More than one million Australians are expected to be about $15,000 better off by the time they retire after Labor caved to pressure to overhaul controversial changes to tax on superannuation.

The federal government has announced a drastic redesign of its super tax policy, which was originally intended to double the tax rate on accounts containing more than $3 million to 30 per cent.

Under the new changes, the $3 million threshold will remain, while accounts with more than $10 million will be slugged a 40 per cent tax rate.

Both thresholds will now be tied to inflation, ensuring lower-income Australians aren't captured by the tax changes over the years, as incomes rise.

About 80,000 people have super accounts holding $3 million or more, and currently pay the standard 15 per cent concess

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