Professionals Prowest Real Estate
175 High Road Willetton
08 9457 5733
08 9457 9844Contact us
Federal Treasurer Scott Morrison said that last Tuesday’s budget is the biggest shake-up to Australia’s Superannuation system in 10 years. According to Switzer commentator Paul Rickard – he is absolutely correct! However, seems this shake-up might be just what the property market ordered.
The budget shake-up is set to reduce how much money Australian’s can put into their super.
Additionally, moving forward, the new budget means there will be lower tax benefits for those Australian’s who keep money in super funds. With reduced super incentives, individuals will quickly start looking for another means to grow their nest egg and invest their hard-earned dollar.
That’s where the property market comes into play.
According to Rickard these changes will result in the money consequently being injected into property instead.
On Switzer Daily, he explains that due to the new super changes in the recently announced budget, middle income Australians will now start looking to invest their money into the family home, investment property and farms – all funds that, in the past, would have typically made their way into the super system.
“Now, super is really for middle-income earners. And whenever tax incentives or disincentives change, behaviours change.
The well-off or soon to be well-off will look at investments outside the super system, with property including negatively geared property, an obvious beneficiary.”
Paul said he recognised a couple of the changes as negative for our super system:
1. Slash concessional contributions cap to just $25,000 per annum
The first of which is the government’s decision to slash the concessional contributions cap to just $25,000 – something which will impact anyone with superannuation. However, the change doesn’t apply until 1 July 2017, so there is still just over a year left to maximise your contributions.
2. Lifetime limit on non-concessional contributions of $500,000
The second (and really important) change came into effect from 7.30pm on Budget night and is expected to have the greatest impact on those more well off. As Paul puts it, “They (the well-off) simply won’t be able to get large sums into super, so they will look to invest and grow their wealth outside super, most directly into property.”
“While the change is not retrospective (i.e. if someone has already accumulated more than $500K in non-concessional contributions they will be allowed to keep it in super), the measure period will commence from 1 July 2007”
But why wait for the budget super changes to rollout? Perhaps now is the perfect time to talk to someone and find out what your options are?
Here at Property 4 Profit, we make it our mission to source investments that provide exceptional capital growth and cash flow. So whether you’re looking to secure your first property or your 10th, our professional experts will work with you to ensure your investment is the smartest one you’ve ever made.