Wealthy collecting $10b super tax free

By Leith van Onselen

The Association of Superannuation Funds Australia (ASFA) has today released new research showing that wealthy retirees are collecting $10 billion worth of income tax free, courtesy of the Howard Government’s short-sighted decision in 2006 to scrap taxes on the retirement income from super.

According to this report, there are over 200,000 people who have superannuation account balances in excess of $1 million, with around 70,000 with balances in excess of $2.5 million.

Within these, there are 24,000 self-managed superannuation fund (SMSF) members in the pension phase with balances in excess of $2 million that are receiving around $5.2 billion in tax-free income stream payments, or an average of around $216,000 a year.

A further 51,700 retirees with balances between $1m and $2m are receiving $4.9 billion a year tax-free income streams, or an average of around $93,000 per year.

ScreenHunter_6856 Apr. 01 13.22
ScreenHunter_6857 Apr. 01 13.23

Chalk this up as another Howard Government blunder with major long-term implications for the Budget and inter-generational equity.

[email protected]


  1. sydboy007MEMBER

    Remind me again why Howard and Costello are feted as economic miracle workers?

      • +1
        A particular demographic was gifted beyond comprehension and were too arrogant or ignorant to say it isn’t fair – and instead voted repeatedly for it. Again Howard/Costello worst economic managers ever. Aj’s comments on the other thread are spot on.

      • Hockey was shot down on Q&A when he blustered about the removal of negative gearing and rents going up. Think the cant might have learnt a thing or two from that episode? Nope, he keeps repeating the same lie even when proven to be as such. Cant should be taken out back and flogged.

    • “Remind me again why Howard and Costello are feted as economic miracle workers?”

      It doesn’t hurt that they were in power during one of the longest (debt/stupidity fuelled) global economic booms the world has ever seen!

    • davidjwalshMEMBER

      I’m no fan of the Howard / Costello period BUT….is it not the case there have been a few elections since and I don’t recall ANY (and that includes the supposedly sincere, thoughtful, ‘different’ Greens and Independents) political player or aspirant proposing that this rort be stopped…..

      Or am I wrong – I’ve been out of the country a lot but I’m pretty sure if it had been proposed the feces storm such a proposal would’ve triggered would have been noticeable???????

      The Australian electorate has to take a measure of credit for this obscenity.

  2. [email protected]MEMBER

    Absolutely a blunder UE
    Howard / Costello pork is all. How to buy votes 101

    • Torchwood1979

      Except they still lost 2007, and they lost something bad! So all that pork from their final term did sweet FA for them anyway.

      • [email protected]MEMBER

        just made the stuctural deficit worse…

      • Torchwood1979

        Yup. Deficit kings those guys. Remember them driving that debt truck around during the 96 election campaign? That thing must’ve run totally out of digits by now.

    • moderate mouse

      Peter Martin was on RN this morning and made a throwaway comment that sometime in the future all company taxes globally will probably drop to zero to end the race to the bottom that corporate tax evasion creates. I laughed at first but then thought “Holy sh*t that’s it!”. Australia should drop all company taxes now, pre-empting the shift and lure a sh*te load of companies from abroad to set up here. It’s first-mover advantage at its best because they’ve nothing to gain by leaving if other companies follow suit. Pie in the sky perhaps, but desperate times call for desperate measures. And things are about to get desperate here.

      • “It’s first-mover advantage at its best because they’ve nothing to gain by leaving if other companies follow suit.”

        Assuming you meant countries, not companies, why is there a zero lower bound?

        If having companies move to your country is important enough to give up all corporate tax revenue, then why couldn’t countries pay them to change location? Why not income tax breaks for CEOs? Why not donated government land?

        The list of potential perks is endless…

      • moderate mouse

        Yeah I did mean countries, oops.

        All good points AB but I’m just putting it out there. I think it’s fair to say Australia has reached a point in its history where everything needs to be on the table, and a little thinking outside the box is called for. (And I’m traditionally a guy who’s said “Yeah f*ck you Google/Apple/Amazon et al….pay your damn taxes!”)

