If you’re receiving franking credit refunds, you’re not self-funded: Shorten

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Labor Leader Bill Shorten has said that retirees who are receiving refunds of franking credits aren’t self-funded.

Shorten, in response to a question from a retiree on Q&A, noted that the Age Pension is means tested for income and assets.

Referring to a tax change in 2001 allowing refunds of excess franking credits, Shorten said: “It’s a government payment.”

“You’re not self-funded when you’re getting a government payment because you own shares. It’s just not means tested.”

Labor’s policy is to stop refunds of franking credits, from 1 July 2019. Shorten has previously called these payments a “gift”, which he repeated on Q&A.

“So this gift, when you get an income tax cheque in the mail, and you haven’t paid income tax, its a gift. And the thing is, this gift is paid for by millions of people who go to work.”

“Did you know that half a million Australians pay on average $11,000 in tax a year, every dollar that these half a million people pay in taxes goes to the gift? To people who happen to be lucky enough to own shares in retirement, get a dividend, and then we top it up.”

Asked if he accepted that the policy would impact a percentage of low-income retirees with SMSFs, Shorten answered: “Low-income people are on the pension.”

“Now that doesn’t mean that it’s illegal or immoral to get a free payment from the government because you own shares. I’m not judging it. I get it. I wouldn’t want to loose that either. I understand that point. But it’s now costing 6 billion dollars [a year].”

Asked again if he accepted that some low-income retirees were going to be hit by the policy, Shorten argued that retirees should spend down some of their retirement savings.

“Well, what your saying is that when you’re a retiree you never have to use any of your shares.”

“The whole principal of superannuation was to give you enough to be comfortable in retirement. It was never meant to be that the government would top you up, you could keep all your shares and you’d never have to spend a cent in retirement.”

“But you’ve got to ask yourself a question: how do we pay for aged care in this country? How do we pay for dental care in this country? How do we pay for medical care in this country?”

“It’s a change, we’ve still got a safety net. But what I understand is not everyone likes this, but there is a sensible reason to do it. Because if its costing the Budget $6 billion now… how much will it have to cost the Budget before we say we can’t afford it?”

“Its gone up 12 times in the last 18 years, when will it be too much?”

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