Australians could lose big under shares plan

INVESTORS reliant on share returns are set to have their cash refunds slashed amid fears changes to tax credits could push tens of thousands of people on to the aged pension.

If elected next year, the Federal Labor party would deny investors franking credit cash refunds on their shares, hitting the hip pockets of Australians with share portfolios hard.

It will not just affect selffunded retirees but also those on low incomes who rely heavily on cash refunds from Australian shares.

National Seniors Australia’s chief advocate Ian Henschke warned it could result in “odd behaviour” by those on the cusp of getting a pension.

“It may well result in some odd behaviour because the franking credit issue is affecting hundreds of thousands of retirees,” he said.

“It could see more people going on the pension.”

He said it could result in those hoping to keep their cash refunds having to adjust their financial affairs by getting rid of some of their assets, which are means tested for pension eligibility.

Labor said under the proposed changes — which would not be grandfathered — it would exempt age pensioners, part pensioners, veterans pensioners and income support recipients under the massive revamp to the nation’s divi- dend imputation system.

Latest figures from Treasury papers showed in 2014-15 individual share investors raked in $2.3 billion in franking cash credits.

Of those, more than half who received cash refunds (671,400) had incomes below the $18,201 tax-free threshold.

About 95 per cent of 1.07 million Australians had taxable incomes of less than $65,000.

Dividends paid from company profits are subject to Aus- tralian’s company tax rate of 30 per cent. This means shareholders receive a rebate for the tax paid by the company on profits distributed to them as dividends.

Sydney self-funded retiree Wayne Hampton, 65, a retired financial adviser, labelled the changes “unfair.”

Under the proposed changes there would be a “pensioner guarantee” for full or part-pensioners which means they would be excluded from the changes.