The govt wants to crack down on people having early access to their superannuation: what will it mean?

The Govt plans to introduce a legal definition of the objective of super to reshape rules & crackdown on early access & tax concessions.
The Govt Wants to Crack Down on People Having Early Access to Their Superannuation: What Will It Mean?

The federal government plans to crack down on superannuation rules that allow people to access their savings early and to significantly reduce their tax, without changing the original copy. The government recently announced its plans to introduce a legal definition of the objective of super as a step towards reshaping the rules.


Since 1992, the government has required employers to set aside a percentage of employees’ pay into a fund for their retirement (currently 10.5%). Money in the fund is invested and makes a return, so people typically take out a lot more in retirement than they put in. Up to a certain level, super contributions and investment earnings are taxed at 15%, which is less than many pay in income tax. You can choose to contribute more than 10.5% of your income.


Many different objectives have been suggested for the super system. Its initial purpose was to support people to save for their retirement. It is also seen as a way to reduce reliance on the government-funded Age Pension. Super has also produced an enormous pool of funds for investment – currently over $3 trillion (more than Australia’s entire economic output in a year). It has also allowed people to accumulate significant amounts of wealth above and beyond what is needed to finance retirement. Many of the wealthiest Australians have millions in their super funds and often reduce their tax significantly in the process.


The government proposes specifying super is meant to “preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way”. The government suggests the word ‘preserve’ has been chosen to emphasise that super should not be accessed for purposes other than retirement. The words ‘equitable and sustainable’ are to emphasise that people with very high incomes should not receive tax concessions that are not “necessary or appropriate”. This proposal is now open for public consultation.

Early Release

In a speech today, Treasurer Jim Chalmers explained the government intends to crack down on exceptions allowing people to access super before retirement age. These exceptions exist for a range of reasons, including some compassionate grounds and for terminal medical conditions. The previous Coalition Government introduced new exceptions for people to be able to access their super prior to retirement, including during COVID and for first homebuyers. Chalmers called these exceptions a “debacle”.

Tax Concessions

Assistant Treasurer Stephen Jones (who has primary responsibility for super policy) has repeatedly suggested the government plans to use its objective as a basis to crack down on tax concessions for the wealthiest Australians. In a speech last November, Jones noted some individuals had amassed hundreds of millions of dollars in their super accounts, paying much less tax in the process than they would have otherwise.

Coalition View

In a press conference today, Opposition leader Peter Dutton suggested the government’s super proposal was “all code for more tax”. The Coalition proposes expanding the capacity for first homebuyers to use their super to pay for a deposit, with any increase in the home value to be returned to the person’s super fund when the house is sold.

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