Super changes in the 2017/18 Federal Budget 

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This week, the Federal Treasurer, Scott Morrison, handed down the 2017/18 Federal Budget.

Mr Morrison announced several changes that, if legislated, could affect savings and superannuation, including the new role superannuation will play in addressing housing affordability issues.

Saving for your first home through super

From 1 July 2017, first home buyers will be able to add extra savings to their superannuation account to help save for a house deposit. This will apply to voluntary contributions (pre-tax or post-tax) made to a member's super account.

In his speech, the Treasurer said this will help a first home buyer boost their deposit by 30% compared to saving through a standard deposit account.

People can make contributions of up to $15,000 per year and $30,000 in total to save for their deposit. Withdrawals will be allowed from 1 July 2018. Where there is a couple involved, both partners will be able to save up to their caps and potentially contribute up to $60,000 in total towards their home purchase.

What you can do

If you’re saving for your first home, you can use your TelstraSuper account to save up to $30,000 towards your deposit. The easiest way to do this is by salary sacrificing part of your salary into your super account. Your employer can set this up for you. Post-tax contributions can also be made, which means, for example, if a person received a lump sum from a family member they could contribute that into their super. Contributions made into your super cannot go over the yearly limits.

If you want to see if you could benefit from this new measure, the Government has an online estimator to understand the advantages of saving for your home deposit through super.

Downsizers can boost their super by $300,000

From 1 July 2018, Australians over age 65 who wish to downsize will be able to make a post-tax contribution (non-concessional) to their superannuation of up to $300,000 from the sale of their primary home (if they have owned it for at least 10 years). Up to $600,000 per couple, for the same home, can be contributed to superannuation through the downsizing cap.

These contributions will be in addition to those currently allowed under existing rules and caps and they will be exempt from the existing age test, work test and the $1.6 million balance test coming in from 1 July 2017 for making post-tax contributions.

Federal Treasury has provided the following example of how downsizing could work: *

George and Jane, both retired and aged 76 and 69, sell their home to move into more appropriate accommodation. The sale proceeds are $1.2 million. They can each make a non-concessional contribution into superannuation of $300,000 ($600,000 in total), even though Jane no longer satisfies the standard contribution work test and George is over 75. They can make these special contributions regardless of how much they already have in their accounts.
Federal Treasury Budget papers

What you can do

If you’re thinking of downsizing after 1 July 2018, you can consider making a contribution into your super account. There could be Centrelink implications as the family home does not fall under the asset test but your superannuation does. Also, if you have over $1.6 million you can’t transfer any amounts over that into a pension as there are restrictions from 1 July 2017 on how much can be transferred into a tax-free pension.

How we can help you

For more detailed information, a video update, or to sign up for one of our webinars on the Budget changes, visit our special Federal Budget page.

2017 Federal Budget update

If you’d like to discuss saving for your first home or downsizing, TelstraSuper Financial Planning has a team of Advisers who can help you work out how to meet your goals. They can be contacted on 1300 033 166 or you can request a call back online. Due to high demand for our advice services, we are now booking appointments for the new financial year. If you’d like advice on this new option for saving you can register your interest by sending us an email and someone will contact you in the new financial year when there will also be more clarity on how these proposed reforms will work.

*http://budget.gov.au/2017-18/content/glossies/factsheets/html/HA_15.htm