Downsizer superannuation contributions

In the May 2017 Federal Budget, the Government announced changes to improve housing affordability. One of these changes was to provide older Australians greater flexibility to contribute to superannuation using the proceeds from the sale of their home after 1 July 2018.

Key benefits

  • You are able to boost your superannuation savings.
  • If the amount contributed is in pension phase, any income or capital gains are tax free. Pension payments are also tax free.
  • Maximum tax within superannuation is between 10% – 15%.
  • You are able to access your superannuation without restrictions at age 65.

Key points

  • The Downsizer Contribution does not count towards any superannuation contribution caps.
  • There is no work test requirement for the Downsizer Contribution.
  • The Downsizer Contributions can still be made even if you have a Total Super Balance greater than $1,600,000.
  • Each person of a couple can contribute up to $300,000, giving a total contribution per couple of up to $600,000.
  • There is no requirement to buy a new home with the proceeds of sale.

General eligibility

  • The contract of sale is entered into on or after 1 July 2018.
  • You are age 65 or over at the time of contribution.
  • The Downsizer Contribution is made following the sale of the principal residence.
  • You have held the property at all times for 10 years.
  • The property must meet the test for ‘main residence exemption’ under CGT rules (wholly or partly).
  • You do not claim a tax deduction for this contribution.
  • The contribution is made within 90 days of settlement, with an election made to treat the contribution as a Downsizer Contribution.

Things to consider

It is important that you seek advice from a registered tax agent to understand your eligibility for the capital gains tax exemption for main residence for this property as this is one of the criteria for being eligible to make a downsizer contribution.

If you are a Department of Human Services/DVA customer, you are required to notify the Department of Human Services/DVA within 14 days changes that could impact your entitlement. This would include the sale of the property and contribution to superannuation.

For further information on the downsizer superannuation contribution, speak to your Bentleys Advisor.

Preparing for retirement and looking for advice?

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