Second Reading Speech
Mr SUKKAR (Deakin-Assistant Minister to the Treasurer)I move:
That this bill be now read a second time.
This bill amends the Taxation Administration Act 1953, the Income Tax Assessment Act 1997, the A New Tax System (Family Assistance) Act 1999, the Child Support (Assessment) Act 1989, the Higher Education Support Act 2003, the Income Tax Assessment Act 1936, the Social Security Act 1991, the Superannuation (Government Co-contribution for Low Income Earners) Act 2003, and the Veterans' Entitlements Act 1986 to create the right incentives to improve housing outcomes for all Australians.
Australians are entering the housing market later in life than previous generations and home ownership is falling out of reach for many younger Australians. With house prices high, difficulty saving a deposit is a key barrier to getting into the market.
That's why the changes contained in this bill are essential and why we need to act now.
The government, in these bills, will help Australians boost their savings for their first home by allowing them to build a deposit inside superannuation.
Older Australians will also be given greater flexibility to contribute the proceeds of the sale of their home into superannuation. This will help free up housing stock, in particular larger homes, for younger families by reducing barriers to older Australians downsizing form homes that no longer meet their needs.
These changes were announced in the budget and this bill gives effect to those announcements.
Schedule 1 implements the First Home Super Saver Scheme measure.
From 1 July 2017, individuals can make voluntary contributions of up to $15,000 per year and $30,000 in total, to their superannuation account to purchase a first home.
These contributions, along with generous deemed earnings, can be withdrawn for a deposit. Withdrawals will be taxed at marginal tax rates less a 30 per cent offset and are allowed from 1 July 2018.
For most people, the First Home Super Saver Scheme could boost the savings they can put towards a deposit by at least 30 per cent compared with saving through a standard deposit account. This is due to the concessional tax treatment-the very generous concessional tax treatment-and the higher rate of earnings often realised within superannuation.
Many employees will be able to take advantage of salary sacrifice arrangements to make pre-tax contributions. Individuals who are self-employed or whose employers do not offer salary sacrifice will be able to claim a tax deduction on personal contributions, meaning savings effectively come out of pre-tax income.
The amount of earnings that can be released will be calculated using a deemed rate of return based on the 90-day bank bill rate plus three percentage points (consistent with the shortfall interest charge).
The First Home Super Saver Scheme will be administered by the ATO, which will determine the amount of contributions that can be released and instruct superannuation funds to make these payments accordingly.
Schedule 2 implements the contributing the proceeds of downsizing into superannuation measure.
From 1 July 2018, people aged 65 and older will be able to make an exempt non-concessional contribution of up to $300,000 to their superannuation after selling their main residential home.
The measure will apply to homes held for a minimum of 10 years, and both members of a couple may take advantage of it. That is, up to $600,000 of contributions may be made by a couple upon downsizing.
These contributions will not be subject to existing age and work tests that apply to voluntary contributions for those aged 65 or older. Therefore they can be in addition to any other contributions they are eligible to make. That is, the $1.6 million test for making non-concessional contributions will not apply.
The government is confident that these reforms will go towards creating the right incentives to improve housing outcomes for Australians.
Full details of the measures are contained in the explanatory memorandum, and we commend this bill to the House.
Debate adjourned.
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