There have been claims that a potential misuse of Australia’s super system exists following the discovery of a number of teenagers who hold six and seven figure superannuation balances.
New statistics from the ATO show that 169 minors in Australia have a combined total of $36 million in retirement savings, providing them with average balances that reach into the hundreds of thousands of dollars.
Another are in the $180,000-plus tax bracket and have superannuation assets of $3.8 million between them.
For the first time, the tax office released statistics showing super contributions and balances which were broken down by gender, age group and personal income tax bracket.
And while there could be a reasonable explanation for the minors having such significant balances, many remain suspicious.
The teenagers have more personal contributions than employer contributions, meaning that their income is coming from somewhere other than employment-related means.
Australia’s original superannuation rules were designed to provide a tax-effective way for Australians to save for retirement, not for intergenerational transfer of assets.
Today, third parties can make personal contributions on behalf of minors who do not satisfy a work test. While these contributions were initially subject to a cap of $3000 per year, this limit now aligns with the annual concessional cap for all accounts, which currently stands at $180,000 per year.
Contributions to minor accounts can consist of cash or in specie transfers such as of shares or business assets.