Budget and Superannuation Updates

The 2017-2018 budget update

In the 2017-2018 Budget, the Australian government has released a package of superannuation-related measures to address a number of key issues such as housing affordability and complaint handling.

Housing affordability

The Budget proposes a number of measures designed to improve housing affordability. These plans, once passed as law, will become effective in the 2018/19 financial year. From 1 July 2018, the government will allow a person aged 65 or over to make a non-concessional contribution to their super account of up to $300,000 from the proceeds of selling their principal residence held for at least 10 years. This contribution will be in addition to those currently permitted, and will be exempt from the existing age test, work test and the $1.6 million balance test for making non-concessional contributions. From 1 July 2018, first home buyers will also be able to withdraw voluntary contributions made to super on or after 1 July 2017 for a first home deposit, and an amount up to $30,000 plus an associated deemed earnings amount can be released. The concessional contribution component and earnings withdrawn from a superannuation fund will be taxed at the individual’s marginal tax rate less a 30% tax offset.

New complaint handling body

Complaints about superannuation will be handled by a new Australian Financial Complaints Authority from 1 July 2018. This will replace all current complaints handing organisations including the Superannuation Complaints Tribunal and the Financial Ombudsman Service. Current complaint handling bodies will remain in operation until 2020.

Medicare levy increase

The government proposes to increase the Medicare levy from 1 July 2019 by half a percentage point from 2.0 to 2.5 per cent of taxable income. The purpose of this increase is to ensure that the National Disability Insurance Scheme is fully funded.