2017年 09月 11日

Gov’t “getting on with” tackling affordability

The Turnbull Government has introduced a number of targeted tax measures aimed at improving housing affordability in Parliament.

This includes legislation such as the First Home Super Saver Scheme (FHSSS) and rules allowing Australians to contribute to their super by downsizing, limiting travel claims and plant and equipment deductions for property investors, and taxing foreign property owners for vacant dwellings.

These four measures were first proposed in the Federal Budget and were finally tabled for discussion in the House of Representatives yesterday (7 September).

“Through the comprehensive housing affordability package announced in the budget, the government is radically improving outcomes across the entire housing spectrum, from first home buyers, to renters, to downsizers, to those in community and affordable housing, and those suffering homelessness. This is getting on with it,” Treasurer Scott Morrison said in a joint press release with Assistant Minister to the Treasurer Michael Sukkar.

First home buyers

Through the FHSSS, individuals will be able to put away a maximum of $30,000 (up to $15,000 per year) into their superannuation for the purpose of purchasing their first home. Withdrawals will be permitted from 1 July 2018 and will be taxed at a marginal tax rate minus a 30% offset.

“This will give prospective first home buyers a significant step up at a time when saving for a deposit is becoming increasingly difficult for many people,” Morrison and Sukkar said.

Downsizing

The government’s downsizing proposal will let older Australians contribute proceedings from the sale of their family home into their super and, if passed, will have come into effect on 1 July 2017.

Those over the age of 65 will be able to contribute a maximum of $300,000 into their super when they sell a home they’ve occupied for more than ten years. Couples can make a maximum contribution of $600,000.

Property investors

Claims for travel expense deductions for inspecting and maintaining residential properties will be disallowed and plant and equipment depreciation deductions will be limited to new assets only from 1 July 2017.

“This will improve the integrity of the tax system by preventing residential property investors from taking holidays at the taxpayers’ expense.”

Public consultation around measures limiting plant and equipment deductions mean that deductions are only allowed in situations where a developer tenants a property prior to selling it to an investor provided that investor purchased the property within six months of it being completed. In addition to this, the developer cannot have also claimed any depreciation deductions.

“Together, the travel and plant and equipment deduction changes will improve the integrity of the tax system and are estimated to generate $800m in revenue over the forward estimates,” Morrison and Sukkar said.

Foreign owners

Finally, the vacancy levy will be applied to foreign buyers who have made a foreign investment application from 7.30pm (AEST) on 9 May 2017. The charge will be paid if the property is not occupied or genuinely available on the rental market for at least six months out of a 12 month period.

When announcing this proposal in the budget, Morrison said that the amount charged will be at least $5,000 per year for all eligible foreign buyers.