The government has partly undone the overly generous super tax breaks that go to the better off.

It limits the superannuation tax concessions to the very well off and redirects some of these to lower income earners and those with lower balances.

Planners and accountants are still grappling with how many of the changes will work in practice.

They will not be able to advise their clients until they see the legislation, with most of the measures not due to take effect until July 1, 2017.

Louise Biti, a director of Strategy Steps, which advises financial planners, says the changes promise to make it a busy time for financial planners as they will be reviewing client strategies in the lead-up to the changes.

She says the winners include women and others with broken work patterns and lower-income earners.

The losers include those with higher super balances and higher income earners.

Losers also include those older workers who are using a strategy called "transition to retirement" to lower the amount of tax they pay on their income rather than genuinely transitioning to retirement.

Rosalie Degabriele, a finance lecturer at the UTS business school, says the majority of super changes impact only the well off and those with substantial super savings, which she estimates to be only 4 per cent of the population.

Lower salary sacrifice cap

The key change is the lower cap of $25,000 on concessional contributions that takes effect from July 1 next year.

This is the limit on how much can be salary sacrificed in super and includes the 9.5 per cent superannuation guarantee.

The $25,000 cap is lower than the current $30,000 for under 50s and $35,000 for over-50s.

But there is a sweetener. At the moment, if the annual cap is not used it is lost.

However, the new $25,000 cap will be cumulative for five years for those with super balances of $500,000 or less.

"For a little bit of lowering of the cap you get the rollover provisions, says Philip La Greca​, an executive at AMP's self-managed super fund business, SuperConcepts.

It will allow people to make decisions as the cash becomes available, he says.

"Salary sacrifice is very structured as you've got to set up how much you want to salary sacrifice at the beginning of the year," La Greca says.

"What this allows everyone to do is what small business owners can do; at the end of the year they see how much they can afford to put into super," he says.

"It will help those with broken work patterns to catch up and those who receive bonus to put that into super," he says.

After-tax contributions

A $500,000 lifetime cap will be applied to after-tax contributions into super, called non-concessional contributions.

That is a lot less generous than the $180,000 a year that is allowed now.

Wealthier people who sell some investments, but also ordinary wage earners  who receive windfalls, such as inheritances, often put the money into their super as non-concessional contributions.

They do so because once they are retired, there is not tax paid on the money.

This is a measure to reduce the capacity for super to be used for wealth accumulation and estate planning tool rather than providing for retirement income.

The budget papers say the $500,000 lifetime cap includes non-concessional contributions going back to the middle of 2007.

That means many people will have made non-concessional contributions in excess of the $500,000 limit.

Natasha Panagis, technical manager at Strategy Steps, says for those who have more than the cap it remains to be seen what they will be able to do.

Those who have hit the limit will have to invest the money in other tax-effective non-super investment like negative gearing or insurance bonds or family trusts," Panagis says.

Transition to retirement 

The government is taking measures to stop the transition-to-retirement (TTR) strategy to be simply a way of higher earners  swapping their highest marginal income rate with the lower super tax rates.

To take advantage of TTR you must have reached the superannuation preservation age; the age at which super savings can be withdrawn as an income stream.

That can be anywhere between age 56 and 60, depending on your date of birth.

The strategy is to draw income from your super (by starting a pension) while also salary sacrificing pre-tax income into super.

Like any salary sacrificing arrangement, the marginal income tax rate that would have been paid on the sacrificed salary is replaced by the lower super contributions tax.

The idea is to have income from the pension replacing the money salary-sacrificed so that take-home pay remains unchanged with the Tax Office taking less.

There is no tax on earnings inside a pension account.

And, for over-60s there is no tax payable on the pension income withdraws.

But the budget changes that. The pension account that is being used for transition to retirement will no longer be free of the tax on earnings and will attract a 15 per cent earnings tax.

And when the change applies from July 1 next year it will apply to all transition-to-retirement income streams irrespective of when the income stream was started.

The measure is designed to restrict use of the strategy only to those who are genuinely transitioning in retirement; that is, those who are moving from full-time work to part-time work.

Panagis says the "strategy will be less effective than it used to be and less popular, especially when combined with the lower concessional caps as well."

Low income earners

In a move that helps with fairness in the super system, the government will continue Labor's  low income superannuation contribution scheme but renamed as the low income superannuation tax offset (LITSO).

Labor's scheme was due to be axed after June 30 next year and the Turnbull government was under pressure from all sectors of the superannuation industry and interest groups representing consumers to retain the scheme.

It compensates workers earning less than $37,000 a year who pay an average marginal tax rate less than 15 per cent on their income, but pay 15 per cent contributions tax on their compulsory super.

The re-named scheme will ensure that lower earners continue to receive an automatic rebate worth up to $500 annually, directly into their super accounts.

Stephen Anthony,  chief economist at Industry Super Australia, says it is a sensible step taken by the Turnbull government.

"[It] is critical in ensuring lower paid workers don't end up paying more tax on their super than they do on their take-home pay," Anthony says.

He says it helps those 3 million lower-income workers, mainly part-time working women earning less than $37,000 a year, who "need the most help to save for a decent standard of living in retirement".

Co-contribution scheme

The co-contribution scheme has been left unchanged in the budget.

Adrian Raftery, a senior lecturer in financial planning and superannuation at Deakin University, says: "It's surprising how few people actually take advantage of free money from the government."

If your income is under $35,454 and you contribute up to $1000 of after-tax income into you super account, the government will match each dollar with a payment of 50 cents.

The incentive shades out at income of $35,454 and cuts out altogether at $50,454. The income thresholds will increase slightly for the 2016-17 year.

The budget increases the income threshold to $37,000 from $10,800 for a low-earning spouse to have their spouse pay into their super account.

The higher earning spouse can pay up to $3000 in the lower-paid spouse's super account and they receive a rebate, which is worth $540 on $3000.

Higher earners

Most of the budget changes are designed to restrict the use of tax concessions by those who have already saved more than enough for a comfortable retirement.

Most people pay a super contributions tax of 15 per cent.

However, from July 1 next year those earning more than $250,000 will pay double or 30 per cent, which is lower than the current income threshold of $300,000.

Another measure to hit higher earners is the restriction that a maximum of $1.6 million can be moved into the tax-free pension phase.

At the moment there is no limit on how much can be accumulated.

There are thousands of super funds with more than $5 million in them, many of which are in the pension phase where no tax is paid on earnings or on withdrawals.

The money  in super in the retirement phase that is in excess of $1.6 million will have the same 15 per cent earnings tax that applies to those in the accumulation phase.

Those retirees who already have more than $1.6 million will have until July 1, 2017 to either put the money back into the accumulation phase or take the money out of super.

Super changes at a glance

* Reduction in annual concessional contribution caps, but an ability to carry forward unused caps

* A lifetime non-concessional contribution cap of $500,000 to replace the annual caps and bring-forward rules

* A limit on pension phase balances of $1.6 million per person (for new and existing income streams)

* Ability for everyone up to age 75 to make contributions to super

* Ability to make personal before-tax contributions, if your company doesn't offer salary sacrifice or you don't have an employer. Previously this was only available to the self-employed

* Increased eligibility for the spouse super tax offset

* Removal of earnings tax exemptions for transition to retirement income streams

The super reforms announced will not take effect until  July 1 2017, although changes to non-concessional contributions are effective immediately, subject to legislation

Source: Strategy Steps / Fairfax Media.