Access to superannuation for first home deposit
From 1 July 2017, individuals will be able save for their first home deposit by making voluntary contributions into their superannuation of up to $15,000 per year (to a maximum of $30,000 in total). The contributions and deemed earnings can then be withdrawn subsequently (from 1 July 2018) for a first home deposit.
The contributions can be made to an existing superannuation account and must be within an individual’s existing contribution cap. The contributions can be “salary sacrifice” contributions, or non-concessional contributions from after tax funds.
The scheme is intended to provide an incentive to enable first home buyers to build savings faster for a home deposit, by accessing the tax advantages of superannuation. Salary sacrifice contributions will be taxed at 15%, as will the earnings by the fund. Withdrawals will be taxed at an individual’s marginal tax rate, less a 30% tax offset.
This scheme does not replace the Super Guarantee Contributions (9.5%).
Super contributions from downsizing
From 1 July 2018, a person aged 65 or over can make a non-concessional contribution into superannuation of up to $300,000 from the proceeds of selling their principal residence where the property has been owned for more than 10 years. Accordingly, a couple that jointly owns their home can collectively contribute $600,000 to superannuation.
These contributions can be made in addition to the existing rules and caps and are not subject to the age or work test or the $1.6m limit applicable to other non-concessional contributions.
LRBAs included in super balance and transfer balance cap
The ability to use Limited Recourse Borrowing Arrangements (LRBA) will be restricted.
For the purposes of the $1.6m superannuation limit, from 1 July 2017 the outstanding balance of a LRBA will be included in a member’s annual total superannuation balance and the repayment of the principal and interest of an LRBA from a member’s accumulation account will be a credit in the member’s transfer balance account.
Related party transactions in the non-arm’s length income provisions to be amended
From 1 July 2018 the non-arm’s length income provisions will be strengthened to ensure expenses that would normally apply in a commercial setting are included when considering whether the transaction is on a commercial basis.