Are you aware of the new legislation that was approved by Parliament in December 2017?
The Australian Parliament finally approved legislation which provides incentives to allow retirees to top-up their superannuation when downsizing from the family home.
As part of the legislative package, people aged over 65 will find it easier to contribute up to $300,000 from selling the family home into their personal superannuation fund.
The $300,000 contribution will be exempt from the existing age and work tests for people aged over 65.
This would mean, for instance, that someone who is aged over 75 who is currently not allowed to make voluntary superannuation contributions will be able to do this from 1 July 2018 when selling the family home.
Similarly, currently if you are aged 65 to 74, you must have worked for at least 40 hours over 30 consecutive days in the financial year to be allowed to make a voluntary contribution. From 1 July 2018, that rule will also not apply for contributions from the proceeds of the family home.
Both members of a couple will be able to take advantage of this measure for the same home, meaning $600,000 per couple can be contributed to superannuation.
In announcing the changes as part of the 2017-18 budget in May 2017, the Australian Government said the initiative would “encourage some people to downsize into housing that is more suitable to their needs, freeing up larger family homes.”
An August 2017 report by National Seniors Australia found that about 17 per cent of people aged over 50 – who had yet to downsize – considered the government’s superannuation incentive as a factor which would encourage them to downsize. This survey included people who, until now, have had no intention to downsize.
Given that the superannuation contributions could still impact on the pension asset test for some people, the new measure is expected to be most attractive to self-funded retirees.