Howard/Costello government 2001 reforms 1.20 In 2001 the Howard/Costello Government extended the policy of the Hawke/Keating Government to ‘provide for excess imputation credits to be refunded to Australian individuals, complying superannuation funds or similar entities who, until now, could not use those credits because their tax liability was insufficient.’20 The then Treasurer, the Hon Peter Costello, MP, stated: At the moment, where a company pays a franked dividend at 36c and the franked dividend is distributed to somebody, let us say a pensioner, who is on a tax rate lower than 36c—maybe 20 cents in the dollar—that person has a dividend on which there is a tax credit of 36 cents in the dollar but is only liable for tax at 20 cents in the dollar. Until now, they have never had the opportunity to get back that excess imputation credit, which, of course, represents an overpayment of tax in their hands. The government foreshadowed its intention to introduce this measure in A New Tax System and it will be of particular benefit to many self-funded retirees
.21 1.21 The then Shadow Treasurer, the Hon Simon Crean, MP, stated: Although imputation credits can be used to reduce an individual's or a superannuation fund's income tax liability to nil, excess credits were of no value to taxpayers. This bill proposes to refund to taxpayers any excess imputation of credits that may be left after offsetting the credits against their income tax liability. The classic example of such a situation is a low income person who earns a little investment income—for example, a full rate age pensioner. They face no income tax liability on their income and therefore cannot obtain the benefit of the excess franking credits attached to the small amount of dividend income they receive. Under this proposal, they will obtain a refund of their income tax from the Taxation Office, representing the excess imputation credits. Labor included this proposal in our taxation policy prior to the last election. Therefore we have no difficulty supporting the proposal because it is our policy. It builds on the major reform
