Chris Bowen’s Misleading Imputation Example

46-year-old Shadow Treasurer Chris Bowen was a panelist on the ABC program Q and A on Monday evening 29/04/2019 defending Labor’s policy proposals should they win the Federal election on May 18.

Although his arguments seemed convincing, the example he gave to justify the massive raiding of retiree funds by ending cash Imputation Credit payments was quite misleading. Savings to the government are expected to exceed $56 billion over a ten-year period and are ear-marked to fund projects Labor thinks are more deserving.

With life-expectancy projected to soon rise into the mid-nineties, retirees wishing to be as independent as possible of government subsidies, must now work out how to make their superannuation last for possibly three decades from retirement, on a reduced dividend income stream.

Chris Bowen’s example to illustrate the purported inequity in the taxation treatment of a salary worker, and the earnings of a retiree with a self-managed superfund:

 “A nurse on $67,000 pays $13,000 in income tax. A retired shareholder with dividend income of $67,000 from shares in their self-managed super fund pays $0 in income tax and gets a tax refund of more than $27,000 from the Government. Same income, different outcome.” #qanda


  1. Is it not outrageously misleading to equate fund earnings with dividend income not taking into account capital losses, which can be substantial in market downturns and crashes?
  2. Wages from personal exertion provide for current financial needs. Superannuation savings on the other hand must meet as much as possible of their expenses in retirement over up to three decades or more of life. The fact is that most retirees qualify within a decade or so of retirement, for a full or part pension.
  3. Superannuants have paid already paid 15% contributions tax, and tax on fund earnings until retirement. They have forfeited the contributions tax they have paid on their capital losses, and seen the value of their savings eroded by inflation. It is therefore unfair to deny them access to Imputation Credits, on the basis of not paying tax.
  4. The nurse’s income of $67,000 p.a. is within the average range.  The Average Wage of all workers, full and part-time, is estimated to be $62,128, whilst the Median Wage for workers is $55,000. The example of the retiree’s dividend income implies a fund balance of 1-2 million dollars if the dividend return on the portfolio is between 3.5% and 7%. I suspect that this is way in excess of the balance of most retirees. In the context of this comparison of the two groups, it implies that SMSFs are vehicles for millionaires and multimillionaires to avoid taxation. At least that is the way Labor is presenting this policy.

Other considerations that I would like clarified.

In flagging their policy on Imputation Credits, Labor has always asserted that the intention is to end cash payments only. Will then Imputation Credits still be availble to offset tax due on SMSFs in the accumulation phase?.

Labor has backed-down on withdrawing Imputation Credits from retirees on the pension. Will this concession also apply to those on a part pension?

It would seem that Labor’s proposal is virtually a tax on recent retirees, and could have the effect of influencing them to run down their fund balance in order to qualify for dependable pensioner benefits. Will measures be taken to stop them doing this?

It is possible that with diminished dividend income, retirees may seek to bolster their earnings with more capital gains. Is there any intention on the part of Labor to then tax their capital gains? If so, retirees should be able to offset imputation credits from their tax liability.


This post is written from the perspective of a retiree likely to be affected by Labor’s proposed superannuation changes. No claim is made for particular investment or financial expertise, and readers should discuss any issues of concern with their own advisors.

About Kenneth Robson

I studied at Adelaide Boys' High School, and the University of Adelaide, Medical School. graduating in 1961. My field of specialisation was Plastic and Reconstructive Surgery. Prior to establishing my practice in Adelaide, I spent 5 years working in India, and Papua-New Guinea, in the field of reconstructive surgery for leprosy. In retirement I joined the Australian Technical Analyst Association and passed the two examinations for a Diploma inTechnical Analysis, and the designation Certified Financial Technician (CFTe) by the International Federation of Technical Analysts.
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