First-home buyers will be able to park an additional $20,000 in their low-tax super account to help save for a house deposit under new legislation passed in federal parliament last night.
Low-income earners will also benefit from the new legislation after the income threshold for employer contributions was scrapped.
The new rules will also lower the age of downsizers looking to make a one-off $300,000 tax-free contribution to their super when they sell their home.
The changes will also make it easier for people nearing retirement that missed out on the benefits of compulsory super earlier in life.
Here’s a breakdown of the new super rules that will come into force in July 2022.
Since 2017, first-home buyers have been able to use their super accounts as a savings vehicle, under what’s known as the First Home Super Saver Scheme (FHSSS).
By making voluntary contributions to their super, first-home buyers pay the lower super tax of 15 per cent instead of income tax, helping them to save for a house deposit quicker.
Critically, first-home buyers can only access their voluntary super contributions: this program does not allow people to dip into their existing super.
The Government has now upped the amount that can be saved this way, from $30,000 to $50,000, to reflect rising house prices. Last year, the average house price across the nation surpassed $1 million for the first time.
For employee super contributions, there has traditionally been a minimum threshold of $450 a month.
But now, since the recent superannuation reforms, there’s less chance small super balances will be eaten up by high fees and insurance premiums, which has paved the way for the Government to scrap the threshold entirely.
The Morrison Government committed to removing this threshold in the 2021-22 budget to improve the economic prospects of women.
Wins for older Australians too
People looking to sell the family home and use the sale proceeds to boost their super will be able to leverage the post-tax contribution of up to $300,000 per person at the age of 60 rather than 65.
The government hopes this will encourage more older people to downsize and free up more large homes for younger families.
The new rules will also make it easier for older people to top up their super when nearing retirement. People aged 67-74 will no longer need to pass the work test for non-concessional and salary-sacrificed contributions to super.
To pass the work test, people have to work for at least 40 hours within 30 consecutive days in a financial year before voluntary contributions can be accepted by a super fund.
The Government has also cut red tape for self-managed superannuation funds and small APRA regulated funds and extended the temporary full-expensing measure by 12 months.