No pensioner compensation, Labor confirms - 9News

 9news.com.au  3/14/2018 9:28:00 PM   

Labor won't be offering compensation to pensioners affected by its plan to scrap the $59 billion in refundable tax credits on share dividends.

The policy will impact more than 200,000 pensioners.

On Wednesday Opposition Leader Bill Shorten said he would make sure they are OK "full stop".

But his finance spokesman Jim Chalmers confirmed on Thursday the party would not be offering compensation despite reports to the contrary.

"Those reports this morning are not accurate," he told ABC radio.

But he said if some pensioners lost money as a consequence, that would be factored into the various tests that people are subjected to when they apply for the pension.

"Everybody will be in a different situation but Bill is saying for some people there will be an increase to their part pension ... but it's not true to say we're working on another package."

Accountants are warning Labor's plan to end the cash handouts for share investors will push more people on to the aged-pension, but social groups say the change will help fund key services.

Labor wants to reform the system that allows share investors, who technically don't earn a taxable income, to get government cash refunds for share dividends.

It says about 14,000 full pensioners and 200,000 part pensioners will be affected by the change.

The Institute of Public Accountants says the system has helped keep retirees off the aged pension.

However, the Australian Council of Social Services said only 16 per cent of people older than 64 pay income tax, and many who don't are quite well off.

"We have a choice. We close gaps like these in the tax system, or we charge people more for services like aged care and home care," chief executive Cassandra Goldie said.

Prime Minister Malcolm Turnbull said Labor's plan would hit retirees who rely on the cash payouts because they technically don't earn a taxable income on their share portfolios.

The original scheme was introduced under Paul Keating to make sure company profits weren't taxed twice - once with corporate tax and again via personal income tax.

But changes under John Howard in 2000 allowed investors to get a cash refund from the government if their tax imputation was more than the tax they owed.

If elected Labor will abolish the refunds, which cost $8 billion a year and $59 billion over a decade.

© AAP 2018

« Go back