The wealthy will be targeted by the super changes announced by Treasurer Wayne Swan.
According to reports in major news, those with about $2 million in superannuation will lose tax concessions under the new changes. This is estimated to affect about 16,000 people in 2014-15.
For people with more than $2 million in super assets supporting income streams, the reform will affect assets earning a rate of return of 5%. It will save about $350 million over the forward estimates period, according to the reports.
A tax exemption on superannuation earnings supporting pensions and annuities will be capped at $100,000, and anything above that level taxed at a rate of 15% during the accumulation phase.
Mr Swan said there was a disproportionate level of government support that flowed to a select few.
"There is something wrong in the system where working Australians on average wages are providing excessive support to people with millions in their superannuation account," he told reporters.
"Why should someone who has millions of dollars in a superannuation account pay no tax on their earnings while someone on $80,000 a year pays a marginal tax rate of 37 cents in the dollar on every additional dollar they earn."
Withdrawals will continue to remain tax-free for those aged 60 and over, and face the existing tax rates for those aged under 60.
The Government will provide an unindexed $35,000 concessional cap to anyone who meets certain age requirements - available to those 60 and older from July 1st 2013, and accessible to people aged 50 and over from July 1st 2014. The general concessional cap is expected to reach $35,000 from July 1st 2018.
Excess concessional contributions will be taxed at the individual's marginal tax rate, plus an interest charge. Clients will be allowed to withdraw any excess concessional contributions made from July 1st 2013 from their super fund.
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