On 9 May 2017 Treasurer Scott Morrison delivered the Coalition Government’s 2017-18 Budget. We have set out below the three superannuation changes announced by the Treasurer.
In Save Our Super’s opinion, the Coalition Government has undermined Australians’ trust in superannuation and created uncertainty by not providing appropriate grandfathering provisions in last year’s (2016-17) Budget changes. Therefore Save Our Super doubts there will be a substantial take-up of the Proceeds of Downsizing to Superannuation Scheme and/or the First Home Super Saver Scheme, when Australians realize there is no certainty that their superannuation savings are safe from future Governments’ adverse changes.
Budget 2017-18 Treasury Budget Paper No. 2 – PDF download – Page 28:
Budget Measures 2017-18—Part 1: Revenue Measures
Reducing Pressure on Housing Affordability — contributing the proceeds of downsizing to superannuation
Revenue ($m)
| 2016‑17 | 2017‑18 | 2018‑19 | 2019‑20 | 2020‑21 | |
| Australian Taxation Office | ‑ | ‑ | .. | ‑10.0 | ‑20.0 |
The Government will allow a person aged 65 or over to make a non‑concessional contribution of up to $300,000 from the proceeds of selling their home from 1 July 2018. 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.
This measure will apply to sales of a principal residence owned for the past ten or more years and both members of a couple will be able to take advantage of this measure for the same home.
This measure reduces a barrier to downsizing for older people. Encouraging downsizing may enable more effective use of the housing stock by freeing up larger homes for younger, growing families.
This measure is estimated to have a cost to revenue of $30.0 million over the forward estimates period.
Budget Measures 2017-18—Part 1: Revenue Measures
Budget 2017-18 Treasury Budget Paper No. 2 – PDF download – Page 30:
Reducing Pressure on Housing Affordability — first home super saver scheme
Revenue ($m)
| 2016‑17 | 2017‑18 | 2018‑19 | 2019‑20 | 2020‑21 | |
| Australian Taxation Office | ‑ | ‑50.0 | ‑60.0 | ‑70.0 | ‑70.0 |
| Related expense ($m) | |||||
| Australian Taxation Office | ‑ | 2.8 | 2.1 | 1.8 | 1.6 |
| Related capital ($m) | |||||
| Australian Taxation Office | ‑ | 1.2 | ‑ | ‑ | ‑ |
The Government will encourage home ownership by allowing future voluntary contributions to superannuation made by first home buyers from 1 July 2017 to be withdrawn for a first home deposit, along with associated deemed earnings. Concessional contributions and earnings that are withdrawn will be taxed at marginal rates less a 30 per cent offset. Combined with the existing concessional tax treatment of contributions and earnings, this will provide an incentive that will enable first home buyers to build savings more quickly for a home deposit.
Under the measure up to $15,000 per year and $30,000 in total can be contributed, within existing caps. Contributions can be made from 1 July 2017. Withdrawals will be allowed from 1 July 2018 onwards. Both members of a couple can take advantage of this measure to buy their first home together.
This measure is expected to have a cost to revenue of $250.0 million over the forward estimates period. The Government will provide $9.4 million to the Australian Taxation Office to implement the measure.
Budget Measures 2017-18—Part 1: Revenue Measures
Budget 2017-18 Treasury Budget Paper No. 2 – PDF download – Page 33:
Superannuation — integrity of limited recourse borrowing arrangements
Revenue ($m)
| 2016‑17 | 2017‑18 | 2018‑19 | 2019‑20 | 2020‑21 | |
| Australian Taxation Office | ‑ | .. | .. | 1.0 | 3.0 |
From 1 July 2017, the Government will improve the integrity of the superannuation system by including the use of limited recourse borrowing arrangements (LRBA) in a member’s total superannuation balance and transfer balance cap.
Limited recourse borrowing arrangements can be used to circumvent contribution caps and effectively transfer growth in assets from the accumulation phase to the retirement phase that is not captured by the transfer balance cap. The outstanding balance of a LRBA will now be included in a member’s annual total superannuation balance and the repayment of the principal and interest of a LRBA from a member’s accumulation account will be a credit in the member’s transfer balance account.
This measure will ensure the 2016‑17 Superannuation Reform Package operates as intended and is estimated to have a gain to revenue of $4.0 million over the forward estimates period.
The SMSF Owners’ Alliance Members Newsletter
The SMSF Owners’ Alliance Members Newsletter dated 10 May 2017 provides:
- More detail on Budget measures
- A super incentive for downsizers
- But levy on banks may be a pain for SMSFs
- And more complication for those with LRBAs (Limited Recourse Borrowing Arrangements)
