Adding money to super from downsizing your home
From 1 July 2018, anyone 65 or over will be able to make a personal contribution to super of up to $300,000 ($600,000 for a couple) using money from the sale of their family home. The restrictions on non-concessional contributions for people with balances above $1.6 million will not apply to contributions made under this new special downsizing cap.
It will still be counted towards the $1.6 million transfer balance cap, which is the maximum amount of super you can transfer to a retirement income account. This means that any amounts over the limit will need to stay in your accumulation (super) account. These payments can be made on top of the before and after-tax contribution caps.
You need to have owned your home for at least 10 years, and it must be your principal place of residence. As these contributions will increase your super balance, they will count towards the Age Pension assets test and deeming rules under the income test.
First Home Super Saver Scheme
From 1 July 2017, first home-buyers can make contributions to their super account from their before-tax pay to save for a house deposit. Contributions can be made by salary sacrifice and will be limited to a total of $30,000 per person, and capped at $15,000 a year. This means a couples can save a total of $60,000 or $30,000 a year. You don’t need to open a new account.
These contributions will also count towards the annual $25,000 concessional contributions cap that will apply from 1 July 2017. If you’re self-employed or your employer doesn’t offer salary sacrifice, you can claim a tax deduction on after-tax contributions up to the contribution cap.
Withdrawals can be made from 1 July 2018, and will be be taxed at your marginal tax rate less 30%.
The Australian Taxation Office will administer the scheme and determine whether you’re eligible to withdraw these savings and how much you can withdraw based on your net contributions and a Government set rate of return.
According to Government estimates, the scheme will see a couple adding an extra $12,484 on combined savings of $60,000 over three years than if they had saved in a standard bank deposit account.
Changes for pensioners
If you lost your pensioner concession card due to the changes to the age pension assets test taper rate introduced on 1 January 2017, you'll now have the card reinstated. This means you can access Commonwealth subsidised hearing services and be eligible for pensioner concession cards and discounts in your state or territory.
The Government will also be making a one-off energy payment to pensioners of $75 for singles and $125 for couples. This will be paid automatically before 30 June 2017.
The residency requirements for pensioners is changing from 1 July 2018. New people applying for the Age Pension and disability pension will need to have 15 years of Australian residency before they are eligible. Some people who meet certain conditions may qualify after 10 years of residency.
Medicare Levy and expiry of budget repair levy
From 1 July 2019, the Medicare levy will increase from 2% to 2.5% to help fund the National Disability Insurance Scheme. For example, someone earning $60,000 a year would pay an extra $300 a year, and those earning $80,000 would pay an extra $400 a year.
The budget repair levy ends on 1 July 2017, which means people on the top marginal tax rate (earning $180,000 and above) will pay 2% less in tax. This will return the top marginal tax rate to 45% (plus the Medicare levy).
New Financial Complaints Authority
From 1 July 2018, the Government is proposing a new ‘one-stop shop' for financial disputes, including super. The Australian Financial Complaints Authority (AFCA) will replace existing bodies including the Superannuation Complaints Tribunal. The existing statutory protections applying to super disputes will continue to be provided.
Borrowing in SMSFs
The Government is addressing one of the loopholes which arises when SMSFs borrow by ensuring that those borrowings are included in the members total superannuation balance and transfer balance caps.