An analysis published recently in the Australian Financial Review, March 27, 2018 is astounding.
The Industry Super research claims that under recent the recent changes made by Labor mean that “95 per cent of the losses will be borne by the top 20 per cent” of individuals with SMSF’s. Since the that “under the policy as originally proposed by Labor two weeks ago, 80 per cent of the lost imputation credits came from the top two deciles, or top 20 per cent.”
The article continued to explain that “Labor’s changes to the policy will remove one-quarter of the original 1.2 million people who were to be hit, while retaining 94 per cent of the revenue.” This has been referred to by Labor as “The Pensioner Guarantee”.
So What is Labor NOW telling us the effect Labor’s Pensioners Guarantee has had on the policy. The number of individuals in the top 20{aa25917b5fa40a9539dec04f4403247b6010e190bbe56733eaf273b598693f19} of franking credits recipients has dropped from 240,000 to 180,000 yet at the same time the “hit” on the top 20{aa25917b5fa40a9539dec04f4403247b6010e190bbe56733eaf273b598693f19} has increased from $ 4.8 Bn to $ 5.358 Bn. Impossible ! Obviously the top 180,000 recipients MUST be included in the top 240,000 recipients so how can the “hit” increase. when the number of individuals decreases. It can’t.
Labor, in its current figures, have included OVER $ 565,000,000 more into the top 20{aa25917b5fa40a9539dec04f4403247b6010e190bbe56733eaf273b598693f19} “hit” than their own figures entitle them to. We say “OVER” because Labor did not specify in the original figures what the hit to the top 180,000 individuals would be. However, it would be significantly lower than the $4.8Bn it told us for the top 240,000, and this figure would need to be added to the $565,0000, 000 to arrive at the full distortion of the figures.
A conservative estimation of the “hit” to the top 180,000 individuals in Labor’s original figures would be 90{aa25917b5fa40a9539dec04f4403247b6010e190bbe56733eaf273b598693f19} of the hit to the top 240,000 individuals, or $ 4.32 Bn. That is around the figure that should be currently the “hit” to the top 20{aa25917b5fa40a9539dec04f4403247b6010e190bbe56733eaf273b598693f19} of individuals. Yet Labor, in their current figures claim it is $ 5.358. Well it can’t be.
It appears that Labor have overstated the hit to the top 20{aa25917b5fa40a9539dec04f4403247b6010e190bbe56733eaf273b598693f19} of individuals by over 19{aa25917b5fa40a9539dec04f4403247b6010e190bbe56733eaf273b598693f19}. It will be more like 77{aa25917b5fa40a9539dec04f4403247b6010e190bbe56733eaf273b598693f19} than 95{aa25917b5fa40a9539dec04f4403247b6010e190bbe56733eaf273b598693f19}
But the effect is much greater on the remaining 80{aa25917b5fa40a9539dec04f4403247b6010e190bbe56733eaf273b598693f19} of individuals affected.
Labor’s current figures claim the affect on this group will be only 5{aa25917b5fa40a9539dec04f4403247b6010e190bbe56733eaf273b598693f19}. In reality it will be around 368{aa25917b5fa40a9539dec04f4403247b6010e190bbe56733eaf273b598693f19} higher, or 24.6{aa25917b5fa40a9539dec04f4403247b6010e190bbe56733eaf273b598693f19} of the total.