Perhaps the best way to go is just start the system all over again. On second thoughts ...
TELL me again why super is so good. I seem to have overlooked something.
Oh that's right, you get a few tax breaks in return for not seeing your money again in your working lifetime and for letting the government off the hook over paying you a pension one day.
Still, it's the petty regulations that get me. Something about superannuation brings out the worst in a bureaucrat.
But then it can't just be one. Bastardry on this scale surely requires a committee.
Take how you're a criminal if you put a dollar too much into super.
You're not allowed to salary sacrifice more than $25,000 ($50,000 for over 50s) in any one year yet can go over this without so much as a by- your- leave.
All it takes is a tardy contribution by your employer on July 1 from an earlier pay and it's shifted from one tax year to the next without you knowing.
One woman whose employer had paid $10.30 too much was hit with penalty tax of $69,754. Talk about vindictive.
None other than the tax commissioner has admitted it's unfair but ... rules is rules.
Even the Minister for Financial Services and Superannuation, Bill Shorten, who was also once a director of a super fund, has been caught out - poetic justice there. So presumably there'll be an attempted remedy in Tuesday's budget but I bet it'll just be more rules about acceptable excuses.
Then there's all that pettiness over DIY super funds holding collectables such as a work of art or a stamp collection.
Mind you, there was talk of banning these altogether - a fine example of replacing a silly rule with a sillier one, even though they'd be less risky investments than shares. But a DIY fund that holds, say, a painting still has to hide it away in the attic.
Hang it on the wall where you could (shame on you) enjoy it and your fund will be declared non-conforming, the super equivalent of being charged with drunk driving, except you don't get to defend yourself. Great, DIY to DUI in one move.
Impossible as it might seem, the rules are getting sillier. Among a new batch, well fed with fertiliser, that sprouted on July 1 - and I'll just pick one randomly - is this doozy.
A geared property in a fund can't be improved without the loan being declared illegal.
Even a deterioration is an improvement. A smaller property rebuilt after a bushfire is considered an improvement on the larger original, so you need to start all over again with a new loan.
Oh, did I mention that before a DIY fund can pay a pension you have to write a letter to yourself asking if you'd mind?
I'd hate to think what'd happen if you turned yourself down but there'd be a rule covering it.
Maybe it'd be better just to start the system all over again.
Oops, take that back. If this is what 27 reviews in five years can produce, why risk a 28th?
Frequently Asked Questions about this Article…
What are the salary sacrifice caps for superannuation and who do they apply to?
The article explains the salary sacrifice cap is $25,000 a year for most people, and $50,000 a year for those over 50. Exceeding these caps — even unintentionally because of a late employer contribution that falls into the next tax year — can trigger penalties.
Can a tiny excess super contribution really attract a big penalty tax?
Yes. The article gives a striking example where a woman whose employer paid $10.30 too much was hit with a penalty tax of $69,754. The point made is that the rules can be severe and inflexible — ‘rules is rules’, as the tax commissioner reportedly admitted.
What are the rules for holding collectables like art or stamps in a DIY (self-managed) super fund?
According to the article, DIY super funds face strict rules on collectables. There was even talk of banning them. If a fund holds an item like a painting, displaying it (for example, hanging it on the wall where you can enjoy it) can cause the fund to be declared non‑conforming — the article jokes you’re supposed to hide it away in the attic.
How do the new rules affect geared property held in a super fund?
The piece notes a new rule (which came into effect on July 1) that a geared property in a fund cannot be improved without the loan being declared illegal. Even deterioration followed by rebuilding can be treated as an ‘improvement’ — for example, rebuilding a smaller property after a bushfire might be classed as an improvement and require starting a new loan arrangement.
Are there any quirky administrative requirements for a DIY fund to start paying a pension?
Yes — the article highlights an odd requirement that, before a DIY fund can pay a pension, you have to write a letter to yourself asking if you’d mind. The author uses this example to underline how petty some rules can feel.
Why does the author describe superannuation rules as petty and bureaucratic?
The author argues that many super rules are petty and overly bureaucratic because they criminalise small errors (like minor contribution timing issues), impose strange limits on harmless investments (collectables), and create technical traps around property loans and pension paperwork — all of which make the system feel vindictive rather than sensible.
Will the government fix these harsh superannuation rules in the next budget?
The article suggests there might be an attempted remedy in the upcoming budget (the author mentions Bill Shorten and a hoped-for response), but expresses skepticism — predicting the fix may simply add more rules about acceptable excuses rather than simplifying the system.
How often have superannuation rules been reviewed lately, according to the article?
The author notes there have been 27 reviews in five years and questions the value of adding another (a 28th), implying repeated reviews have produced a lot of complexity rather than clarity.
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