Dividends, Tax Credits and Pensioners

Article published 19 March 2018

Dividends, Tax Credits and Pensioners

Retirement Income

Although dividend imputation reform proposed by the Opposition would mostly affect the wealthy, pensioners with small franked-dividend-paying shareholdings could also lose a significant amount of their income.

Low-income retirees have made their retirement plans based on the understanding that they would receive these tax credits in cash. For many, investing in defensive stocks rather than a term deposit has been a leap of faith, and they should not be punished for it.

However justified dividend imputation reform may be the practical consequences for low income retirees would be serious.

The Opposition went into damage control and committed to pensioners being compensated for every dollar they forego as a result of dividend imputation reform. Later that day this pledge was withdrawn.

At this point it is not yet clear whether the Opposition would go through with their reform as initially announced. CPSA is seeking clarification and will keep its members and supporters informed.

Closing tax loopholes is a worthy policy. The tax revenue this frees up can help improve social spending to support the most disadvantaged, but this can’t be done at the expense of those not much better off

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