Retirees to pay for Lib leave plan: Labor

THE coalition's paid parental leave scheme will be partly funded by a $1 billion hit to self-funded retirees, Finance Minister Penny Wong says.

The coalition's scheme involves a 1.5 per cent levy on taxable company incomes of $5 million or more, which will affect about 3200 companies.

The levy will be offset by a 1.5 per cent fall in company tax.

But many big companies pay a large chunk of their profits out in dividends, which are often fully franked because they come out of tax paid profits.

A company gets a franking credit equal to the tax paid by the company. Those franking credits are currently calculated at a tax rate of 30 cents in the dollar.

But under the paid parental leave plan, the franking credits will be calculated at a rate of 28.5 per cent meaning they are worth less to investors.

Senator Wong said the policy would have two impacts.

"It imposes an administrative burden on companies but more importantly it is a $1 billion hit to self-funded retirees, to mums and dads who have invested in companies," she said.

"Self-funded retirees are helping fund Mr Abbott's signature policy."

http://www.news.com.au/breaking-news/national/retirees-to-pay-for-lib-leave-plan-labor/story-e6frfku9-1226700425181