Tim Miller, technical and education manager for Smarter SMSF, said the proposed changes to the tax cuts for the lower tax bracket could influence future decisions about where money should be retained and whether members in the retirement phase want to take money out of super from an income point of view.

“A lot of people will be thinking salary sacrifice strategy and things like the carry-forward concession if they are in the mid-tier income bracket,” Mr Miller said.

“A lot of those people will have unused, concessional caps and will be thinking about whether there will be a greater capacity to contemplate salary sacrifice arrangements moving forward because I believe there will be some movement in that area with regards to contribution strategies.”

Mr Dunn said for lower income earners, the change from 19 per cent to 16 per cent tax rate, moves them closer to the 15 per cent rate that applies to superannuation for those in the accumulation phase.

“That has got us thinking about what some of the issues will be for people contemplating, with just a one per cent difference in tax rate and the Medicare level kicking in, whether it’s more beneficial to keep assets inside super, or out of super,” Mr Dunn said.

“We have seen in this financial year minimum pension factors have gone back to where they were and people are pushing more out of their super fund in a lot of instances.”

He said the question then changes to whether are they better managing that risk at 16 per cent outside of super rather than trying to manage it at 15 per cent inside of super.

Mr Miller said there was a significant change from 1 July 2020 concerning contributing after age 67 into super, and many clients saw that as an opportunity to put more money into their fund.

“But if the tax rate drops down to 16 per cent, will that mean there will be less desirability to put money into super if it does have ramifications on things like estate planning from a taxation point of view? Is it worth putting that money in for that potential one per cent variable?”

Mr Dunn said the potential of the lower tax rate for low-income earners adds another layer of complexity for advisers to deal with regarding the best tax implications for their clients.

“With all these impacts we have to continually overlay as part of the ongoing requirements and this provides an opportunity for advisers to be sitting with their clients analysing, understanding and working out what they're going to do next,” he said.

“This is another layer again on top of the planning that we need to do with holding assets in or outside of super, subject to the Division 296 rules.”