Brutal tax grab targets self-funded retirees

The policy will have very serious, profound implications and long-term impacts on the income needed to sustain St George and Sutherland Shire retirees who live independently of the age pension.

Labor’s new policy fails to recognise that tax has already been paid by the companies owned by their shareholders.

By not returning imputation credits on dividends, the ATO would be retaining a share of company profits earned by the company owners on lower taxable incomes.

The impact of this, should it begin in July 2019, will be felt by thousands of retirees living in the region. Across the country, most of the 1.9 million Australians who are currently fully or partly self-funding their own retirement income will be affected. This number will grow significantly over the next 20 years.

There are real concerns that it will push more retirees onto the aged pension much earlier than would currently be the case.

This would effectively negate the short-term revenue gains anticipated from this Labor Party policy.

An example: The impact of this policy is shown by a couple living in the St George area who have just retired and are self-funding their retirement from assets of $1 million supporting an income stream. Depending on their portfolio they could now lose approximately $7,000 per annum each and every year from their income. This significant loss will be compounded if this couple need to draw down more from their capital to maintain their retirement income. This capital reduction would then result in less income returns and and a cycle of further capital reduction and reduced income.

When considering this example and how this couple are not far above the asset threshold for the aged pension, it is amazing that it has been claimed by Labor that this policy will only impact on a very small number of very wealthy retirees.

This new policy is another example on the failure of successive governments and opposition parties to understand and support the principle of fairness and equity for those who through their careful and diligent management can partly or fully self-fund their retirement needs.