"The original superannuation rules were intended to provide a tax-effective way for Australians to save part of their working income for retirement – not to allow for intergenerational transfer of assets," he said.

"The extraordinary balances being accrued by those not even in the workforce are something most wage and salary earners could only dream of.

"There are only limited concessions to go around in the system and this doesn't appear to be the best use of them."

The government is devising an objective for super, which will be enshrined in legislation.

Senior ministers have said the objective is not to generate wealth or transfer it to the next generation.

There is speculation the government will use the budget to wind back top-end tax concessions for super contributions.

The former Howard government introduced the ability for third parties to make personal contributions on behalf of minors who do not satisfy a work test.

This was initially subject to a cap of $3000 per year. But this limit was subsequently aligned with the concessional annual cap for all accounts, which is $180,000 a year.


Contributions to accounts held by minors could consist of cash, perhaps from a parent or grandparent, or in-specie transfers such as of shares or business assets.

An in-specie transfer involves shifting managed funds or shares without selling the underlying investment.

As ISA points out, one explanation for large balances held by minors is that they are one-off personal injury payouts, which generate a lifetime income stream for children who are totally and permanently injured.

The ATO figures show there are 127 girls and 45 boys aged under 18 with six- and seven-figure super balances.

All have earnings of $37,000 or more. The fact they are in higher tax brackets suggests they are probably not typical under-18s with part-time jobs.

They also have much larger personal rather than employer contributions, which means their income is coming from somewhere other than employment-related means.

An ATO spokesman said nearly 90 per cent of the 172 minors have their superannuation held within a large pooled fund. That is, not a self-managed superannuation fund.

"In relation to individuals under 18 there are close to 100,000 who have superannuation balances, with the average being $5794," he said.


"There are a range of scenarios where an individual under 18 can accrue a superannuation balance within the rules governing the superannuation system.

"This can include employer contributions, disability injury payouts [or] contributions from parents or third parties.

"If an individual is under 18 and a person makes a contribution for them, the contributions count towards the under-18s non-concessional contributions cap."