The 2017 budget, the family home, and your super
Superannuation | 12/05/2017 |
3 min read
From July 1 2018 people aged 65 and over will be able to make a non-concessional (post tax) contribution to their super of up to $300,000 from the sale of the family home.
According to Mercer, "These contributions will be in addition to those currently permitted under existing rules and caps and they will be exempt from the existing age test, work test and the $1.6 million balance test for making non-concessional contributions."
For older Australians this is one of the more relevant announcements to come out of the 2017 Federal Budget.
While the news has been welcomed in some quarters, Rice Warner’s analyst Stephen Freeborn has noted that the real beneficiaries will be wealthier Australians, who will be able to use it as a vehicle for moving additional money into the concessionally taxed superannuation investment environment.
According to Freeborn: “For the masses, it is not a good idea. A couple owning a home and with other assets including superannuation of $350,000 would be eligible for a full Age Pension of $34,800. If they capitalise $600,000 and put it into superannuation (or the bank), they lose the whole pension. While they will start getting a part pension later as they spend their assets, the pain is likely to be too great to endure.”
While the proposed changes are still to be passed in parliament, we strongly recommend that any members considering this option should discuss it with their financial planner to fully understand the pros and cons.
In the meantime, the changes announced in last year’s budget are set to take effect on July 1. You can read more about them (and how you can take advantage of existing contribution caps) by clicking here.
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