Opposition Leader Bill Shorten has declared war on wealthy Australians who own shares with a plan to raise $59 billion over the next 10 years by axing cash refunds for excess imputation tax credits claimed by super funds.
Mr Shorten will announce the scrapping of the rebate in a speech to the Chifley Institute at the KPMG offices in Sydney today. This weekend, Labor faces a threat from the Greens as it seeks to hold onto the marginal seat of Batman.
Mr Shorten says the policy change will target about 200,000 of an estimated 600,000 self-managed super funds (SMSF) in Australia. A small number of “low-income, high-wealth” retirees would also be affected.
The policy would not apply to 92 per cent of the 12.8 million Australians who lodge annual tax returns, he says.
“Every dollar that slips through these loopholes is a dollar that cannot be invested in the Australian people and their potential,” Mr Shorten will say, according to a copy of his speech.
“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.
“Firstly, 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. These people will no longer receive a cash refund, but they will not be paying any additional tax. Let me repeat that, a small number of people will no longer receive a cash refund, but they will not be paying any additional tax.”
Mr Shorten claims the policy would return the imputation system, originally designed to stop double taxation, back to the original design implemented by the Bob Hawke-Paul Keating Government in 1987.
The scheme was expanded by the Howard Government in 2000 and changed again in 2006.
“The Howard-Costello subsidy entirely distorts the original design of the dividend imputation system,” Mr Shorten will say.
“In fact, it makes Australia the only OECD country with a fully refundable dividend imputation credit system. And every dollar our opponents spend on preserving exemptions for the top end of town is a dollar they have to cut from schools and hospitals, extracted from middle Australia in tax increases or forcing taxpayers to pay more interest on the nation’s debt.”
The Labor policy, according to Fairfax Media, is aimed at raising $5.6 billion in 2020 and a similar amount every year, equivalent to about $4800 on average each year for every taxpayer affected.
Do you agree with the mooted changes if Labor were to win office? Would you be affected?