20 May 2019

Self-funded retirees have emerged as the big winners from the Coalition’s surprise election victory, with the ALP’s proposals to raise superannuation taxes and scale back negative gearing now in the political junkyard.

Despite opinion polls predicting an ALP victory, Prime Minister Scott Morrison and his Coalition team have swept back into power.

The outcome is a big boost to the 2 million Australians aged over 65 who either partly or fully self-fund their retirements, along with Australians under this age who are planning to self-fund their retirement.

As a result of Saturday night’s election result, the following ALP policies which would have hit current or future self-funded retirees are now dead in the water:

  • Making people earning more than $200,000 pay 30 per cent tax on their superannuation contributions (down from the current threshold of $250,000)

  • Blocking cash refunds for excess dividend tax credits

  • Ending tax deductibility for personal superannuation contributions

  • Limiting negative gearing to newly-constructed housing from 1 January 2020 (with existing investments to be grand-fathered)

  • Halving the capital gains tax discount for all assets purchased after 1 January 2020

  • Reducing the annual after-tax superannuation contributions cap from $100,000 to $75,000

  • Banning retirees from being able to accumulate unused pre-tax contributions under the annual $25,000 cap, and make these contributions in future years

  • Limiting direct borrowing by self-managed superannuation funds

At the same time, a number of existing or proposed Coalition policies in support of self-funded retirees are now very much alive and well.

This includes measures already in place which allow downsizers to make contributions of up to $600,000 to super from the proceeds of their family home sale.

It also includes measures which are proposed but not yet in place, including allowing self-managed super funds to expand from four to six members and for Australians aged 65 and 66, from 1 July 2020, to be able to make voluntary superannuation contributions without meeting the government’s work test.

Overall, seniors who have substantial existing assets - including those who own their homes and are looking at downsizing - will be breathing a little easier following Saturday night’s result.

By the same token, seniors who don’t have the luxury of being able to part or fully-fund their retirement will have little joy out of Saturday night’s ALP election loss.

The ALP’s plan to invest $2.4 billion to allow three million pensioners access to free dental care now looks to be dead. This plan would have allowed pensioners to get $1,000 worth of free dental work every two years.

Similarly, an ALP promise to build 20,000 affordable homes in its first term, including for older women who are at risk of homelessness, now also appears in the political scrapheap. This policy would have almost certainly helped people reliant on the age pension.

Neither party committed to any change in the age pension rate.

By Mark Skelsey, News Editor of Downsizing.com.au. Email Mark at news@downsizing.com.au