The opportunity to use additional non-concessional contributions (NCC) of up to $300,000 to put into super will not result in a surge of SMSFs suddenly downsizing their homes in order to boost their balances.
This year’s federal budget contained a measure aimed at encouraging older Australians to free up housing stock by enabling those over the age of 65 who were downsizing their home to make NCCs of up to $300,000 into their super fund from the proceeds of the sale of their principal home.
Commenting on SMSFs specifically taking up the extra NCC offer, particularly in the context of wealthier SMSFs, SMSF Association head of policy Jordan George said he believed the measure itself would not result in a mass take-up.
“I’m not sure whether this measure will be a trigger to make people downsize their home,” George told selfmanagedsuper.
“But it is another benefit that people can have if they do downsize – they’re able to put it into their super fund, draw a pension from it, have it in a concessional tax environment.
“So it’s another incentive, but it may not be the trigger that makes someone decide to downsize, though it could get people thinking to head in that direction.”
Under another budget measure, the government announced it would provide a tax cut on first home deposit savings where first home buyers would be able to save for a deposit by salary sacrificing into their super account above their compulsory super contribution from 1 July.
Following the budget, George warned SMSF trustees needed to be mindful of implementing either measure as there was no time frame or expiry included in the budget papers.
“The budget measures didn’t mention a time limit, so it’s going to be a question for government in the long term,” he said at the time.
“If the housing market does change and there’s not a need for it any further, will they need to keep that feature as part of the super system?”
