Downsizer Contributions

The ‘downsizer’ contribution came into effect on 1 July 2018 and allows an eligible person to contribute and additional amount to superannuation of up to $300,000 per member, without the need to satisfy normal tests relating to superannuation contribution eligibility (including the work and total super balance tests).

These contributions will not count towards the concessional or non-concessional contribution caps and the individual that makes the contribution will not need to meet the existing maximum age, work or $1.6m balance tests for contributing to super.

Eligibility criteria

  • The person must be aged 65 or over from 1 July 2018
  • The person must have owned the home for at least 10 years and it meets the test for the ‘main residence’ exemption (or partial exemption) under CGT rules (although members do not have to be currently living in it)
  • The contract for sale must be entered into on or after 1 July 2018 and the contribution must be made within 90 days of receiving the proceeds of the sale.

The downsizer contribution can only be made once.

Members are not required to make a subsequent home purchase or purchase a new residence of a smaller value. Members can move into any living situation suitable for them after the sale

  • If funds are required after the downsizer contribution is made, lump-sum withdrawals can be made which are received tax-free
  • It is possible for the members spouse to also make a downsizer contribution, increasing the potential contribution to a maximum of $600,000 combined (as long as this doesn’t exceed the home’s sale price)

All contributions still are required to be made within 90 days of receiving the funds which is usually from the date of settlement, unless an extension has been granted an extension by the ATO.

Anybody interested in this measure should have a chat with an authorised financial adviser first. We can help put you in touch with someone suitable to give this advice just contact the office.