Melinda Bendeich, Manager, Technical Advice at ClearView

In the 2017 Federal Budget last May, the Government proposed a number of superannuation changes to improve housing affordability.

It announced the First Home Super Saver Scheme (FHSSS), aimed at helping young people enter the property market by enabling them to partially access their superannuation for a home deposit.

It also announced a 'downsizer contribution' to encourage Australians 65 years old and over to sell their home and invest for retirement, with the aim of 'freeing up' more properties for the younger generations.

These two initiatives are now law.  This article examines each benefit in detail and illustrates how they may be beneficial for your clients.

First Home Super Saver Scheme (FHSSS)

The FHSSS allows individuals to effectively save for their first home inside superannuation. From 1 July 2017, FHSSS voluntary contributions of up to $15,000 per year and $30,000 in total can be made into superannuation and these contributions, plus deemed associated earnings, can be withdrawn by first home buyers or builders.

The Government estimates that this could boost house deposit savings by up to 30 per cent given the tax benefits of using pre-tax dollars for contributions and the low 15% tax on super earnings (not to mention the potential for higher returns in super compared to standard deposits in bank accounts).

To be eligible for the FHSSS, your clients must be over age 18 and must never have owned any property in Australia. However, if they are jointly purchasing a property with someone who has previously owned property, the FHSSS is still available as it is individually tested.

The Australian Taxation Office (ATO) is administering the scheme and advising super funds on how much can be released after taking into account contributions tax. Once your client has obtained a contract to buy or build their first home, they have 12 months to request the release of FHSSS contributions.
Withdrawals will generally be taxed at your client's marginal tax rate, however, a 30 per cent tax offset will apply.  Importantly, withdrawals will not be assessable by Centrelink or the Department of Veterans' Affairs and there will be no impact on payments such as Family Tax Benefits.

Downsizer contributions

Australians aged 65 and over who sell the family home to free up equity to fund their retirement will be able to make additional super contributions of up to $300,000, from 1 July 2018.

This benefit can be utilised by both members of a couple for the same home, resulting in a total possible contribution of $600,000 per couple.It will apply where the contract for the sale of the home is entered into (exchanged) on, or after, 1 July 2018.

Contributions made under this legislation will not count towards other super caps.Additionally, no work test or age restrictions apply, however, you clients must have owned their home for at least 10 years and it must be their principal residence.

It's important to be aware that your clients may risk losing some or all of their Age Pension. While the family home is exempt from the Asset Test, the additional $300,000 super contribution will be an assessable asset.

Finally, to be eligible to make a downsizer contribution, there is no requirement to purchase a new home.This may provide retirement planning opportunities that were not previously available to those over 65 years of age and retired.

(Australian Associated Press)

The federal government insists it has been vindicated over its past decision to delay increasing the superannuation guarantee as Labor toys with fast-tracking the trajectory.

In 2012 the Gillard Labor government moved to increase the superannuation guarantee from nine per cent incrementally to 12 per cent by 2019.

Assistant Treasurer Michael Sukkar doesn't think increasing the superannuation guarantee early would necessarily be a popular move because of tight household budgets and flat wages growth.

Asked if the government was seeking to delay the increase to 12 per cent again, Mr Sukkar responded: "with a very strong economy we're moving into an environment that maybe we can manage it."

Meanwhile, Labor is considering applying the superannuation guarantee to the government-funded parental leave scheme to help address an imbalance in women's retirement savings.

(Australian Associated Press)

Employers who don't pay superannuation could face up to 12 months in jail under new penalties being introduced by the government.

"It is fundamentally unacceptable for people not to be paid their superannuation entitlements," Financial Services Minister Kelly O'Dwyer told parliament on Wednesday, introducing new penalties the tax office can impose.

Colin Brinsden and Katina Curtis
(Australian Associated Press)

The Turnbull government has given up on passing corporate tax cuts this week, but will make a fresh attempt in the May Budget week.

Finance Minister Mathias Cormann told the Senate on Tuesday afternoon the government had been unable to convince nine crossbenchers to get behind the bill to reduce the corporate tax rate from 30 per cent to 25 per cent across all-sized businesses.

Independents Derryn Hinch and Tim Storer have yet to lend their support to the bill, leaving the coalition with only seven of the nine crossbench votes it needs.

"We believe there is opportunity for the government to persuade the majority of senators of the merits of our argument that is why the government is committed to keep working, to keep engaging," Senator Cormann said.

The minister, who has previously been successful in negotiating other key pieces of legislation, said the cuts were in the interests of working families because they would pay for jobs and higher wages.

Labor frontbencher Don Farrell told parliament it was an opportunity for crossbenchers to reflect on their decision to support the bill.

"That's not the way we create equality in this country. It won't trickle down to those people who really need a wage rise in the current environment," he said.

Earlier on Tuesday, Mr Shorten confirmed a Labor government would scrap the tax cuts for businesses with a turnover of more than $50 million.

However, Labor has yet to make a decision on what it will do about the already legislated cuts for small firms.

"Labor will consider its final position on that in the context of the information we receive in the budget," Mr Shorten told reporters.

"What we are not going to do is promise business corporate tax cuts which this government cannot pay for."

Prime Minister Malcolm Turnbull said the opposition wants to go to the election on a platform of "fewer jobs and less well-paid jobs".

"Their latest policy on company tax is no more well calibrated than their shocking cash grab on pensioners," he told parliament, referring to Labor's plan to end cash handouts for non-taxpaying shareholders on their dividend credits, which was subsequently amended on Tuesday to protect pensioners from the change.

One Nation senator Pauline Hanson reiterated her party's support for the tax cuts while predicting Labor wouldn't deliver on its promise to ditch them in government.

"It will be political suicide for them if they do," she told reporters in Canberra.

But shadow treasurer Chris Bowen said the reductions for firms above $50 million were neither "justifiable or affordable".

"These changes don't come in until 2019 and so it is appropriate that we are up-front about our plans and we're doing that today," Mr Bowen told ABC radio.

The latest Essential Research poll suggests voters have become ho-hum over the whole issue with 40 per cent backing the cuts, 30 per cent opposing and the remainder ticking 'don't know'.

Colin Brinsden, AAP Economics Correspondent
(Australian Associated Press)

Asia looks set to again lead the way in an expanding global economy in 2018, which will be good news for Australian exporters, a new report from Deloitte says.

Deloitte Access Economics lead partner Stephen Smith says people shouldn't become "mesmerised" by US President Donald Trump's tariffs on steel and aluminium.

Such growth is "music to the ears" of Asia's trade-driven economies.

Mr Smith said global financial conditions remain accommodative and capital flows in emerging and developing economies have returned.

However, he concedes a descent into a global trade war, sparked by President Trump's tariff threats, is still a small risk.

There is also a risk the financial imbalances building in China for some time could worsen.

"Importantly, however, our baseline scenario is for China to continue its impressive performance."

"Even though it's in its early stages, a number of infrastructure deals have already been signed under the initiative," he said.