million Australians receive tax relief of $2000 or more this year,” Josh Frydenberg said.

“Lower and middle income earners will this year receive tax relief of up to $2745 for singles, and up to $5490 for dual income families compared with 2017–18.”

The New Daily says it is that final caveat – the comparison to 2017–18 – some have missed, “because since then, under stage one of the tax cuts in July 2018, many Australians have already received $1080”.

The $2160 “tax relief” is the sum of changes announced in the past three budgets combined – not Tuesday night alone – and people have already been enjoying some of those changes for two years, it says.

“Indeed, a table buried in the budget documents shows people on incomes from $50,000 to $90,000 will get ‘0’ additional tax cut under the bringing forward of the stage two tax cuts,” The New Daily reports.

The only benefit those people will get is the $1080 in an extension of the Low and Middle Income Tax Offset (LMITO). However, that only gets a one-year extension.

The Australia Institute senior economist Matt Grudnoff said: “It’s totally shifty, totally disingenuous.

“When people look at what’s changed in this Budget, they’ll look for whether they’re paying more or less, and how much. They’re only getting half the tax cut this financial year that the government is trumpeting.

“Next year, people go back to paying exactly what they were paying last year.”

Labor’s shadow treasurer Jim Chalmers says the government is “notorious for over-claiming”.

“There’s always lots of spin. There’s always trying to present what they’re proposing is better than it is. And others have raised that issue with us as well.

“The thing that concerns us about support for workers is that the average tax cut being brought forward is about $50 a fortnight for the average worker at the moment.”

Would you welcome the Association of Independent Retirees’ suggested assistance measures for retirees? In what other ways could the government help?

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Written by Janelle Ward

Energetic and skilled editor and writer with expert knowledge of retirement, retirement income, superannuation and retirement planning.

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