THE Labor Party's proposal to increase capital gains tax is 50 per cent has been described as "an unjustified slug" on retirees.
Association of Independent Retirees acting president Wayne Strandquist said self-funded retirees rely solely on returns from their investments to provide income to live.
"These returns can come from interest, share dividends, franking credits, property rents and the sale of investment assets," Mr Strandquist said.
"The Labor Party's proposal ... will mean a substantial reduction in the investment returns for retirees who have saved their entire working lives so that they don't have to rely solely on the government age pension."
Mr Strandquist said when retirees sell shares or other growth assets, the discounted net capital gains are added to their income for the year in which they sold the investment. They pay tax on this income for the year even though the capital growth of the assets may have been realised over 20 years or more.
He described the purchase and sale of assets as an important process for retirees, as most investment strategies rely on adjusting portfolios to minimise risk and maximise investment growth.
It was also necessary, he said, to sell down assets such as shares and property to provide income for living expenses and to fund aged care accommodation.
"Unlike the loss of franking credit refunds, there will be no pensioner exemption for the 50 per cent hike in capital gains tax," Mr Strandquist said.
"All individual investors who purchase investment assets like shares and property after January 1, 2020, will pay 50 per cent more tax on their future capital gains.
"Together with the loss of franking credits refunds, no negative gearing for pre-owned properties and other proposed tax changes, it is clear the Labor Party thinks retirees are a soft target."
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