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Archives for June 2020

HomeBuilder – Federal Government Stimulus

A lot has changed since the start of the COVID-19 pandemic and life is slowly getting back to normal as social restrictions are eased at a different pace, state by state. All levels of Government are now shifting their focus to targeted economic stimulus.

HomeBuilder is the latest Federal Government stimulus targeted at the residential renovation and new home construction market. The Government is offering a grant of $25,000 to build a new home or substantially renovate an existing home, where a contract is signed between 4 June 2020 and 31 December 2020.

To be eligible, you must be an Australian citizen and an owner-occupier over the age of 18. You will need to earn less than $125,000 per annum for an individual or $200,000 per annum for a couple (based on 2018-19 tax return).

If you choose to renovate, the cost of the renovation contract will need to be between $150,000 and $750,000. The value of your property must not exceed $1.5 million pre-renovation.

If you choose to build a new home, your property value must not exceed $750,000. Construction for the new build or renovation will need to commence within three months of the contract date.

The State and Territory governments will distribute the HomeBuilding grant when the builder you employ seeks permits and submits appropriate applications. First home buyers are still eligible for the respective State or Territory Government grants on top of the HomeBuilder grant.

HomeBuilder might just be the extra money needed to build your first home, complete that major renovation or build your new home.

Please note this article provides general advice only and has not taken your personal, business or financial circumstances into consideration. If you would like more tailored advice, please contact us today.

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Changes to Super – Aligning with Age Pension Age

In what seems to be the ever-changing world of superannuation, the Commonwealth Government has amended the regulations that result in closer alignment to the age pension age, which is a good thing.

The eligibility for the government age pension was increased from 65 in line with the following table:

Soon enough, the eligibility for the age pension will be upon turning 67, however, this is out of whack with the superannuation rules, which principally revolve around turning 65.

Under the current superannuation rules, once you turn 65 the only way you can make a voluntary contribution into super is if you satisfy the work test. This involves working at least 40 hours in a consecutive 30-day period in the financial year the contribution is made.

The current system disadvantages those retirees who have turned 65 as they are not yet eligible to apply for the age pension, however, unless they work, they are restricted from being able to make a voluntary contribution into super.  If an asset was realised or they acquire the winning lottery ticket a voluntary contribution into super is not an option.

It’s highly undesirable to expect a retiree to have to go back to work in order to be able to make a contribution into super hence, quite rightly, this mismatch in the system has been removed.

From the 2020/21 financial year people aged 65 and 66 will be permitted to make a voluntary contribution into super without having to satisfy the work test.  This will permit a ‘non-concessional’ contribution to be made up to the $100K maximum limit.

Similarly, the age at which the ‘bring-forward’ rule for non-concessional contributions is before parliament to be increased from 65 to 67.  The bring-forward rule permits two future years of non-concessional contributions to be brought-forward resulting in a maximum of $300K that can be voluntarily contributed into super instead of $100K.

These are positive steps to alleviate gaps in the retirement system that make it fairer for everyone.

Please note this article provides general advice only and has not taken your personal, business or financial circumstances into consideration. If you would like more tailored advice, please contact us today.

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