A retiree advocate alliance has come out swinging against Labor’s proposal to disallow cash franking credit refunds, arguing SME owners will suffer a “significant fall” in retirement income.
“Many small business owners may be unaware of the impact of Labor’s proposal on their retirement plans,” the spokesperson for the recently formed Alliance for a Fairer Retirement System, Professor Deborah Ralston said.
“Those who have invested equity in their company and rely on dividends to fund their retirement may be surprised to find a significant fall in income.”
Speaking following a meeting with the Shadow Treasurer Chris Bowen, and the CEO of the Council of Small Business Australia, Peter Strong, the alliance said its formation was triggered by the “growing fabric of discontent” felt by “everyday Australians” who could be impacted by the proposal.
The alliance is made up of the spokesperson, Ian Henschke from National Seniors Australia, John Maroney, CEO the SMSF Association, Alan Marshall, the president of the Association of Independent Retirees and Michael Lorimer, managing director of the Self-managed Independent Superannuation Funds Association (SISA).
“The alliance’s focus is to explore options to fix problems with the existing superannuation taxation, age pension means testing and broader retirement income system,” the alliance said.
According to a case study shared by the alliance, Arthur Smith, a small business owner in Queensland planning to retire in the near future could stand to lose one-third of his retirement income that was previously made up of dividends and franking credits.
He told the alliance he considers the proposal to be an “attempt to ‘steal’ from us in order to fund a whole range of policies that we don’t necessarily agree with”.
However, Stephen Koukoulas of Market Economics said the proposed changes could see investors take a step away from “lazy” asset allocation decisions.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.