With the Coalition’s somewhat unexpected victory, the ALP’s intended policies regarding tax treatment of trusts, Division 7A loans, negative gearing, franking credits and CGT are no longer on the agenda. However, changes to the First Home Super Saver Scheme will take effect on 1 July 2019.
This article explains those changes, which the Government has designed to increase the rate people participate in the scheme.Jack Coventry, Maddocks Lawyers
The ALP’s 2019 Federal Election campaign proposed significant reforms to tax policies which, if implemented, would have significantly altered the economic landscape. Bill Shorten, employed a fairness-focussed rhetoric to garner support for his platform of cutting tax concessions and closing loopholes. However, the Coalition’s unexpected victory wiped a number of these anticipated legislative changes off the political agenda.
Had Labor prevailed their most widely reported policies would have had far-reaching implications. They included:
In addition to the above, the ALP signalled an intention to introduce a new 30% standard minimum rate of tax for discretionary trust distributions to adult beneficiaries. This measure was intended to counter ‘income splitting’ where distributions from discretionary trusts are spread between beneficiaries in order to take advantage of lower marginal tax rates.
These changes are no longer in play, however one legislative change was already underway and will impact those saving to purchase their first home.
The First Home Super Saver Scheme (FHSS Scheme)
On 1 July 2017, Parliament implemented the FHSS Scheme to encourage first home buyers to save a deposit by making super contributions. Individuals who made contributions could later withdraw funds to help pay their first home purchase deposit. The advantage: funds saved in this manner allow savings to accrue in super’s concessional tax environment.
The rules governing the FHSS Scheme are detailed at length in a previous ClearLaw article: Housing affordability and super: upcoming changes for first home buyers and 'downsizers'.
A new amending act (Act) corrects certain technical and drafting errors, clarifies the operation of the FHSS Scheme, builds in a measure of flexibility to improve individuals’ access to the scheme and in the process fixes a number of anomalies and unintended consequences of the original scheme.
Changes to the scheme
The Act will amend the FHSS Scheme as follows:
The Act amends the rules to allow a buyer to enter into a contract to purchase or construct their home up to 14 days prior to making a valid request to release their FHSS amounts. Accordingly, buyers will have more flexibility in the market as they no longer have to wait for their first FHSS amount to be released prior to signing the contract to purchase or construct a home.
These changes apply retrospectively to the FHSS Scheme and all other aspects of the scheme remain unchanged.
For more information, contact Maddocks on (03) 9288 0555 and ask to speak to a member of the Markets and Revenue or General Commercial teams.
You can read earlier ClearLaw articles on a range of topics, including the following related articles:
 Treasury Laws Amendment (2019 Measures No. 1) Act 2019
Julian Smith is a partner in the Maddocks Commercial team.
Julian advises extensively in the following areas:
Julian advises clients ranging from public companies servicing the wholesale financial services market to high net worth individuals and their advisers.
Julian has been with Maddocks since undertaking articles in 2001.
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For more information, contact Maddocks on (03) 9258 3555 and ask to speak to a member of their team.