Budget 2016/17: How will the new tax changes affect the individual?

Font Size:

So, how will the changes to superannuation, proposed in Budget 2016/17 affect you? Here are some case studies provided by the Government that highlight, if legislated, what they will actually mean to individuals.

Low-income earner
Bronwyn is a part-time worker who earns $20,000 in the 2017-18 income year. Her employer makes Compulsory Superannuation Guarantee payments of 9.5 per cent ($1900 per year) into Bronwyn’s account. Once in the superannuation account, Bronwyn’s contributions are taxed at 15 per cent ($285 per year). At the end of the year, Bronwyn will be eligible for a Low Income Superannuation Tax Offset of $285. Bronwyn now effectively pays zero tax on her superannuation contributions.

Middle-income earner
In 2017-18, Jamie earns an average full-time wage of $80,000 per year. His employer makes compulsory Superannuation Guarantee payments of 9.5 per cent of his salary ($7600 per year) into his superannuation account. Jamie makes no additional contributions to superannuation and is not affected by the changes. Jamie can still make additional concessional superannuation contributions of $17,400 either through salary sacrifice or by making a deductible personal contribution. If Jamie inherited some money, he could also put this in his superannuation (subject to the new $500,000 lifetime cap for non-concessional contributions).

Helping individuals with interrupted work patterns
Emma is a mother on maternity leave who is about to return to work part time. Emma, who earns $30,000 will be eligible for the Low Income Superannuation Tax Offset when she returns to work. Under the new changes to spouse contributions, her partner, Frank will be eligible to claim a tax offset of up to $540 for contributions he has made to Emma’s superannuation account.

Once Emma returns to full-time work, she will be able to boost her retirement income by making additional contributions. Enabling her to ‘catch up’ by rolling over the amounts left remaining under the concessional contributions cap, Emma can contribute more over her working life. Although Emma has changed jobs, she will also benefit from the Government’s changes to member protection measures, making it easier for her to reunite and consolidate her multiple accounts, including any in an Eligible Rollover Fund.

Saving for retirement
Gus is a 65-year-old retiree who currently draws down his account-based superannuation pension at the minimum rates, as he is concerned that his superannuation will run out.

As deferred income stream products do not qualify for the retirement phase earnings tax exemption, these products are not generally offered in the market.

Under this initiative, Gus will have the option to buy deferred lifetime annuity that will give him a guaranteed income stream for the rest of his life commencing from age 80. This will give Gus the confidence to have a higher standard of living in the intervening period and peace of mind knowing that no matter how long he lives [basic error!!!] he will receive a guaranteed income stream. 

Join YourLifeChoices today
and get this free eBook!

By joining YourLifeChoices you consent that you have read and agree to our Terms & Conditions and Privacy Policy


Budget 2016/17: Kaye asks “Is that all there is?”

There are two ways to review Scott Morrison's first budget.

Budget 2016/17: Super changes for high income earners

Treasurer Scott Morrison has swung the axe to make super fairer.

Budget 2016/17: Reducing the tax burden

Tax relief is on the way for low and middle-income earners.

Budget 2016/17: Targeted welfare safety net

Stopping the Clean Energy Supplement is just one welfare measure.

Budget 2016/17: Crackdown on multinational tax avoidance

The Government has announced tougher laws to target tax avoidance.

Budget 2016/17 – Government to invest a record $50 billion on infrastructure

The Government has pledged a record $50 billion for roads, rail, bridges and infrastructure.

Budget 2016/17: Scott Morrison on a fairer super system

Here's why the Treasurer thinks a fairer superannuation system is important.

Budget 2016/17: Making super fairer and sustainable

Has Scott Morrison delivered on his promise to make super fairer?

Budget 2016/17: What’s in it for retirees?

How does Budget 2016/17 shape up for you?

Written by Leon Della Bosca

Leon Della Bosca is a voracious reader who loves words. You'll often find him spending time in galleries, writing, designing, painting, drawing, or photographing and documenting street art. He has a publishing and graphic design background and loves movies and music, but then, who doesn’t?



Total Comments: 8
  1. 0

    Before this budget, I thought that low income workers over 60 don’t get taxed on Super any more.

  2. 0

    This budget edges on dictatorial
    1- increase tobacco excise to stop smokers
    2- increase alcohol excise to stop drinkers
    3 – increase passports costs deter overseas travel
    4- retain backpackers taxes deter visitors coming to Australia
    They are taking away our democratic rights in the best country in this world
    Please stop forcing these issues on our country and let the population make the choice
    Dictatorships don’t survive with the acceptions it is the easiest way to gather money from our population find some other areas to find it and balance it out

    • 0

      Are you serious? The increase in tobacco is designed to force people off smoking, the increase on alcohol may affect drinkers as it’s a reduction in the wine rebate, passports have gone up by $20.00 or less than 8% and backpackers who are taking Australian jobs are asked to pay the same tax as an Australian.

      You’re large on rhetoric and small on substance. Please feel free to point out in which areas you would make changes so that the majority of Australians can continue to live well in this great country.

    • 0

      Old Man, I will reserve my opinion of wether the government is just grabbing cash by increasing the excise on tobacco and alcohol untill I see how much of that money is going to go towards health and welfare services.
      I suspect that it will prove to be a cash grab, but I hope I am proven wrong.

  3. 0

    Old man
    These are my opinions only but review previous budgets and see in what areas are excises and duties are continually increased to fill the coffers ,I don’t smoke and only a small social drinker that’s my choice and it does not bother me to the persons that do as for backpacker taxes I live in the country area and and without the visitors coming in our seasonal crops are difficult to get removed without them e.g cherries,oranges,garlic also reduced numbers in visitors also effects hospitality industries along our coastal holiday destinations all Aussies ask is a fair go but this not
    Thanks for the comment

  4. 0

    You forgot to mention that $1 million dollar a year income earners will get a tax cut of almost $17000 a year!

    As is typical of this government, lots for the haves and bugger all for the have nots. Cuts to health. Cuts to education. Increases in medical costs. And heaven help those on low incomes whose only respite from their miserable working life is their smokes or drinks. Sure it would be better for less people to resort to these vices, but crippling prices only serve to cripple the families of addicts and deprive their children. Where are the measures to address the cause of their addiction?

  5. 0

    This budget will not effect me at all, it is a typical election budget as expected. No long term plan here.



continue reading


How to … fall back asleep

Waking up at night and struggling to get back to sleep can be stressful and exhausting. According to WebMB, around...


Curing the incurable: Why some patients make astounding recoveries

As a GP and someone who works in the holistic health field, Dr Jerry Thompson has long been interested in...


The 'ism' that's rife and no, it's not okay

Ageism, like all 'isms', creates a social hierarchy and disadvantages people based on an aspect of their diversity. Compared to...


When conversations become a competition

Australia has a well-deserved reputation for being a very competitive nation on the world stage. Perhaps it dates back to...


Wakey wakey - a history of alarm clocks

Matthew S. Champion, Australian Catholic University Australians are returning to our normal rhythms. The first beats of the day are...


The top-selling-souvenir from every country in the world

Do you buy souvenirs to remember your overseas holidays? If so, we imagine you have been looking at these very...


ACCC to keep a keen eye on travel issues this year

Australia's consumer watchdog expects to have its hands busy dealing with COVID-affected travel complaints this year. In his annual address...


Cruisers turn to superyachts to satisfy their cruise cravings

Typically, Australia is one of, if not, the biggest cruise market in the world. It wasn't so long ago that...