The down low on Downsizer Contribution rules

The Downsizer Contribution rules have been in play since 1 July 2018, however, the ATO has recently clarified the guidelines following an increase in these contributions into SMSFs.

The Downsizer Contribution method allows eligible trustees to make a contribution of up to $300,000 into their superannuation fund from the proceeds of selling their home.

The method has become popular for making excess non-concessional contributions (NCCs) once a super fund member had reached the annual NCC cap, or for fund members who were no longer working and were unable to make other types of voluntary contributions.

The rules

The contract for sale of the property was entered into on or after 1 July 2018; and, The ATO published the following list to establish eligibility for members to make a downsizer contribution to super. If you can answer yes to all of the following you are eligible:

– You are aged 65 or over at the time the contribution is made

– The contribution is from the proceeds of the sale of a single eligible property in Australia

– You do not claim a tax deduction for this contribution

– You have owned the property for at least 10 years prior to the sale

– You claim the capital gains tax (CGT) main residence exemption on the sale of this property (wholly or partly)

– The contribution is made within 90 days of settlement

– An election is made to treat the contribution as a downsizer contribution (either before or when the contribution is made)

– You have not previously made a downsizer contribution in relation to the sale of another property treated as your main residence.

Fun Facts

– You don’t actually have to be ‘downsizing’ to utilise the concession
– A spouse does not need to have been an owner of the property to use the proceeds for their contribution

Peak Super has been helping Australians with their SMSFs for more than 30 years. Let them help you too by contacting or (08) 8172 9172.