Super changes may provide windfalls

A number of superannuation changes expected to come into effect from 1 July this year may provide a windfall for Australians, according to the National Australia Bank (NAB).

Gemma Dale, NAB director of self-managed superannuation funds and customer behaviour said that Australians looking to buy their first home or prepare for retirement could benefit from upcoming changes.

The changes to the first home scheme, for example, would allow eligible individuals who make voluntary super contributions from 1 July 2017 to withdraw them to put those funds towards their first home.

The contributions would count towards the relevant contribution cap, and be limited to $15,000 per year, up to a total of $30,000.

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Dale warned that the scheme has not been passed into law yet, though.

“The legislation for this scheme is yet to be passed, so there is a risk any voluntary contributions made in anticipation of it could be locked into individuals’ super,” she said.

The downsizer contribution legislation, introduced to Parliament by the Government in September last year, would allow individuals aged 65-years or over to make non-concessional contributions of up to $300,000 per person to their superannuation from the proceeds of selling their main residence.

These contributions would only apply to houses owned for at least 10 years prior to selling, with contracts of sale needing to be entered into from 1 July, 2018.

The implementation of catch-up contribution concessions could also provide windfalls for Australians, allowing individuals with super balances under $500,000 on 30 June of the prior financial year to access a higher annual cap and contribute their remaining unused concessional contribution cap on a rolling basis for five years.

“This measure will enable customers who take time out of work or work part-time to make catch-up contributions when they accumulate lumpy income or decide to work full-time,” Dale said.

Only unused amounts accrued from 1 July, 2018 would be carried forward.

Dale said that Australians should seek financial advice before making any decisions because of the above reforms, to ensure that they are in their best interests.