Opposition Leader Bill Shorten announced 13 March 2018 that Labor, if elected, will end cash refunds of excess dividend imputation credits for individuals and superannuation funds effective 1 July 2019 . This would mean that franking tax offsets would be non-refundable. As such, a resident individual (or super fund) would only be able to use the franking credits on their grossed-up dividend income to offset their tax liability for an income year, with no cash refund for any excess credits.
Labor's policy would apply to resident individuals and complying super funds, including self-managed super funds (SMSFs). It would NOT apply to:
- ATO-endorsed income tax exempt charities; and
- Not-for-profit institutions (eg universities) with deductible gift recipient (DGR) status.
According to Labor, the policy would impact 8% of individual taxpayers (typically low-income self-funded retirees) and around 200,000 SMSFs. Labor said the policy would only have a "small impact" on large APRA super funds. The measure is expected to save $11.4bn over the forward estimates. See further the ALP fact sheet, A Fairer Tax System: Ending cash refunds for excess imputation .
Opposition Leader Bill Shorten also announced on 13 March 2018 Labor's policy proposal for an Investment Guarantee that would provide all businesses with an immediate 20% tax deduction for any new eligible asset worth more than $20,000 effective 1 July 2010 . The balance of the asset would be depreciated in line with normal depreciation schedules from the first year. Labor said its Investment Guarantee would be permanent so that businesses could continue to take advantage of an immediate 20% tax deduction whenever they made a new investment in an eligible asset.
Eligible assets would include new tangible machinery, plant and equipment (eg trucks, utes, tractors, food processing machinery, but not buildings). Labor said the measure would apply to depreciable intangible assets and include new investments in computerised technology (such as new software) and intellectual property (such as patents and copyrights). However, the measure would only apply to eligible investments valued at over $20,000 (with no pooling of assets allowed).
The measure would not apply to passenger motor vehicles, but it would apply to non-passenger motor vehicles such as lorries, vans, utes and trucks that are used to support trade businesses. Likewise, it would not apply to investments in structures and buildings, or otherwise eligible expenditure claimed under the existing R&D tax concession. See further the ALP fact sheet, Australian Investment Guarantee .
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