The findings, prepared by former Treasury officials for Industry Super Australia, will be put to the ISA board today in a discussion about the impact of the policy on their eight million super fund members. Mr Shorten signalled plans to adjust the policy on Sunday, saying he would have “more to say” on help for pensioners and would make sure the most vulnerable people were looked after. “When it comes to pensioners, pensioners are always going to do better under Labor,” he said at a press conference alongside Ged Kearney, the former ACTU president who will enter federal Parliament as the member for Batman. “We want to decrease the gap and out of pocket costs paid for by pensioners. We don’t support the Turnbull government creating the world’s oldest pension age, the age of 70. “So we’re far more fair dinkum on pensioners, and we will have more to say in the future about our good deal for pensioners.”

The new analysis for the nation’s industry superannuation funds shows the Labor policy could be softened without sacrificing much of the $5.6 billion it is expected to raise each year. The modelling reveals a simple amendment to allow the first $500 to $1000 of dividend tax credits to be refunded could slash the number of pensioner and retiree losers by one half to two thirds and soften the impact on the others. Labor's win in the Batman byelection has emboldened the party's leadership to pursue tax reform. Credit:AAP Treasurer Scott Morrison on Sunday attacked the "sneaky" and "shifty" Labor plan and rejected the argument for a cap on refunds for dividend credits, saying it was bad policy and should be rejected.

"Bill Shorten is saying to the Australian people 'give me all of your money and trust me about what I'll do with it'. We don't agree with that. We don't think any government should say that to Australians. That's why we want to keep taxes as low as possible," Mr Morrison said. Yet the analysis of Australian Taxation Office data by former Treasury official Phil Gallagher concludes that people aged over 65 and receiving the age pension in part or in full would account for only $238 million of the $5.6 billion based on shares they hold directly. A $500 cap on the cash refunds would reduce this amount to about $170 million. A $1,000 cap on the refunds would reduce the burden on this group to about $130 million. The analysis also shows that self-funded retirees aged over 65 would account for $645 million of the annual revenue to be raised through the loss of their cash refunds. A $500 cap on the refunds would reduce this amount to about $520 million and a $1,000 cap would reduce it to about $445 million.

The Labor policy aims to cancel cash refunds to 1.2 million taxpayers who enjoy tax credits on the dividends they receive from owning shares, under the imputation regime that seeks to avoid taxing a company’s profits twice. The new findings highlight the impact of the policy on its primary targets – about 200,000 self-managed super funds and the investments held by Australians with low taxable incomes but large share portfolios. “Fine-tuning the policy to ensure pensioners and retirees with smaller parcels of shares are not affected would be quite inexpensive because the burden of the policy falls elsewhere,” the advice concludes. Australians who are on the age pension in full or in part, and who hold their shares directly rather than through an SMSF, account for only 4.3 per cent of the refundable credits that Labor is seeking to stop. Self-funded retirees who are over the age of 65, and who hold their shares directly, account for just over 10 per cent of the refundable credits.