Mar 28, 2018

Labor Promises to Exempt Pensioners from Tax Policy

Promised changes in tax policy would suggest that the government was planning to axe payouts to non-tax paying investors. This means there would be an end to cash handouts to share investors.

However, Bill Shorten announced yesterday that more than 300,000 pensioners will be exempt from this change.

Under the “pensioner guarantee”, all older Australians who get a pension with individual shareholdings will still be able to receive cash refunds.

“This includes individuals receiving the age pension, disability support pension, carer payment, parenting payment, Newstart and sickness allowance,” the policy states.

“Self-managed superannuation funds with at least one pensioner or allowance recipient before 28 March 2018 will be exempt from the changes.”

Though this policy is targeted at high earners and people who have large amounts of money in their super funds, there were fears that it will negatively impact people who have low income and have shares.

There was suggestions that these changes would hurt pensioners, but Mr Shorten has made his position clear after two weeks of heated debates.

“When did it go out of fashion that when you have a big idea, a big policy, which most experts reasonably agree is heading in the right direction, that you stop listening to people?” he asked reporters.

“I’m grateful to some of the pensioner groups who have spoken to us.”

According to Treasurer Scott Morrison says 800,000 Australians will still be affected.

However, in regards to older people, the changes ensure that approximately 230,000 part-pensioners, 45,000 full-rate pensioners and 25,000 other income support recipients will not suffer from the cuts.

Shadow Assistant Treasurer Dr Andrew Leigh spoke with Ross Greenwood on his radio show Money News and said “good policymaking is about listening as much as it is about talking”.

“We’ve very much heard the message from people about the concerns and impacts on pensioners.”

“So we what’ve said is every pensioner will be able to benefit from cash refunds,” he said.

“This is a tax concession skewed towards ‘the top’, by closing it off we do not change the considerable tax advantages that are offered in superannuation.”

“No one pays more tax under our change. No one ends up having less in their super.”

Dr Leigh made a clear point that “superannuation is not a way to send tax preferred money to your kids. It is intended to be spent in order to provide for you in retirement.”

“The notion that retirees should draw on their capital as well as live on their returns, I think, is a pretty reasonable one. It’s what most Australians would expect.”  

“We look after pensioners and by focussing on pensioners, you’re using the heavy targeting that is in the pensions. In fact ours is one of the most heavy targeting in the world with both an income and an assets test.”

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