John Maroney

The Federal Government’s decision to allow people aged 65 and over to downsize their homes and make a non-concessional contribution (NCC) of up to $300,000 to their super fund has been welcomed by the SMSF Association.

The NCC will be in addition to existing contribution caps and will be exempt from the existing age test, work test and the $1.6 million total superannuation balance test for making NCCs.

Association Chief Executive Officer John Maroney says: “This measure will apply from 1 July 2018 to sales of a principal residence owned for the past 10 or more years and both members of a couple will be able to take advantage of this measure for the same home.

“This will allow a couple to contribute up to $600,000 from the sale of their home to superannuation outside of the existing caps and balance restrictions.

“This means people can make a significant top-up contribution to their super funds, allowing them to fund a dignified and secure retirement. While the measure may not be a significant trigger to encourage downsizing, we welcome the ability for older Australians to top up their superannuation where downsizing their home provides them with funds to do so.”

The other Government initiative linking housing and superannuation encourages individuals saving for their first home the opportunity to make voluntary contributions to superannuation from 1 July 2017; up to $30,000 of those extra contributions being eligible for withdrawal from 1 July 2018 to fund a first home deposit.

Maroney says: “Under the new rule, up to $15,000 a year and $30,000 in total can be contributed within existing contribution caps to fund a deposit for a first home. It is important to note that only the extra voluntary contributions and associated earnings can be withdrawn, not a person’s compulsory super contributions made by their employer. Both members of a couple can take advantage of this measure to buy their first home together.

“This scheme offers superannuation funds, including the SMSF sector, an excellent opportunity to engage younger fund members in their superannuation.

“The first home buyers’ proposal strikes the right balance between encouraging young people to save for a first home deposit in a concessional tax environment, but also protecting their retirement savings for the longer-term.”

Aside from these two measures, it was relatively quiet on the superannuation front when Treasurer Scott Morrison handed down the 2017-18 Federal Budget tonight.

“The SMSF sector and its specialist advisors can breathe a little easier with the Budget largely leaving superannuation policy untouched.

“We are delighted that the Government has heeded our call for stability in superannuation policy after the significant changes to superannuation over the past 12 months.

“This will give SMSFs and their advisors a much-needed period of stability to adjust to the superannuation law changes taking effect on 1 July 2017,” Maroney says.

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