Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Register

24 October 2025

Home / 174

10 quick points on super reform for dummies

  •   22 September 2016
  • 2
  •      
  •   

This is a quick snapshot of the proposed superannuation changes announced by the Government (as at Friday 16 September 2016, that is).

  1. The Government is legislating an objective of superannuation against which all changes will be measured. Broadly, the primary objective of super will be to supplement or replace the age pension. This objective has some problems, including that super funds currently pay out on events unrelated to pensions, they pay out lump sums and they pay money to beneficiaries other than the superannuation fund member.
  2. Income on account balances paying a pension up to maximum of $1.6 million will be tax-exempt. Any income from assets above that will be taxed in a fund at 15% or the excess can be taken out.
  3. If taxable income is above $250,000 pa, the tax rate is 30% on contributions to a super fund, not the usual 15%.
  4. Non concessional contributions will be capped at $100,000 pa or $300,000 over any three-year period before age 65, and once there is $1.6 million in a fund, no more non-concessional contributions can be made.
  5. If income is less than $37,000 pa the Government will refund the contribution tax to the fund.
  6. Employees can receive a deduction for up to $25,000 pa of contributions less what their employer has contributed.
  7. One spouse can contribute up to $3000 to the other spouse’s super account whose income is less than $40,000, and the first spouse gets an 18% tax offset on what they have contributed.
  8. Income on deferred annuities will be tax exempt.
  9. Extra payments made by funds on the death of a member will not be tax deductible.
  10. Fund income supporting a pension while a person is working will be taxable at 15% not 0%.

All these changes commence from 1 July 2017 so get cracking!

 

Gordon Mackenzie is a Senior Lecturer in taxation and superannuation law at the Australian School of Business, University of New South Wales. This article is a brief summary of the major points, it does not consider the needs of any individual and does not summarise all aspects of the proposals, which have yet to be legislated.

 

  •   22 September 2016
  • 2
  •      
  •   
2 Comments
PPayne
September 22, 2016

6.Employees can receive a deduction for up to $25,000 pa of contributions less what their employer has contributed

Can someone speak on our behalf.
If you are over 50 years the limit for Concessional Contributions was $35000. (This is excluding the 9.5% employers super SGC guarantee). Please can this be re-instated. It has been reduced to $25000 for everyone (including >50 years).
This is the time when you can build a bit more I your super and it is not fair to target this group.

Ben
September 28, 2016

Yes this is not smart in my opinion, lowering the amount to $25,000, when interest rates are so low and likely future returns even on the stock market will be low. Only public servants with their assured tax payer funded defined pension schemes would let this get proposed. Ivory towers in Canberra!

The elderly are usually advised to keep a solid proportion of their income producing assets in fixed interest not shares/stocks. With Aust 10 year Gov bond under 2% that means $500,000 will yield $10,000 annually. This will likely result in more people needing more pensions from the taxpayer not less.

If people put more into shares, and there's a significant crash/drop what will this mean? How many could cash out at the worst time?

Meddling with the world famous super scheme Australia introduced is unwise. Anyway in our view Aust Gov.s in the future will not have enough money as in other welfare dependent and demographically challenged developed countries and the private Super monies will be even more attractive for treasury to 'raise money' from. Beware.

 

Leave a Comment:

RELATED ARTICLES

'Rorts and rip-offs’ prevention in super legislation

What might the Tax White Paper say on imputation and CGT?

Make sure going overseas does not spoil your SMSF

Firstlinks is sponsored by:
banner

Most viewed in recent weeks

Retirement income expectations hit new highs

Younger Australians think they’ll need $100k a year in retirement - nearly double what current retirees spend. Expectations are rising fast, but are they realistic or just another case of lifestyle inflation?

Four best-ever charts for every adviser and investor

In any year since 1875, if you'd invested in the ASX, turned away and come back eight years later, your average return would be 120% with no negative periods. It's just one of the must-have stats that all investors should know.

Why super returns may be heading lower

Five mega trends point to risks of a more inflation prone and lower growth environment. This, along with rich market valuations, should constrain medium term superannuation returns to around 5% per annum.

The hidden property empire of Australia’s politicians

With rising home prices and falling affordability, political leaders preach reform. But asset disclosures show many are heavily invested in property - raising doubts about whose interests housing policy really protects.

Preparing for aged care

Whether for yourself or a family member, it’s never too early to start thinking about aged care. This looks at the best ways to plan ahead, as well as the changes coming to aged care from November 1 this year.

Our experts on Jim Chalmers' super tax backdown

Labor has caved to pressure on key parts of the Division 296 tax, though also added some important nuances. Here are six experts’ views on the changes and what they mean for you.        

Latest Updates

A speech from the Prime Minister on fixing housing

“Fellow Australians, I want to address our most pressing national issue: housing. For too long, governments have tiptoed around problems from escalating prices, but for the sake of our younger generations, that stops today.”        

Taxation

Family trusts: Are they still worth it?

Family trusts remain a core structure for wealth management, but rising ATO scrutiny and complex compliance raise questions about their ongoing value. Are the benefits still worth the administrative burden?

Exchange traded products

Multiple ways to win

Both active and passive investing can work, but active investment doesn’t in the way it is practised by many fund managers and passive investing doesn’t work in the way most end investors practise it. Here’s a better way.

Economy

The Future Fund may become a 'bad bank' for problem home loans

The Future Fund says it will not be paying defined benefit pensions until at least 2033 - raising as many questions as answers. This points to an increasingly uncertain future for Australia's sovereign wealth fund.

Investment strategies

Managed accounts and the future of portfolio construction

With $233 billion under management, managed accounts are evolving into diversified, transparent, and liquid investment frameworks. The rise of ETFs and private markets marks a shift in portfolio design and discipline. 

Property

Commercial property prospects are looking up

Commercial property is seeing the same supply issues as the residential market. Given the chronic undersupply and a recent pickup in demand, it bodes well for an upturn in commercial real estate prices.

Infrastructure

Private toll roads need a shake-up

Privatised toll roads in Australia help governments avoid upfront costs but often push financial risks onto taxpayers while creating monopolies and unfair toll burdens for commuters and businesses.

Sponsors

Alliances

Site Map

About Firstlinks

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.