The Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No. 1) Bill 2017 and the First Home Super Saver Tax Bill 2017 were passed by the House of Representatives and moved to the Senate on 18 October 2017.
These Acts establish the First Home Super Saver Scheme and amend: 10 Acts to enable first home savers to make voluntary contributions into the superannuation system and to withdraw those contributions and associated earnings for the purposes of purchasing their first home
They also amend the Income Tax Assessment Act 1997 and Taxation Administration Act 1953 to allow an individual aged 65 years or over to use the proceeds of one sale of their main residence to make contributions (downsizer contributions) of up to $300 000 to their superannuation.
The First Home Buyers Super Saver Scheme
1.31 The key features of the FHSS Scheme are as follows:
- Individuals who have had eligible voluntary contributions into superannuation under the existing contribution rules and caps can withdraw certain amounts for the purpose of purchasing their first home.
- To initiate the release process, individuals must request a ‘first home super saver determination’ (FHSS determination) from the Commissioner [under Div 97 of the TAA1].
– In making a FHSS determination, the Commissioner must identify a ‘maximum release amount’ based on the individual’s past contributions and associated earnings.
- Individuals who receive a FHSS determination can request that the Commissioner issue a release authority in respect of their superannuation interests.
– The process for requesting and issuing release authorities utilises the general release rules in Division 131.
- Amounts released under the FHSS Scheme are subject to concessional tax treatment [mainly ‘Non Assessable Non Exempt] and are paid by funds to the Commissioner, who withholds an amount for any tax payable before paying it to the individual.
- Individuals who do not purchase their first home within a specified period can either recontribute an amount into superannuation, or pay an amount of tax (the first home super saver tax) to unwind the concessional tax treatment that applied on release.
The ‘Downsizers’ superannuation concessions
If you are aged 65 or over, you may make downsizer contributions from the proceeds of the sale of your main residence.
Downsizer contributions are not counted against your contributions caps.
Your downsizer contributions must relate to the sale of a dwelling that was your main residence and which was owned by you or your spouse for at least 10 years up to the disposal.
Your total downsizer contributions cannot exceed $300,000.
Downsizer contributions are not deductible and you can only make downsizer contributions in relation to the sale of your main residence once.
In addition, there are changes to the contribution acceptance rules in the SISR 1994 and RSAR 1997 are required. These changes will allow downsizer contributions to be made in respect of individuals where they would otherwise not be able to be made because the individual does not satisfy the existing age and work tests.
[APH website: Bills Digest; Bill; Explanatory Memorandum; FJM; LTN 200, 19/10/17; TM Oct 2017]