Superannuation Is Australia’s Greatest Legal Tax Dodge

If you can't beat them, join them?

The businessman pushed open the stone door of the brick wall and found the gold coins hidden in the wall

Superannuation is one of the most effective ways Australians can use to legally avoid paying tax. There are increasing calls for it to be capped, though.

Dodging tax is frowned upon (unless you’re Google, Apple, or Jimmy Carr’s old accountant). But with mortgage rates through the roof, interest rates gaining our interest (and not in a good way), and the cost of a business class flight to Europe currently scaring off even the biggest ‘Euro summer pilgrimage’ snobs (read: us), you could be forgiven for wanting to make the most of your dollars.

Speaking of which, there has been some discussion this week about superannuation and the potential to (legally) use it to dodge tax. Both The Australian and have weighed in on the topic.

A journalist at The Australian claimed superannuation is a “ticket to huge tax savings and greater wealth” while Leith van Onselen at reported, “the superannuation system has literally been designed to favour of the wealthy.”

He added: “The 15% flat tax on most superannuation contributions and earnings means that higher-income earners receive far more superannuation tax concessions than lower- and middle-income earners.”

According to, “top 1%” retirees get more than double “earnings tax concessions” than people on the age pension.

Putting it statistically, “the top 1% of income earners are projected by the Treasury to receive more than $700,000 in superannuation concessions over their working lives,” ( In other words: some 14-times the tax concessions received by the bottom 10% of income earners. Ouch.

Because the system is set up like this, some people are arguing we should have a cap, so that superannuation doesn’t go beyond its intent (giving people self-sufficiency in retirement) and into the grounds of helping people pass on (and increase) generational wealth.

The Guardian reports that Richard Denniss, the executive director of the Australia Institute, said ATO data shows about 897 self-managed super funds are producing incomes of one million dollars or more.

“The current system is not taking pressure off the budget to provide a dignified retirement for all Australians, but it certainly is providing a lucrative tax avoidance facility for multimillionaires,” he said (per The Guardian).

“There is a strong case for limiting tax concessions for high-income groups and it’s telling that even super industry chiefs agree reform is needed.”

In the meantime, it’s probably the motivation for the rest of us non millionaires to be more diligent about using the system (legally) to our advantage. What’s that old saying, if you can’t beat them, join ’em…