Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.

Super experts call for abolition of super 10pc rule

Pressure from the superannuation industry to end the 10 per cent test relating to personal concessional member contributions has increased, with one industry figure labelling the test “grossly prejudiced”.

News Miranda Brownlee 08 April 2015
— 1 minute read

The 10 per cent test prohibits a personal concessional member contribution where the superannuation member earns more than 10 per cent of their income from employment services.

In a LinkedIn forum, F D Browne & Co principal Chris Browne argued that the 10 per cent rule fits into the category of a “grossly prejudiced tax law against the relatively small number of taxpayers that it affects”.


“There is no justification for singling this group out as being ineligible for tax concessions which are available to others,” said Mr Browne.

The rule “adversely affects those switching from employment to self-employment or vice-versa within a year,” he said.

“For some, it can be very hard to know with any certainty that they have passed the 10 per cent test until after 30 June, by which time it is too late to contribute."

Financial and Technical Solutions' principal Tony Negline expressed a similar view, stating that the 10 per cent rule has “achieved very little other than unnecessary complexity”.

“[However,] with the federal Budget under stress I’ll be surprised if the government opens the flood gates on deductibility of super contributions,” Mr Negline added.

Partner at Deloitte Australia Michael Ward said allowing taxpayers to make deductible top-up contributions is the first step in giving taxpayers more control over their super.

Superannuation will then be seen as being of greater relevance by taxpayers, he said.

Meg Heffron, head of customer at Heffron SMSF Solutions, said the test was most likely brought in as a crude means of limiting contributions at a time when limits on contributions were dealt with by limiting the tax deductions available to the contributor rather than imposing a limit on the recipient.

“It’s very clearly unnecessary now that caps are imposed in aggregate at an individual level [and] should have been killed off years ago,” said Ms Heffron.

Super experts call for abolition of super 10pc rule
image intro
accountantsdaily logo


Are you thinking of expanding your offering into SMSFs to grow your client base? Become a pro at SMSF fundamentals and make your clients bulletproof with the SMSF Foundations course. Learn directly from Aaron Dunn from Smarter SMSF as he deep-dives into the fundamentals you need to know to successfully undertake your work as an SMSF practitioner. Earn up to 21 CPD hours! Learn more