The Federal Government has announced changes to the superannuation system that it says will affect about 16,000 of Australia's highest earners in the first year.
From July next year, earnings of more than $100,000 on superannuation pensions and annuities will be taxed at 15 per cent instead of being tax-free.
The Government says around 16,000 people will be affected by this reform, which will save around $350 million over the four-year forward estimates period.
From 1 July 2013, people aged 60 and over will see increased concessional caps from $25,000 to $35,000.
Excess concessional contributions will be taxed at the individual's marginal rate, plus an interest charge.
The Government says this will mean individuals are taxed on excess concessional contributions in the same way as if they had received that money as salary or wages.
The Government will establish a Council of Superannuation Custodians.
Treasurer Wayne Swan says the change will improve the fairness and sustainability of the system, given Australia's ageing population.
At a rate of return of 5 per cent, the Government expects the change will only affect people with more than $2 million in superannuation assets.
Mr Swan says tax concessions for high-income earners are too generous.
"Why should someone who has millions of dollars in a superannuation account pay no tax on their earnings while someone on $80,000 pays a marginal tax rate of 37 cents in the dollar on every additional dollar they earn?" he said.
"So today's reforms address this imbalance."
Treasury estimates that about 16,000 people will be affected by the measures next financial year.
"There is something wrong in a system where working Australians on average wages are providing excessive support to people with millions in their superannuation account," Mr Swan said.
Superannuation Minister Bill Shorten says the Government will appoint a council of custodians to oversee the changes.
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