Helping first home owners save for a deposit inside superannuation
From 1 July 2017, the Government is proposing to allow first home buyers to make voluntary contributions of up to $15,000 per year and $30,000 in total, which may be over a number of years, to their superannuation account to buy their first home. So, when it comes time to pay the deposit on your first home, you can withdraw up to $30,000 total. You will be able to withdraw any interest earnt on those savings (deemed earnings).
The amount you withdraw for your first home deposit will be taxed at your marginal rate (including Medicare levy) less a 30% offset. This means you will benefit from the lower tax rates in superannuation while saving for your first house.
It’s important to note that the total concessional (before-tax) contributions you can make to your superannuation cannot exceed your annual concessional contribution cap which is $25,000 for the 2017-18 financial year. This means that if you contribute the maximum $15,000 per year to save for your first home during 2017-2018, you can only contribute $10,000 more of concessional contributions to your super that year.
Superannuation Guarantee payments contribute to your total concessional contributions. You can also make non-concessional (after-tax) contributions but these contributions may not be as tax effective.
Enabling older Australians to contribute the proceeds of the sale of their home into superannuation
From 1 July 2018, if you are 65 or over, the Government will allow you to make a non-concessional (after-tax) contribution of up to $300,000 from the sale of your home provided that this has been your principle residence for the past 10 years or more. Both members of a couple will be able to take advantage of this measure. This means that a total of $600,000 per couple can be contributed to superannuation from the sale of the same house.
For example, Anne and Joe are both over 65 and have been living in their principle place of residence for the last 20 years. Their children have moved out and they wish to sell their home. Under this new measure, Anne and Joe will be able to each contribute $300,000 as a non-concessional (after-tax) contribution to their superannuation account.
You can still take advantage of this proposed measure even if your total superannuation balance is more than $1.6 million and you are no longer working. However, it is important to note that this contribution is not exempt from the $1.6 million transfer balance cap. This means that while you may be able to add this money to your super (accumulation) account you cannot add the $300,000 to your pension account if you will exceed this cap.
Establishing the Australian Financial Complaints Authority (AFCA)
From 1 July 2018, the Government is proposing to establish the Australian Financial Complaints Authority (AFCA). This new body will replace the Superannuation Complaints Tribunal, the Financial Ombudsman Service and the Credit and Investments Ombudsman and be wholly funded by industry.
AFCA will hear individual consumer, investor and small business disputes in relation to banking, insurance and superannuation free of charge.
From 1 July 2018, the SCT will only handle existing cases and will no longer operate from 1 July 2020.
Medicare levy to increase
The Government is proposing to increase the Medicare levy by half a percentage point from 2.0 to 2.5 per cent of taxable income from 1 July 2019. The increase will fund the National Disability Insurance Scheme. This will impact the rates at which superannuation funds must withhold Pay As You Go tax from members’ benefit payments.