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Three ways the 2017 Federal Budget could impact your super

May 2017

Note: These changes are proposals only and may not be made law.

1. Super contributions from downsizing your home

Date of effect: 1 July 2018

If you’re aged 65 or older, you’ll be able to make non-concessional (after tax) super contributions of up to $300,000, using proceeds from the sale of your family home.

This limit will:

  • apply on a per person basis
  • be in addition to the ordinary non-concessional contribution cap, and
  • be available where you’ve owned  your home for at least 10 years.

Unlike other non-concessional contributions, it won’t be necessary for you to meet a work test or have a ‘total super balance’ under $1.6million. The amount you contribute won’t be exempt from the assets test used to assess eligibility for the Age Pension.

2. First home super saver scheme

Date of effect: From 1 July 2017

If you’re a first home saver, you’ll be able to save for a deposit by making voluntary concessional and non-concessional super contributions. Contributions will be limited to $15,000 per year (up to a total of $30,000) and will count towards the relevant contribution cap.

You can make withdrawals from 1 July 2018. Concessional contributions plus assumed earnings you withdraw will be taxed at your marginal tax rate, less a 30% tax offset.

The Government has provided an online estimator to help you calculate the potential benefit of the scheme.

3. SMSF borrowings

Date of effect: When law is passed.

 Broadly, when new limited recourse borrowing arrangements are established, the loan balance will be included in your ‘total super balance’. The total super balance is used to determine your ability to:

  • make non-concessional contributions
  • qualify for a Government co-contribution or a spouse contribution tax offset, and
  • make catch-up concessional contributions above the annual caps from 1 July 2018, where certain conditions are met.

Also, repayments made from the SMSF’s accumulation balance will count towards your transfer balance cap, if the borrowing supports a pension account. The transfer balance cap limits the total lifetime transfers you can make to retirement phase pensions.

More information

For full Budget analysis,  please see MLC’s 2017 Federal Budget Wrap Up.


Important information

This communication is an extract from the Federal Budget Analysis current as at 9 May 2017 and prepared by MLC Technical, part of GWM Adviser Services Limited ABN 96 002 071 749, AFSL 230692, a member of the National Australia Bank Group of Companies.

An investment with MLC is not a deposit or liability of, and is not guaranteed by NAB. Any advice in this communication is of a general nature only and has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice in this communication we recommend that you consider whether it is appropriate for your personal circumstances.