In his budget reply speech, Opposition Leader Bill Shorten reinforced his plans to put an end to cash refunds for excess dividend imputation credits.
“If the Tax Office pays a tax credit to someone who pays no tax, this is a gift. It is a gift that is costing taxpayers nearly $6 billion every year,” said Mr Shorten.
“It’s not illegal, it’s not immoral, but it’s just not sustainable anymore.”
Instead, Labor, if elected, will invest $2.3 billion over the next four years to help cancer sufferers with the cost of cancer scans, medical appointments, and medicine costs.
$600 million will be put towards eliminating all of the out-of-pocket costs for diagnostic imaging, with $433 million to cover specialist consultations for cancer patients,.
“Cancer is a curse. I wish I could stand here tonight and guarantee that we’ll find a cure for each cancer,” said Mr Shorten.
“Until the day that we find a cure, I promise the men and women of Australia this: under Labor, if you’re battling cancer, you focus on getting well without worrying about going broke.”
Mr Shorten also drilled home plans to limit negative gearing to new properties, with the date now set at 1 January 2020.
“Instead of patronising millions of young Australians with lectures about cutting back on smashed avo, why don’t we tell them the truth? Getting together a 20 per cent deposit plus stamp duty is much, much harder than it was 20 or 25 years ago,” he said.
“It is even more difficult when your government uses your taxpayer money to subsidise the property investors bidding against you. The intergenerational bias that the tax system has against young people must be called out.”
BDO tax partner Mark Molesworth said Mr Shorten’s commitment to tax reform was welcomed, but urged the Opposition Leader to consider further reform measures beyond his current proposals.
“Mr Shorten has confirmed that the Labor party intends to fund many of its promises, including its Medicare Cancer Plan, by removing most refunds of franking credits, introducing restrictions on negative gearing and reductions in the CGT discount,” said Mr Molesworth.
“We would urge Labor to commit to holistic, system wide reform considering all taxes, particularly those dead-weight taxes that are a drag on business. In our view, tax reform is about more than one-out measures such as negative gearing, CGT discount and franking credit changes.”
Mr Shorten also confirmed it would be introducing the Australian Investment Guarantee, a permanent feature which will allow all businesses to immediately deduct 20 per cent of any new eligible asset worth more than $20,000.
While matching the government’s plan to give low-to-middle income earners tax offset of $1,080, Labor will not back the government’s plan to introduce a mega 30 per cent tax bracket.
“We won’t back a plan that gives a retail worker on $35,000 less than $5 a week while an investment banker pockets more than $11,000 a year,” said Mr Shorten.
“This is not a tax plan; it’s a ticking debt bomb.”
Jotham Lian is the news editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
With a focus on breaking news and exclusive analysis, Jotham keeps Accountants Daily readers up to date with company moves, tax updates and essential business and client strategy.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.