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Affordability at both ends of the savings spectrum commended: Deloitte
9 May 2017: In response to the Federal Treasurer’s proposal to create more housing supply by announcing that from 1 July 2018 people over age 65 who downsize by selling their home, will be able to contribute an extra $300,000 per person (i.e. $600,000 for a couple) into super, Deloitte Head of Superannuation Russell Mason said: “We support this proposal offering older Australians the ability to supplement their super in retirement through additional contributions from downsizing.
“As the majority of current retirees in Australia have not had the benefit of a lifetime of superannuation savings, this proposal has the potential to significantly help them towards financial adequacy in retirement. Even those current retirees who have received a lifetime of super at the SG level, will still have a shortfall, compared to the amount required to meet ASFA’s comfortable retirement standard.
“The caveat is of course that the downsizing must be the person’s principle place of residence and must have been held for at least 10 years.”
The scheme will be administered by the ATO.
Deloitte Head of Superannuation Russell Mason also supports the proposed First Home Super Saver Scheme which from 1 July 2017 will allow first home buyers to save for a deposit via the superannuation system by contributing up to $15,000 per annum with a total of $30,000 altogether over time.
Mason explained that if made by salary sacrifice the contributions will be taxed at 15% and the monies, plus interest, when withdrawn, will be taxed at the individual’s marginal tax rate, less 30%.
He said: “We are pleased that the Government did not allow the SG contributions to be eroded. We are also pleased that the scheme, which will be administered by the ATO, will hopefully mean that an additional administrative burden (and therefore additional cost) will not be placed on superannuation funds.”
He added that: “These contributions must be made within the current concessional contribution caps of $25,000 per annum in 2017/18, and are in addition to employer Superannuation Guarantee (SG) contributions.”
Both Mason and Deloitte Superannuation Partner Ben Facer commended the Government on its move to extend the CGT rollover relief for funds that merge until 1 July 2020. “This relief was due to expire on 1 July 2017, and we see this extension as very important as it facilitates fund mergers which might otherwise not occur,” said Facer.