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The big change / opportunity
The proposal is that from 1st July 2018 retirees who downsize their home will be able to make an after tax Super contribution of up to $300,000 each from the sale proceeds, so up to $600,000 for a couple. You must have owned the property for at least 10 years.
This contribution will not contribute towards the new contribution caps and there will be no age or work requirements.
However, the measure will not involve any special Centrelink treatment, i.e. Said couples may well find themselves worse off in terms of age pension entitlements, given their assessable assets will increase.
- From 9th October 2017 the Government will reinstate the Pension concession card (PCC) for those that lost their age pension as a result of the changes imposed on 1st January this year. They will receive the PCC and also the Commonwealth Seniors health card, in order to keep getting the energy supplement.
- In situations where they received the Low Income Healthcare Card, that will now cease and the card deactivated.
- From 26th June the Government will make a one-off “Energy Assistance” payment of $75 for singles and $125 for couples. This is not taxable and not counted as income.
- Residency requirements will change and generally speaking people will now need to have 15 years of continued residency before being eligible for the age pension or the disability support pension.
- There will be a number of other changes over the next two years designed to improve aged care, including extending the Commonwealth Home Support Program.
Please remember that although the Federal Budget generates media frenzy, most of the major changes announced are only proposed changes. They will not come into effect until passed by both Houses of Parliament and receive the Governor General’s Assent.
No doubt there will be much debate and media attention placed on these proposed changes, but until we advise you that the changes have become law and how they may affect your financial situation, we all just have to wait and see.