Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

I would like to draw the House's attention to the issue of Labor's proposed retirement tax, which would enable them to steal—

Opposition Members:

Opposition members interjecting—

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

'theft' is the correct word—the franking credits of 1.4 million older Australians on low incomes. Franking credits are based on a simple principle: the profits of a business belong to the shareholders, belong to the partners or belong to the owners of that business. To avoid double taxation, the profits are paid at the marginal rate of that person's tax. So any profits paid by the company are immediately withholding tax. For example, if someone has a marginal tax rate of 45 per cent and they receive a distribution from the company as profits, and profits have already been taken out, they then pay additional tax to make up the difference to their marginal tax rate. Likewise, a person on a marginal tax rate below the 30 per cent company rate gets a refund so that tax paid is the equivalent of their marginal tax rate.

Joanne Ryan (Lalor, Australian Labor Party) Share this | Link to this | Hansard source

A refund when they haven't paid any tax!

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

You can hear the comments of the Labor Party. They simply do not understand this. We have members over there who want to steal franking credits. Labor's retiree tax is a disgrace. There are 1.4 million older Australians who are going to have their income slashed! (Time expired)