Prime minister Malcolm Turnbull has told journalists to "have a word to your parents" when asked about Labor's plan to scrap cash refunds for some shareholders who pay little or no tax.
On Tuesday Labor announced that if elected it would scrap a John Howard-era policy that allows shareholders who don't pay tax to get cash refunds from the tax office.
The Hawke-Keating government introduced a system known as franking credits – or imputation credits – in 1987. When paying dividends to shareholders, companies provide these tax credits to individuals, who can use them to offset their income-tax liability and ensure they're not double-taxed.
In 2001, the conservative Howard government introduced a measure which allowed shareholders who don't pay tax to convert the credits into a cash refund from the tax office.
Labor leader Bill Shorten said the current system was "not sustainable" and "not fair" for all Australians.
Shadow treasurer Chris Bowen says Labor's policy is targeted at high income earners, and around a third of Australia's 600,000 self-managed superannuation funds would lose money.
Bowen said it would affect 200,000 part pensioners, and around 14,000 full pensioners, and save the budget $5 billion a year.
The prime minister rolled his eyes when asked about Labor's plan during a press conference at the Gallipoli Barracks in Brisbane on Wednesday morning.
Massive eye roll from Malcolm Turnbull when asked about Labor’s tax plan.
The prime minister labelled Labor's plan a "tax grab" that is "robbing pensioners".
"That's who Bill Shorten is going after — pensioners," Turnbull said. "He's going after pensioners' incomes. He's seeking to take money from pensioners and self-funded retirees — money they're entitled to."
Turnbull says 3.5 million super accounts would be made worse off by the policy, and half the people affected will be pensioners and self-funded retirees on less than $18,000 a year.
"You know exactly what Bill Shorten is doing," Turnbull told journalists on Wednesday morning. "Have a word to your parents and they'll tell you how they feel about it and their friends."
Prime Minister @TurnbullMalcolm: @billshortenmp can dress this up as much as he likes, but Australian pensioners and self-funded retirees know it's targeted at them...Shorten is coming for the savings and affordability of retirement. MORE: https://t.co/w9ou2pWh7W #SkyLiveNow https://t.co/TLVRekZBrc
"You're smiling because you know I'm right," he said. "Bill Shorten is going after the savings of your parents and their friends and their contemporaries.
"Bill Shorten is coming for the savings, for the incomes, for the lifestyles, for the affordability of the cost of living, of people on lower and lower middle-incomes in retirement."
Labor's policy has launched a debate over what constitutes a "low income" and "high income" retiree according to Australia's tax system. A retired couple living in a $2 million house, with $3.2 million in super, are classified as ‘‘low income’’, according to Adam Creighton of The Australian. They pay no tax.
But, Creighton said, a couple living in an $800,000 home, with a mortgage, who together earn $100,000 a year, are classified as earning a "high income". They pay 37% tax on every extra dollar they earn.
If elected, Shorten said Labor's plan would come into affect from 2019.