Federal Budget 2017/18 | SolePurposeTest

Budget 2017 superannuation changes: downsizing homes & first home buyers

The Federal Budget 2017 includes several changes to superannuation, the biggest of which relate to housing.

The 2017 Budget proposes a higher super contributions cap for the proceeds of downsizing homes and allowing first home buyers to withdraw voluntary contributions from super. Other changes include integrity measures, tax relief for merging super funds and a one-stop shop financial dispute resolution body.

Note that these measures have been proposed by the Government, but not yet legislated.

Extra contribution cap for downsizing home

Older people will be able to make extra super contributions from the proceeds of selling their home, from 1 July 2018. Read more...

ASFA calls for super policy stability, with modest changes, in 2017 Budget

The Association of Superannuation Funds of Australia (ASFA) is calling for today’s Federal Budget to deliver policy stability for the superannuation system, though with “modest changes”.

ASFA CEO Dr Martin Fahy said superannuation, was an unqualified human good and an outstanding public policy initiative, like universal health care and free education.

“Super is lifting Australian retirement outcomes and supporting fiscal sustainability, helping reduce unfunded pension liabilities,” he said. Read more...

SMSF Association hopes for ‘period of stability’ from 2017 Budget

The SMSF Association has urged the Federal Government to deliver a period of stability for superannuation in the upcoming 2017/18 Budget.

Association Head of Policy Jordan George said: “Superannuation funds need a period of stability, not only to ensure that they are able to implement any changes required to meet the new superannuation laws, but to foster confidence in the system.”

“The Government’s moves to enshrine the objectives of superannuation in law are a welcome step in this direction; however, the objectives must be fit-for-purpose to deliver the stability the system so badly needs. It is also essential to remove superannuation policy from the regular budgetary cycle.” Read more...

$100 million cost of Budget not addressing unpaid super issue

Industry Super Australia says the 2017/18 Budget, to be released next week, must address the issue of unpaid superannuation or else the cost of the age pension will increase by $100 million a year.

An analysis of ATO data, by Industry Super Australia, shows that almost one in three employees missed out on a total of $5.6 billion in unpaid super entitlements in 2013/14, leading to those nearing retirement having an retirement balances $23,857 lower on average.

“Using conservative assumptions, Industry Super Australia estimates annual superannuation pension drawdowns are $300 million per annum less than they otherwise would be, costing the Government $98 million per annum in extra age pension payments.” Read more...

Proceeds from downsized home may be exempted from super caps in Budget

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”. Read more...

Tax pension phase super fund income at 15%, recommends ACOSS

ACOSS, the Australian Council of Social Service, has recommended the 2017/18 Budget include a tax on the pension phase earnings of superannuation funds.

As noted in the pre-Budget submission, a 15% tax rate applies to the income of superannuation funds in accumulation phase with 0% tax applying for pension phase.

ACOSS recommends that the 15% tax should be extended to the pension phase, increasing by 3% each year from July 2017. Though there would be a 15% rebate for taxpayers whose income was below the tax free threshold. Read more...

Reduce lost super threshold back to $2000, says AIST

The Australian Institute of Superannuation Trustees says that technological improvements make lost super less of an issue, and so the threshold at which lost super is transferred to the ATO should be reduced back to $2,000.

In their 2017/18 pre-Budget submission AIST recommends that the lost super threshold, which increased to $6,000 from the start of the year, be reduced back to $4,000 from 1 January 2018 and then to $2,000 in 2019.

“AIST notes and welcomes initiatives taken at the ATO to reduce red tape for small business and to increase the efficiency of the superannuation system,” says the pre-Budget submission. Read more...

Budget should include changes to support self-funded retirees: FPA

The Financial Planning Association of Australia (FPA) has recommended the Government implement a number of changes to superannuation contributions in the upcoming 2017/18 Budget to encourage Australians to self-fund their retirement.

“With an ageing population and the additional pressure this will add to future budgets, the FPA strongly recommends that the Budget reflect policy decisions that are designed to support and encourage today’s working Australians to become self-funded in their retirement,” says the FPA 2017/18 pre-Budget submission. Read more...

Government should return to 2021 date for 12% SG rate, says FSC

The Financial Services Council says the Government should implement its original commitment to increasing the Superannuation Guarantee rate to 12% by 1 July 2021.

The SG rate was set to increase to 12% from 1 July 2019. Following the 2013 Federal election the incoming Liberal Government said it would delay this by two years, to 2021. However as the Minerals Resource Rent Tax worked its way through the Parliament this schedule was further delayed. The SG rate is currently legislated to reach 12% from 1 July 2025. Read more...

Seniors call for wind-back of age pension taper rate increase

National Seniors has called on the Government to partially wind-back the higher age pension taper rate.

“The changes to asset test thresholds and taper rates, which came into effect in 1 January 2017, are of significant concern to National Seniors members,” says the 2017/18 pre-budget submission by the organisation.

“While the increase to the assets test free area is welcomed and will improve the situation for around 170,000 pensioners, roughly 330,000 Age Pension recipients will lose either some or all of their pension and associated concessions.” Read more...