Guaranteeing the essentials
Protecting and boosting the essential services Australians rely on
Supporting first home buyers and older Australians
Making it easier to get into the housing market
Helping first home buyers
Many Australians, particularly younger Australians, are finding it harder to save for their first home.
The Government will make this savings task easier by allowing first home buyers to build a concessionally taxed deposit inside superannuation through the First Home Super Saver Scheme.
From 1 July 2017, first home buyers can contribute up to $15,000 per year and $30,000 in total in voluntary contributions to their superannuation account, within existing contribution caps, that can then be withdrawn for their deposit. These savings will benefit from the tax advantages of superannuation. Contributions and earnings will be taxed at only 15 per cent, rather than at marginal rates, and withdrawals will be taxed at marginal rates less 30 per cent. Both members of a couple can save within the cap and then combine savings for a single deposit.
To understand what benefit you may receive from using the scheme please access the online estimator.
Boosting Louise and Craig’s first home deposit
Louise earns $60,000 a year and wants to buy her first home. Using salary sacrifice, she annually directs $10,000 of pre-tax income into her superannuation account, increasing her balance by $8,500 after the contributions tax has been paid by her fund. After three years, she is able to withdraw $27,380 of contributions and the deemed earnings on those contributions. After withdrawal tax, she has $25,760 that she can use for her deposit. By using this scheme, Louise has saved around $6,240 more for a deposit than if she had saved in a standard deposit account.
Louise’s partner, Craig, makes the same income and salary sacrifices $10,000 annually to superannuation over the same period.
Together, after 3 years, Louise and Craig have $51,520 for their first home, $12,480 more than if they had saved in a standard deposit account.
Reducing barriers to downsizing
Older Australians will be encouraged to downsize and free up housing stock. These homeowners will be given greater flexibility to contribute the proceeds of the sale of their home into superannuation. Downsizing frees up larger homes for younger families.
From 1 July 2018, people aged 65 and older will be able to make a non-concessional contribution of up to $300,000 to their superannuation after selling their home. This will be in addition to any other contributions they are eligible to make.
Helping George and Jane downsize
George and Jane, both retired and aged 76 and 69, sell their home to move into more appropriate accommodation. The proceeds of the sale are $1.2 million. They can both make a non-concessional contribution into superannuation of $300,000 from the sale proceeds ($600,000 in total), even though Jane no longer satisfies the standard contribution work test and George is over 75. They can make these special contributions regardless of how much they already have in their superannuation accounts.
Tightening foreign investor rules
The Government will stop foreign and temporary tax residents from claiming the main residence capital gains tax exemption when they sell their Australian property.
To reduce avoidance of capital gains tax in Australia by foreign residents, the Government is bolstering the integrity of the foreign resident capital gains tax withholding system by increasing the rate from 10 per cent to 12.5 per cent and reducing the threshold from sales valued at $2 million or above to $750,000 or above.
Helping private renters
A new annual charge of at least $5,000 will apply to new foreign-owned properties left vacant which will free up more rental housing stock.
The Government will also work with the States and Territories to develop standard long-term leases that offer more security to renters.
Improving regulator tools to address housing risks
The Government is ensuring that the Australian Prudential Regulation Authority (APRA) is able to respond flexibly to financial and housing market developments that pose a risk to financial stability. This includes giving APRA new powers over the provision of credit by lenders that are outside the traditional banking sector.
The Government also recognises that housing pressures and risks may not be the same in markets across Australia. For this reason, the Government will make it clear that APRA has the ability to use geographically-based restrictions on the provision of credit where APRA considers it appropriate.
Better targeting tax deductions
The Government will improve the integrity of the tax system by disallowing accommodation and travel deductions for residential rental property and by limiting depreciation deductions for the plant and equipment forming part of residential investment properties.
Together with changes to foreign investor rules, these changes will raise $1.4 billion over the forward estimates period.