Over 65? $300,000.00 Boost to Superannuation Incentive

Under new rules announced by the Australian Federal Government in last week’s budget people aged 65 and older will now be able to make a non-concessional (post-tax) contribution of up to $300,000 – and $600,000 for couples – from the sale of the family home. Take this link to download the fact sheet - Reducing Pressure on Housing Affordability Fact Sheet

From July 2018, people who have owned their home for 10 years or longer will be able to claim the incentive which is exempt from the current $1.6 million transfer balance cap on super contributions. The contributions are also exempt from the work test which only allows those over 65 but under 75 working part-time to make voluntary super contributions and the age test which prevents people over 75 from contributing to their super.

You’ll also be able to make the contributions even if you’re still working part- or full-time, regardless of how much you have in your account already.

The Property Council advises that retirees who downsize to retirement villages will save the Government more than $2 billion each year from fewer GP and hospital visits and delayed entry into aged care compared to the $30 million the incentives will cost the bottom line in the Budget.

Given the retirement village poverty trap some village residents will face on eventual departure has the government factored in the cost of increased government funded aged care placements rather than self fund placements.

Is it a long term saving for the Australian Federal Government or will it become simply a transfer of capital from older Australians to the retirement village industry.  Will it generate a class of capital poor older Australians who will have to return to the government cap in hand to fund their aged care placement.