Retiree To Lose $20,000 A Year Under Labor

Toya and Laurie Adams would be about $20,000 a year worse off. James Brickwood Retiree Toya Adams, a former nurse and air hostess, is one of many retirees angry about Labor's proposal to stop franking credit refunds.

With her husband Laurie, she has run a self-managed superannuation fund (SMSF) for 11 years. The couple would be worse off by $20,000 a year if the Labor proposal came to fruition.

Last month Opposition Leader Bill Shorten announced a Labor government would make all franking credits non-refundable. This was later tweaked with a "pensioner guarantee" whereby everybody receiving a government age pension of entitlement would still be able to get refunds.

SMSFs with at least one member receiving a government pension on or before March 28, 2018, would also be exempt.

Unused franking credits are useful to retirees paying little or no tax as they are refunded from the Australian Tax Office, boosting annual income.

Ms Adams, 62, says: "It is mischievously misleading for Labor to attempt to oversimplify the portrayal that all SMSF trustees in pension phase – and all shareholders who receive imputation credits and are on zero tax rate – as mega-wealthy multimillionaires who are bludging off taxpayers."

She says she has saved hard and worked two jobs to ensure an adequate retirement pension and prevent being a burden on the taxpayer."

I am not a privileged mega-wealthy tax bludger, although I am a SMSF trustee and investor who does get some taxation windfalls from following the super rules that Labor and Liberal designed," she adds.

Part of the solution

Ms Adams, who has voted for Labor, is a self-taught investor in Australian and overseas equities, dividing the portfolio between growth and income stocks. She and Laurie Shears, a retired pilot, regularly attend investor conferences and seminars.

She was on the committee of the Australian Investors Association, is a member of the Australian Shareholders' Association and SMSF Association and takes a keen interest in investment policy, particularly personal finance and taxation."

Like many who worked hard to provide for their own retirement, I feel demonised, victimised, disincentivised and now penalised," she says. "Can't we do better in Australia than this popularist policy? How are we to be self-reliant if we are not rewarded but penalised?"

Labor changes would cost the couple about $20,000 in annual income."

I had no 'luck' building my retirement income, just four decades of delayed gratification. Meanwhile, friends went skiing and holidaying and mocked me for being 'obsessed by money'. They now live off the aged pension and tell me 'how lucky I am'. Self-funded retirees are part of the budget solution and not the problem and should be respected as such."

Narrow target

She says Labor's proposal around imputation credits does not increase the taxes or decrease the income of the "real" wealthy. "They typically have some form of tax to offset, which can extend to other income classes, such as property," she adds.

Ms Adams also says the Labor proposal has a far too narrow target. "It does not diminish the pensions of any who are on a public service pension, including the politicians, as the Future Fund and government revenue is exempt from tax and all such imputation credit changes," she says.

"It also does not impact those in industry or retail super funds, as these large funds have pooled funds with tax offsets."

She feels SMSF trustees are being unfairly penalised."

An SMSF allows a level of control to ensure protection of your nest egg from a (by and large) self-interested, poorly regulated industry which I believe, along with the governments of the day, also has its snout too deep in our super trough. SMSF trustees and investors put ongoing conscientious work into managing the unnecessarily over-complicated rules of their SMSF and manage the precarious and stressful market risk that investors face."

By Duncan Hughes

Financial Review

13 April 2018

Read more: Follow us: @FinancialReview on Twitter | financialreview on Facebook

#specialist #will #enduringpowerofattorney #smsf #estateplanning #law #Contribution #Fund #Retail #SMSF #Cap #Superannuation #EPA #lawyer #Retiree #Pension

Recent Posts

See All

ASIC Should Withdraw Its SMSF Factsheet

The Australian Securities and Investments Commission (ASIC) should withdraw its Self-Managed Superannuation Fund (SMSF) factsheet because it contains “an array of seemingly deliberate inaccuracies”, a

SMSFA Points To ASIC Fact Sheet Inconsistencies

The SMSF Association has criticised the corporate regulator’s focus on the risks of SMSFs in its mailout campaign targeting new trustees, saying the data sources used in its fact sheet are inconsisten