The Government is reportedly considering allowing exemptions from contributions caps and the Transfer Balance Cap for people who downsize their home and contribute the proceeds to superannuation.
This is the latest in a series of pre-budget reports. Most recently there were reports of different ways in which first home buyers may be allowed to access their superannuation, though these ideas may have been dropped.
According to a report in the Australian Financial Review the Government may include in the Budget an exemption from the $1.6 million Transfer Balance and the non-concessional contributions caps from the sale of a “large family home”.
However the proposal doesn’t include a corresponding exemption for the age pension, meaning people who took advantage of the contribution exemptions could see their age pension reduced.
It is also unclear if there would be a cap on the amount that could be contributed to super under such a plan.
If adopted as policy this would form part of the rumoured housing affordability package. Though this may not be the centrepiece of the Budget as was thought, based on recent comments by the PM.
Such a policy may also be an attempt by the Coalition to win favour with the base, part of which are displeased with the superannuation changes – which include the Transfer Balance Cap and reductions in the contributions caps – introduced in the previous Budget. Minister for Revenue and Financial Services, Kelly O’Dwyer, may face a preselection battle as a result of the changes to super.
The Federal Budget is due to be handed down on Tuesday the 9th of May.