Anthony Albanese is accused of breaking ANOTHER election promise with two major tax changes: here’s what it means and who it will most affect
- Labor to announce changes to postage credits
- Retirees will be most affected
- The government has already announced changes to super
Anthony Albanese has been accused of breaking yet another election pledge as his government pushes through new postage credit tax laws that will affect Australian shareholders.
The Prime Minister has already coped with the political heat over his controversial new pension tax policy and now faces another political battle over appropriation franking – a policy that likely cost Labor the 2019 election.
The government introduced a bill last month that would limit companies’ ability to pay postage credits to shareholders as part of a share buyback or capital increase.
Debate on the bill resumes on Tuesday, with shadow treasurer Angus Taylor accusing Labor of breaking another election promise.
Postage discounts are tax credits that prevent shareholders from being taxed twice.
The scheme gives tax credits to shareholders on their dividends, taking into account how a company they invested in has already paid the 30 percent corporate tax.
Mr Albanese had previously ruled out major changes to both the pension and postage credits.
But Labor’s proposals would affect the over-75s and pension funds.
Anthony Albanese’s government (pictured with partner Jodie Haydon) has been accused of breaching yet another election pledge with major changes to postage appropriations to be announced shortly
WHAT ARE FRANCE CREDITS?
Postage discounts are tax credits that stop ‘double taxation’.
Companies have already paid taxes on their profits when they distribute them as dividends to shareholders.
Dividends, which are generally financed from profits, are then paid to shareholders ‘fully prepaid’, subject to a ‘postage credit’.
At tax time, shareholders receive the value of the postage credit as a tax refund.
That means they don’t pay taxes on the profits because a company has already paid taxes. This prevents double taxation.
An important change that the government is implementing is that dividends from capital increases are no longer eligible for postage credits.
They would also give off-market share repurchases the same treatment as on-market share repurchases.
On-market buybacks are when a company buys its shares through an exchange, such as the ASX, while off-market buybacks are when a company offers to buy back shares directly from the shareholder.
The changes announced Tuesday would deliver nearly $600 million in budget savings over the next five years.
Australians over the age of 75, Australian super funds and corporations and charities appear to benefit the most from postage credits, according to data released by the government last week.
Mr Taylor criticized the changes, arguing they would hurt those living off their dividends during a cost-of-living crisis.
“The Prime Minister and Treasurer went to the election and promised Australians they would ‘not touch’ postage credits, and yet they added two tax bills to Australian shareholders in 10 months,” he said.
“This is just another tax on super. Another tax on Australians’ retirement savings. And another broken tax promise.
‘Whether it’s franking appropriations or pensions, Labor has no control over spending and so it goes after Australians’ hard-earned dollars to pay for its pet projects.
“You can’t trust Labor to deliver on promises and you can’t trust Labor to run the economy.”
Bill Shorten brought a policy-changing postage appropriation bill into the 2019 federal election and later admitted the plan contributed to his loss.
The Prime Minister promised weeks before the May 2022 elections that there would be no pension changes.
But late last month he announced his Labor government would prevent Australians with more than $3 million in super contributions from 1 July 2025 and pay a favorable rate of just 15 per cent.
Aussies over 75, Australian super funds and companies and charities appear to benefit most from postage credits