SMSF entrants will hesitate to invest in self-funded retirement on the back of the Labor Party’s imputation credits policy proposal, according to the Institute of Public Accountants (IPA).
IPA chief executive Andrew Conway today said: “Self-managed superannuation funds are a viable and important part of Australia’s superannuation system and this proposed measure will deter entrants from investing in their future self-funded retirement.”
The policy will also affect thousands of self-funded retirees – those people who place no pressure on the pension system, Conway said.
Dividend imputation provides shareholders with an imputation credit on a dividend that is equivalent to the company tax already paid on that dividend. If the imputation credit is higher than the tax they need to pay, the shareholder receives the excess as a cash refund from the ATO.
Conway said given Australia’s ageing population, future governments will be unable to fund people’s retirement.
“Self-retirees or prospective self-retirees who seek to invest to secure a self-funded retirement plan, alleviating pressure on a government-funded pension system, should be incentivised, not penalised,” he said.
“Australia should be looking to every avenue possible to reduce long-term reliance on government-funded pensions.”
Dividend imputation was introduced by then-Labor treasurer Paul Keating in 1987 to avoid double taxation. However, cash refunds began under the Howard government in 2001.