Property to be the big winner from Budget super changes: Switzer's Paul Rickard

Switzer commentator Paul Rickard says Treasurer Scott Morrison was right when he said that the Tuesday budget is the biggest shake-up to super system in 10 years.

He said on Switzer Daily that middle income Australians will invest monies that would otherwise have made their way into the super system into the family home, investment property and farms.

Paul added that none income producing assets such as collectables (art, rare coins, stamps etc) might also get a boost.

He said Budget had gone one step further from the Perter Costello shake up 10 years ago by slashing what can be put into the system and reducing the tax benefits of keeping money in there.

"Super was never a vehicle for the rich.

"Tuesday night, super was an attractive proposition for the well-off.

"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.

Another important change is that the transition to retirement pension has been effectively killed from 1 July 2017. The tax benefits are gone, which will come as a shock to many well-off and not-so well off over 55’ers. 

Here is a summary of the changes he saw as bad.

Impacting all superannuants, the government has slashed the concessional contributions cap to just $25,000. 

The change doesn’t apply until 1 July 2017, so he adviser have the remainder of this financial year and next financial year to maximise your contributions.

An even more important change is the new lifetime limit on non-concessional (or after tax) contributions of $500,000.

"To apply from 7.30pm on budget night, this is the change that will have most impact on the well off.

"They 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 (ie if someone has already accumulated more than $500,000 in non-concessional contributions they will be allowed to keep it in super), the measurement period will commence from 1 July 2007.

"That’s not a typo - the Government will look back 9 years to count your non-concessional contributions."

Rickard pointed out these changes require legislation by the Parliament.