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Downsizer contributions

Section: 2.12

2.12 Downsizer contributions

From 1 July 2018, members aged 65 and over* have been able to make superannuation contributions of up to $300,000 from the proceeds of selling their home.

The downsizer contributions are not included as non-concessional contributions and will not affect contribution caps. The downsizer contributions can still be made even if an individual's total super balance is greater than $1.7 million.

*Note:

In the 2021 Federal Budget, the government announced that the age of eligibility for the downsizer contribution will reduce from age 65 to age 60 (subject to legislation).

The sale of any dwelling in Australia (other than a caravan, houseboat or mobile home) can qualify the member to make a contribution, provided the dwelling has been owned for at least 10 years.

Both members of a couple will be entitled to take advantage of the measure which is designed to reduce barriers to downsizing for older people.

Requirements

Requirements to make the downsizer contribution are:
 
  • the contract for sale must be entered into on or after 1 July 2018
  • the contribution must be made from the capital proceeds of disposal of a property located in Australia
  • the member or their spouse must have owned the property for a period of 10 years or more
  • the member or their spouse must be eligible for a main residence CGT exemption (full or partial)
  • the member must be aged 65 or more at the time the contribution is made*
  • the contribution must be made within 90 days of the change of ownership, which is generally the date of settlement. An extension can be applied for in some limited circumstances.
  • an election must be made using the ATO election form no later than the time the contribution is made
  • the maximum contribution amount is $300,000 per member

This technical resource is intended for the use of financial advisers only. It is current as at the date of publication but may be subject to change. This publication has been prepared without taking into account a potential investor's objectives, financial situation, needs or objectives. Before making a recommendation based on this material, you should consider its appropriateness based on the client's objectives, financial situation and needs. Rainmaker Group is not a registered tax agent under the Tax Agent Services Act 2009. Your client should refer to a registered tax agent before relying on information published herein that may impact their tax obligations, liabilities or entitlements.

Last modified: Tuesday, June 22, 2021