After waiting for what seems like an eternity, the government has finally put to Parliament its draft legislation around two of its schemes.
The proposed schemes, the First Home Super Saver and Contributing the proceeds of downsizing to superannuation, are both pieces of legislation that are an attempt to bring into action proposals from the 2017 Federal Budget.
The proposals aim to:
1. assist first home buyers to save a deposit through their superannuation, and
2. assist retirees to use some of their superannuation money from downsizing their present living arrangements.
The First Home Super Saver might sound a little familiar; the ALP introduced a similar scheme under the Rudd government that the then Coalition opposition opposed.
In fact, proposals to use superannuation for housing go back as far as Paul Keating in 1993 who put up the idea of all Australians being able to use up to $10,000 of their superannuation, and is constantly raised by those who may not fully understand the policy intent of superannuation.
The second proposal is a little more novel; the government believes that many retirees are not selling their existing homes, and downsizing to a more livable space, due to the new contribution caps. It is hoped the proposal will encourage retired Australians to downsize their home, offering those homes to the market and thereby increase the supply of dwellings (and hopefully putting downward pressure on house prices). However as the amounts transferred will count towards pension tests, some retirees may choose not to readily jump at the idea.
If you are a retiree and considering this, talk to this office to determine its effectiveness for you and the impact, if any, it could have on your government pension.
First Home Super Saver (FHSS)
The budget proposed that from 1 July 2017 eligible first home buyers would be able to contribute up to an extra
$15,000 per year, up to a total maximum of $30,000,
into their superannuation that would then be able to be
released if used to buy a home. However the contributions
still count towards the annual concessional and nonconcessional caps and are not in addition to those caps.
Eligibility is limited to those aged 18 and over who have
not used the FHSS before and have never owned real
property in Australia. If you are purchasing with another
person who already has property, you would not be
disqualified from using the FHSS.
However, there can only be one request for a release of
the amounts held in superannuation. If you withdraw less
than the total $30,000 plus earnings in an initial release
you cannot later seek to withdraw further amounts.
downsizing to superannuation B Contributing the proceeds of
The second proposal has two aims — one, to assist
older Australians to downsize their living arrangements,
and two, to increase the supply of housing to first home
buyers thus reducing some of the supply constraints
that are keeping housing prices high.
What the proposed housing-based super contribution initiatives offer cont
Who is eligible?
To be eligible under the proposed policy:
■■a person must be aged 65 or older
■■the property sold must have been held by the person
for at least 10 years and been their principal place of
residence for that period
■■the property must be in Australia and cannot be a
houseboat, caravan or other mobile home
■■the contribution must be made within 90 days of
the disposal of the dwelling, or such longer time as
allowed by the Commissioner
■■the individual must choose to treat the contribution
as a downsizer contribution, and notify their
superannuation provider in the approved form of this
choice at the time the contribution is made, and
■■the individual cannot have had downsizer contributions
in relation to an earlier disposal of the main residence.
How much can be contributed?
You can contribute up to $300,000 from the sale o