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  • CRT Alert 085-2017

    19 December 2017

    Housing related superannuation measures are now law

    In the 2017–18 Federal Budget, the Australian Government announced two new measures as part of a broader package aimed at reducing pressure on housing affordability in Australia.

    The legislation supporting the First Home Super Saver (FHSS) Scheme and the Contributing the proceeds of downsizing into superannuation (downsizing) measure have now passed both houses of parliament and received royal assent on 13 December 2017.

    This law also includes a provision that requires an independent review of both FHSS and downsizing measures that will commence 18 months after royal assent.

    First Home Super Saver (FHSS) Scheme

    The FHSS Scheme allows members to save money faster for a first home inside their superannuation fund with the concessional tax treatment within super.

    From 1 July 2017, members can make voluntary concessional (before-tax) and non-concessional (after-tax) contributions into their fund to save for their first home.

    From 1 July 2018, they can then apply to release these contributions, along with associated earnings to help purchase their first home (members must be 18 years or over to apply for the release of these amounts).

    The legislation enacting this measure included an amendment that broadened the eligibility for the scheme. Members may still be eligible even if they have previously owned property in Australia, if the Commissioner of Taxation determines that they have suffered a financial hardship. Regulations will be available prior to 1 July 2018 specifying the circumstances that the Commissioner is to consider when determining if members have suffered a financial hardship.

    Downsizing measure

    The downsizing measure allows members who are 65 years and over to make a contribution of up to $300,000 into their superannuation after selling their main residence. The contract for sale of the main residence must be entered into on or after 1 July 2018. A member's spouse may also be eligible to make a contribution.

    A downsizer contribution does not count toward a member's contribution caps, and their ability to make a contribution is unaffected by their total super balance.

    A downsizer contribution is treated the same as other super benefits or balances for the purposes of determining eligibility for the age pension.

    While the contribution is known as a downsizer contribution, there is no requirement for the member to move to a smaller property or purchase another property.

    Event based reporting arrangements for downsizer contribution

    A new transaction type 'Proceeds from primary residence disposal' has been included in the finalised Member Account Transaction Service (MATS) to allow funds to report downsizer contributions.

    However, the ATO has been working with industry to also develop an alternative reporting solution for funds that decide not to build the 'Proceeds from primary residence disposal' contribution transaction type into their registry systems.

    The ATO has identified a potential solution using a new MATS form in the ATO Business Portal and is working with Industry on the design.

    Only the personal and proceeds from primary residence disposal transaction types will be available initially.

    While we are still designing the process we envisage funds who choose to use this alternative process will generally:

    • accept a downsizer contribution and record it as a personal contribution in their registry system
    • report the contribution within 10 days of receipt through MATS

    After a period of time (which is still being determined) to ensure the MATS reporting has been processed,

    • log on to the ATO Business Portal using AUSKEY authorisation
    • either cancel or adjust the personal transaction and re-report the amount at the proceeds from primary residence disposal label.

    We are working with industry to identify a point in time to review the operation of the alternative reporting solution. This is likely to be in line with the timeframe of the Independent review of the Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No. 1) Act 2017.

    Support to individuals and industry

    The ATO will be responsible for administering these two superannuation related measures and we have published further information to provide support to individuals and industry.

    You may start to receive enquiries from your members about these measures. Some common questions that members may ask are:

    • whether you are a participating fund for FHSS or for downsizer purposes
    • eligibility for both measures
    • the balance of their account(s)
    • validating amounts of voluntary contributions
    • any potential associated fees, charges or insurance implications of having amounts released for the FHSS.

    We will consult with industry on the design of the FHSS release authority form and the downsizer approved form, which are currently being developed

    Next step:

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      Last modified: 19 Dec 2017QC 54119