The main function room of the Merimbula RSL Club was packed to capacity on Monday, largely with retirees keen to express their displeasure over Labor’s proposed changes to franking credits.
The subject was being investigated through a House of Representatives Standing Committee on Economics.
With Liberal MP Tim Wilson as chair it was mainly a conversation of the party faithful.
There were presentations by about 13 individuals some of some were representing companies in the local financial sector.
The changes to franking credits could reduce the the income of some self-funded retirees.
Dividend imputation (franking credits) was introduced by then-Labor treasurer Paul Keating in 1987 to eradicate double taxation. It entitles a shareholder to a tax credit on a dividend which is equivalent to the tax already paid by a company.
The Howard government made the system more generous in 2000 so that if a shareholder had an imputation credit higher than their personal tax liability, the investor would receive the excess credit as a cash refund.
Labor wants to bring the system back in line with its original 1987 design starting July 1, should they win the federal election this year. They will not change the system of dividend imputation, but plan to remove the ability to claim excess imputation credits in cash from the Australian Taxation Office (ATO).
Many speakers claimed they had saved money after being prudent with their earnings, and planned for their retirement and now the amount they might receive was in jeopardy.
Baden Cameron said the proposals broke the fairness rules “because it targets one group”.
“If this policy goes ahead I will be forced to join a industry fund. Local professional services like accountants will not have my business if I move to an industry fund,” he said.
Industry super funds are not affected by the proposals and aim was taken by several speakers at the “union backed funds” but deputy chair of the committee and member for Kingsford Smith, Matt Thistlethwaite, said they were not union backed funds because there was government oversight and independent representation on the industry funds boards.
Jon Gaul of Tura Beach said he retired in 2007 having established his fund in the ‘80s and drew $47,700 including $6000 for credits.
“Retirees funds would be ransacked by Bill Shorten. There is no way this is a fair go especially while you Mike Kelly enjoy 15 per cent super fund only available to Parliamentarians,” Mr Gaul, who is president of the Liberal Party Merimbula-Eden branch, said.
“I fear this will discriminate against our children and become a death tax.”
But Mr Thistlethwaite asked where in the superannuation legislation it said you have to provide for your children, to which Mr Gaul said he was talking about “the real world”.
Darren Stevens of Sapphire Coast Financial Services said that the change to credits could mean 20 per cent less in funds. He speculated that people would sell some of their shares or move out of the funds threatening his job.
Merimbula was selected as the location for the only regional NSW public hearing of the federal Parliamentary inquiry into the impact of removing franking credits.
The change won’t apply to cash refunds to charities and not-for-profit institutions (like universities).
The ALP updated their original proposal to also allow Centrelink pensioners (full and part) and allowance recipients to continue to receive cash refunds. This extends to self-managed superannuation funds (SMSFs) that had at least one pensioner/allowance recipient before March 28, 2018.