Beating the next raid on your nest egg

It's no secret the government is about to get stuck into super again in the interests of rescuing its shrinking surplus.

One reason there's a problem is that falling commodity prices have, well, undermined the mining tax that was supposed to pay for higher compulsory super - although levied on bosses it costs the budget because the contributions are taxed at 15 per cent rather than marginal rates - as well as the $500 assistance to low-income earners.

Not that it was ever going to raise anything after a nip and tuck by the miners. Still, a start would be dropping - or "not proceeding with", as Wayne Swan would say - the higher compulsory contribution.

After all, there is form reversing budget decisions before they ever happen. Remember how interest earned was to be tax-free two, or was it three, budgets ago?

Too easy. Now it's your nest egg's turn. The tax on contributions of those earning more than $300,000 was doubled or, in the memorable words of Bill Shorten, "the tax concession on their contributions will be reduced".

That's one way of putting it I suppose. Better bear that in mind about any super changes in the mid-year budget review. What we would call doubling a tax is ''halving a concession'' to the government.

Before it does anything rash, though, it might care to go back to the Henry Tax Review, even if a certain K.Rudd commissioned it, where there was a clever suggestion of more super for everybody at less cost. Employer contributions would count as part of your income, in return for the 15 per cent tax being dumped.

So more money would go into your super because it's not taxed any more and the government gets more revenue.

Oh, and your take-home pay would drop. But hang on, that's going to happen anyway.

Why do you think the Reserve Bank cut interest rates?

Lower incomes - or, same difference, higher prices if the dollar drops - are the inevitable consequence of tumbling commodity prices.

At least with Henry's idea there'd be no more Treasury tinkering.

Hands up if you know the difference between a restricted, non-preserved amount and an unrestricted preserved amount?

I'd tell you - only I seem to have suddenly run out of space.

Where was I? Oh yes, don't think super is the be-all and end-all of tax breaks in retirement. Keep this under your hat, but there's a huge tax break outside super thanks to the last budget. I still can't believe how it slipped through.

The tax-free threshold on ordinary income of $20,542, counting rebates, jumps to $32,279 (or up to $57,948 for a couple) with the new senior Australians and pensioners tax offset once you reach pension age.

So there's a good excuse for, uh, not proceeding with super.

Follow David on Twitter @moneypotts

The story Beating the next raid on your nest egg first appeared on The Sydney Morning Herald.

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