The Alliance for a Fairer Retirement System, comprised of several industry associations, is working with the Council of Small Business Organisations Australia (COSBOA) to highlight concerns about proposed Labor policy to disallow refunds of excess franking credits.
Alliance spokesperson Deborah Ralston said the group has been ensuring millions of Australians who are shareholders in Australian companies, including self-funded retirees and SMSF members, are aware of the effects of a potential banning.
“However, there are many thousands of small business owners who are not aware that the proposal could severely damage their retirement plans and that’s why collaborating with COSBOA is so important,” Ralston noted.
COSBOA chief executive Peter Strong said small business people need to be aware of how these changes may impact on their income.
“That is why we are working closely with the alliance. It’s unfair for a person who has reinvested income back into their business in good faith, planning for their retirement while doing so, to have their plans changed by a decision they couldn’t predict,” Strong noted.
“Small business owners who take their income from their company and are either in retirement or have lower incomes may be in danger of losing franking credit refunds that could substantially reduce their income.
“With around 25 per cent of small businesses being in a company form – about 550,000 businesses – many small businesses needed to check if their future plans were going to be disrupted by this proposal, especially if they were nearing retirement.
“We are in dialogue with the Labor Party on this issue.”
The alliance highlighted an example of a small business owner expecting their retirement income to drop by up to one-third if the proposal was implemented.
Ralston warned the policy is affecting people’s retirement planning.
The alliance will be hosting its inaugural Fairer Retirement Summit in Sydney in September.
The federal government and Labor have been invited to address the summit.
