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The Turnbull government has brought forward a range of measures to address housing affordability, such as the First Home Super Saver Scheme, downsizing measures, travel and plant & equipment deductions, and placing tighter restrictions on foreign investors.
First introduced in the 2017 budget, these measures were proposed to Parliament on Thursday in an attempt to allow for Australians, particularly younger Australians, to purchase property.
“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,” said assistant minister to the treasurer and federal member for Deakin, Michael Sukkar.
These measures were recommended as Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No. 1) Bill 2017, First Home Super Saver Tax Bill 2017, Treasury Laws Amendment (Housing Tax Integrity) Bill 2017 and Foreign Acquisitions and Takeovers Fees Imposition Amendment (Vacancy Fees) Bill 2017, all by Mr Sukkar.
All four of the bills will undergo a second reading, with debate to be adjourned.
“These changes were announced in the budget, and this bill gives effect to those announcements,” Mr Sukkar said.
“That’s why the changes contained in this bill are essential and why we need to act now.”
What changes to the law is the government proposing?
Currently, those aged 65 and over have super contributions relating to the proceeds of the sale of a person’s main residence subject to contribution caps. The new law however allows for uncapped downsizer contributions, as long as the main residence is owned by you or a spouse for at least 10 years. The contributions are limited to $300,000, are not deductible, and can only be made in relation to the sale of a main residence once.
The new law will not be able to deduct a loss or outgoing if it is related to travel to gain or produce assessable income from residential property. Exceptions allow for corporate tax entities, super plans that are not self-managed, a public unit trust, a managed investment trust, or a unit trust or partnership.
Further, assets can be deducted for the first time they’re installed or used in a residential property.
In terms of the vacancy levy, foreign investors will be hit with a fee when their property has been occupied for less than 183 days in a year, with penalties for those who fail to submit or keep required records.
The government has sought public input on draft legislation for travel and plant and equipment depreciation and foreign investment, as published previously.
Budget is defined as the estimation of expenses made over a specified time for the purchase of goods or services.