Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Sydney Morning Herald gets it wrong on super

Superannuation regulations are complex and a thorough knowledge takes time to accumulate, and the details become part of a financial planner's skill that clients can access (and pay for appropriately).

The debate about the cost of super to the Australian budget is often hijacked by incorrect claims, and hundreds of thousands of SMH readers were treated to a ripper on 3 April 2013.

Peter Martin wrote:

"Superannuation is designed backwards. It gives the biggest subsidies to those who need them least. For Australians on truly enormous incomes those subsidies are obscene.

The notion the super-rich wouldn't save for their old age is laughable. The idea that without government support they would fall back on the pension and be a ''drain on the public purse'' is not only wrong but, in the context of what's handed to them, almost sick.

Think about an executive on $1 million a year. Not quite one of Joel Fitzgibbon's ''battlers'', but someone several rungs above.

His or her company pays a legislated $90,000 a year into a super fund of their choice, perhaps a self-managed one. Instead of being taxed at the marginal rate - 45 per cent plus the 1.5 per cent Medicare levy - the payment has until now been taxed at just 15 per cent. So instead of paying $41,850 in tax, the executive pays just $13,500. The gift from the tax system is $28,350."

Oh dear.

There is a cap of $25,000 on concessional contributions for everyone and any employer contributions above that are taxed at an additional 31.5% excess contribution tax. Furthermore, the employer is only obliged to pay 9% on $183,000 ordinary time earnings. Any additional SGC is voluntary. And let's not overlook the fact that an executive on $1 million will pay almost half that in income tax.

By early in the morning, the Herald had corrected its online version amid a barrage of critical comments, but the print version was still sitting in thousands of homes, inflaming the debate.

 

  •   3 April 2013
  •      
  •   

 

Leave a Comment:

banner

Most viewed in recent weeks

Indexation implications – key changes to 2026/27 super thresholds

Stay on top of the latest changes to superannuation rates and thresholds for 2026, including increases to transfer balance cap, concessional contributions cap, and non-concessional contributions cap.

The refinery problem: A different kind of energy crisis in 2026

The Strait of Hormuz closure due to US-Iran conflict severely disrupted global energy supply chains. While various emergency measures mitigated the crude impact, the refined product market faces unprecedented stress.

The missing 30%: how LIC returns are understated, and why it matters

The perceived underperformance of LICs compared to ETFs is due to existing comparison data excluding crucial information, highlighting the need for proper assessment and transparent reporting.

Little‑known government scheme can help retirees tap into $3 trillion of housing wealth

The Home Equity Access Scheme in Australia allows older homeowners to tap into their home equity for retirement income, yet remains underused due to lack of awareness and its perceived complexity.

Origins of the mislabeled capital gains tax ‘discount’

Debate over the CGT discount is intensifying amid concerns about intergenerational equity and housing affordability. This analysis shows that the 'discount' does not necessarily favor property investors.

Div 296 may mean your estate pays tax on assets your beneficiaries never receive

The new super tax, applying from 1 July, introduces more than just a higher rate on large balances. It brings into focus a misalignment between where wealth sits and where the tax on that wealth ultimately falls.

Latest Updates

The ultimate superannuation EOFY checklist 2026

Here is a checklist of 28 important issues you should address before June 30 to ensure your SMSF or other super fund is in order and that you are making the most of the strategies available.

Retirement

Two months into retirement

A retirement researcher's take on retirement and her focus on each of her six resource buckets to stay engaged during the transition and beyond.

Superannuation

Markets have always delivered for super fund members. What if they don’t?

What happens if market resilience in the face of ongoing geopolitical tensions ends? Potential decade-long market weakness shows the need for contingency planning.

Retirement

We tend to spend less in retirement …

Studies show that a drop in expenditure during retirement leads to a happier retirement. But when costs ramp up again later in life, it's a guaranteed income that makes spending more hurt less.

Shares

Can you value a share just using dividends?

A cow for her milk, a stock for her dividends. Investors are too quick to dismiss this valuation technique. 

Property

The 25-year property trust default is being questioned

The 33% CGT discount rate being floated isn’t random. It sits at the structural break-even between trust and company for the multi-property cohort. That’s driving the conversation we’re hearing now.

Investment strategies

Are active managers bringing a knife to a gunfight?

How passive investing has permanently changed market structure — and why sophisticated tools are now the price of survival.

Sponsors

Alliances

© 2026 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.