The build-up to last night’s budget may have been more exciting than the budget itself for some. After much speculation following Prime Minister Julia Gillard’s statement that ‘everything was back on the table’, no further changes to personal superannuation were announced.
However, Melinda Howes, chief executive of the Actuaries Institute, is excited about one of the announcements. A new pilot scheme will allow senior Australians to downsize their home, without reducing their Age Pension if the home has been owned for at least 25 years. Amounts up to $200,000 can be deposited into a separate account which will be an exempt asset for up to 10 years.
“The new announcement allowing the downsizing of a retiree’s home without reducing Age Pension is a sensible initiative which will assist the current generation of retirees who didn’t have compulsory super for their whole working lifetimes, and for many of whom the family home is their main retirement asset,” said Howes.
The AFA has also applauded the move, but says more information is needed regarding it. “Obviously there are limited details on that and criteria are pretty tight…but it’s certainly a positive for senior Australians that have a lot of money tied up in property.”
The industry is still disappointed in the Government’s plan to apply tax to earnings above $100,000 on assets supporting income streams. SPAA says it could introduce substantial complexities and costs to the super system.
“We have already outlined our concerns about this proposal to the Government, and will expect to work closely with Government on the details of this measure to minimise the costs and complexities for SMSF trustees,” said head of technical and professional standards, Graeme Colley.
“The fact that the Budget papers provide $43 million to administer this measure for an estimated 16,000 affected taxpayers shows its complexity.”
Deloitte National Superannuation Leader Russell Mason also raised the point, stating that “while there is no argument regarding the equity of this tax, Deloitte’s superannuation team is concerned that the administrative cost in putting systems in place to calculate an individual member’s investment earnings could potentially exceed the revenue raised.”