Labor to end 'millionaire welfare' by axing tax loophole

Federal Opposition leader Bill Shorten is ready to make changes to his tax plan

Federal Opposition leader Bill Shorten is ready to make changes to his tax plan

Bill Shorten has doubled down on his plan to abolish franking credit cash rebates for retiree investors, branding the status quo "millionaires' welfare" bankrolled by ordinary Australian taxpayers.

There is insufficient detail yet to make a definitive assessment of the ALP's policy, but Mr Shorten deserves credit for launching the discussion, a move that was always certain to trigger anger from those who have come to depend on an unusual distortion of the tax system as part of their income entitlement.

"We are going to stop multi-millionaire welfare funded by the taxpayers of Australia".

Mr Turnbull said many retirees were dependent on the cash payouts because they did not earn a taxable income on their share investments. "Have a word to your parents and they'll tell you how they feel about it and their friends".

Speaking to reporters in Brisbane, the Labor leader rejected calls to water down his policy proposal, or exempt pensioners, following a vigorous initial backlash from seniors groups, the self-managed superannuation fund industry and shareholders lobby groups. "They have no ideas of their own, no plans, no policies - all they engage in is scare campaigns". "Why is it that Malcolm Turnbull will fight for millionaire welfare but not the welfare of battlers?" "That's the lie that the treasurer and the prime minister are perpetrating today and again they perpetrated it on negative gearing".

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.

"Abolishing cash refunds for individuals and superannuation funds will raise about A$5 billion a year in extra revenue", Wood, Coates and Daley wrote.

"We're focused on what people have to live on", he told Sky News.

"The fact is a lot of the income people receive in retirement is "tax free" because it comes out of retirement-phase super funds", the shadow treasurer said.

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.

Former prime minister Tony Abbott argued the Coalition had a "credibility gap" on superannuation, given the adverse changes his successor Mr Turnbull tried to introduce before the 2016 election.

Former treasurer Peter Costello insists the Labor Party's plan will not affect high income earners but rather those on low incomes.

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

When companies pay dividends to Australian shareholders out of after-tax profit, shareholders receive franking credits, a credit against their own tax bill based on the tax paid by the company.

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