  3. http://www.watoday.com.au/federal-politics/political-news/harper-review-pharmacists-slam-proposal-to-lift-restrictions-20150331-1mc84b.html

    “Loosening strict pharmacy regulations would allow supermarket chains to tap into the prescription medicine market and could compromise patient care, pharmacists warn.

    The final report of the Harper Review, published on Tuesday, has recommended dumping pharmacy location and ownership rules among a raft of other changes aimed at boosting competition.

    But pharmacists have roundly rejected the proposal, saying deregulation would give supermarkets the power to compete with local pharmacies, driving independent operators out of business and putting health care second to profit”

    Geez. Come on. NOT A WORD from them about the TPP.
    But this ? They all come a shouting !!!!

  4. Step 1. Lie, smear other political parties, incite fear, and raise funds however possible (even from foreigners).
    Step 2. Get elected to gain control of the ministerial cabinet.
    Step 3. Throw a few bones to the masses to keep them placated.
    Step 4. Do backdoor deals for mates, family members and happy insiders (piggeries and all).
    Step 5. Rinse and repeat every 3 to 4 years.

    Those bones get expensive but are a mere distraction from the core objective – raping of the public coffers for vested interests.

  5. But everyone in pension phase is getting the benefit. Note to self hurry up and retire.

    • Don’t wish your life away. I rather be young and broke than retired and living off my SMSF investments.

  6. Ha, to late for that, but actually looking forward to removing myself from all the average overpaid middle mgmt I have to wipe while pretending to agree with the next loony idea. Trouble is I now know how far shareholders are from the trough so one must save 2 or 3× the suggested amounts.

  7. innocent bystanderMEMBER

    I will have to find the time to read the report. But is this:
    “… with balances in excess of $2 million that are receiving around $5.2 billion in tax-free income stream payments, or an average of around $216,000 a year…
    A further 51,700 retirees with balances between $1m and $2m are receiving $4.9 billion a year tax-free income streams, or an average of around $93,000 per year.”

    saying they generated income (dividends, interest, realised CG etc) in the fund that was exempt from income tax, or they paid them sells on average a pension of $93k, some of which may be derived from income and some from capital drawdown?
    Cause if the former they are generating pretty good returns, on average, given they might not be realising a lot of the capital gains in the fund

  8. How about they buy themselves a couple of positively geared IP’s. Then they’d suddenly have smaller balances. A ploy to get every last cent into real estate? I think renters will be slugged with a solidarity tax soon. You get an exemption if you buy property. Like the health rebate. You’ll get the full 30% if you’re negatively geared enough.

  9. Even StevenMEMBER

    Who was arguing before that there weren’t many with millions of dollars in super? Well, err, how about 70,000. Enough for you?

  10. This is a side show and a pretty ugly one at that in terms of the politics of identity. What are we doing about the $60 billion increase in healthcare spending between 2000 and 2014?

    Answer…nothing at all.

  11. Mr SquiggleMEMBER

    The tax that Costello removed from allocated pension payments was roughly 15%.

    A recipient of the allocated pension then needed to do a tax return and was subject to the same personal tax scale as everyone else. (eg first 18,200 tax free, 20c per $ on the next $20,000 etc). Rebates and offsets often meant pensioners paid less than 15%.

    I’m not sure how it would have all shaken out, but if you do 15% tax on the $10,1bn, you’d get $1.5bn in foregone tax as the ballpark

    • Yes. Nothing compared to how much the government wants to blow on submarines to keep Abbott in power.

      Perhaps people could wake up to where the real problem lies.

  12. The thing that everybody misses here is that bonds, share market and home prices will all tank, and 98% of Baby Boomers will be drawing the Old Age Pension.
    So the future taxes will have to still come from people who are now 50 years and under, by the time the depression is over.
    It is already too late to do anything about it except hunker down.
    People under the age of 40 years will certainly be able to buy cheap shares and cheap homes…because they’ll still be working for a long time.