The Federal Government recently announced that, as of 1 July 2018, downsizers aged 65 years or older may opt to contribute proceeds from the sale of their home (up to a total of $300,000 each) toward their super fund(s). Referred to as a downsizer contribution, it is treated as being non-concessional; existing in addition to the current maximum annual non-concessional contribution of $100,000 each (or $300,000, pursuant to the bring-forward rule). Any downsizer contribution will, however, count towards an individual’s transfer balance cap, which is $1.6 million for the 2018-19 financial year.
Those eligible to make downsizer contributions must meet all the following specifications:
- the contract of sale for the home is exchanged on – or after – 1 July 2018;
- be at least 65 years old at the time of making the downsizer contribution;
- a Downsizer contribution into super form (available from the ATO website) has been provided to the relevant super fund(s) before – or at – the time of contribution;
- the home has been owned by the contributor and/or their spouse for at least 10 years prior to the sale (ownership period depends on calculation used);
- the sale proceeds are exempted – either wholly or partially – from CGT under the main residence exemption;
- the home sold is Australian and is not a caravan, houseboat, or other mobile home;
- the downsizer contribution is being made within 90 days of receiving the proceeds of sale (extensions are granted in certain circumstances); and
- a downsizer contribution has not previously been made from the sale of another home
An individual who has made a downsizer contribution toward their super fund is not required to purchase a new home. Multiple downsizer contributions from the proceeds of a single sale are allowed, so long as they do not collectively exceed $300,000 per owner (or, the total proceeds of the sale less any other downsizer contributions made by a spouse). Careful consideration should be given to possible taxation, estate planning, and Centrelink implications.
More information? To find out more, give us a call on 1300 023 782 or email team@cdrta.com.au.
The team at C&D Restructure and Taxation Advisory are here to help. As part of the Vault Group we can offer the full suite of financial products and advice to help you navigate the business landscape. Schedule a meeting here via Calendly or give us a call on 1300 1 VAULT (1300 182 858)
Craig Dangar
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