Coalition considering super concession for wealthy home downsizers
Anger in the Coalition ranks about the $6 billion superannuation reform package appears to be spilling over again, with Cabinet said to be considering a sweetener for wealthy downsizers.
The plan on the Cabinet table would see people downsizing to a smaller home able to contribute some of the proceeds to their super even if the move breached the $1.6 million cap on retirement pension accounts due to take effect from July 1, 2017.
Another element would see downsizers able to breach the tighter non-concessional caps that will cut after-tax contribution limits to $100,000 a year from $180,000 currently from the same date.
A further suggestion is that money freed up by downsizing would not be subject to the pension assets test, meaning such moves would not threaten pension eligibility.
Neither Treasurer Scott Morrison nor Financial Services Minister Kelly O’Dwyer would comment on the proposals or say whether super concessions were on the table in the pre-budget negotiation process.
Opposition Financial Services spokesperson Senator Katy Gallagher said a Labor scheme to make it easier for seniors to downsize their housing without penalty was scrapped by the Liberal Party in 2013.
“We’re receptive of similar measures subject to our normal policy processes and ensuring the government doesn’t botch their implementation,” she said.
Matt Linden, Industry Super Australia’s public affairs director, told The New Daily it was “an odd proposal”.
“Relaxing the $1.6 million super cap for downsizers would do nothing for housing affordability.”
“An analysis of ABS figures shows that in 2013-14 only 32,250 homeowners aged 60 to 74 years had super balances over $1.5 million; and, of these, only 1620 had moved in the last five years. The average house for the group was valued at $1.235 million.
“We calculate the number of additional houses arising from such a policy would be a few hundred at most, and first-home buyers simply couldn’t afford them.”
Robert Curley, director with the Association of Independent Retirees, said the proposal would not aid housing affordability and was inequitable.
“It’s another pie in the sky idea.
“If an individual has more than $1.6 million in super or a couple has twice that, what special things do we need to do for them?” Mr Curley asked.
Ian Yates, CEO of ageing lobby group COTA Australia, said the proposal to leave the proceeds of downsizing outside the pension assets test “would be unlikely to fly”.
“It would destroy the integrity of the assets test and leave the system open to artificial arrangements to get around it.
“As far as the downsizing proposal goes, we’d like the government to show us the modelling,” Mr Yates said.
“It is unlikely that anyone with a low super balance is going to downsize to a smaller house and have enough to take them over the $1.6 million transfer balance limit anyway.”
Mr Linden said the government would help 100 times more pensioner downsizers by rethinking recent changes to the assets test rather than implementing concessions for wealthy home owners.
Dissent over the super reform package has spilt over in the past.
Rebellious Coalition members forced changes to the package after last year’s budget and MPs, including Nationals’ George Christensen and Liberal Senator Eric Abetz threatened to cross the floor and vote against the package.