Contributing the proceeds of downsizing to superannuation
New legislation to be introduced by the government is planning to give an allowance to all people over 65 the ability to contribute to super funds even after finishing work.
The measure, which is due to kick in on 1 July 2018, will allow people over 65 to contribute the proceeds of the sale of their home to super.
The contribution is limited to $300,000 but for each person, meaning two owners could collectively contribute $600,000 into a concessionally taxed environment.
Also, there is no need to buy a new property either. If you have an existing house, or a holiday home, that can be considered downsizing too.
If you would like further information relating to this new measure in the tax laws, please do not hesitate to give us a call on (02) 9984 7774. We would be delighted to assist you in putting more money away for your retirement.
Martin van der Saag
Director
T: 02 9984 7774
E: martinv@northadvisory.com.au
Norman Ruan
Accountant
T: 02 9984 7774
E: normanr@northadvisory.com.au
“Downsizing contributions allow Australians to boost their super later in life, even when traditional contribution limits no longer apply.”
About the author
Marius Fourie - Director & Business Advisor
As Director and Business Advisor, Marius uses his accounting expertise and empathetic skills to work directly with business owners and help them feel at ease with their finances.
Marius saw a common need in clients that just wasn’t being met by accounting providers.
That need was for clear, open communication and streamlined accounting services that didn’t come padded out with any unnecessary features.
Business owners just don’t have time to compare different accounting firms to see which one has the best packages with the best inclusions (many of which they would pay for but never use).
Key Takeaways
Downsizer Contributions Create Valuable Flexibility
They allow eligible Australians to add to super later in life, even if they’ve reached other contribution limits.
Timing Is Critical
Contributions must be made within strict timeframes following the sale of the home to remain eligible.
Not Everyone Will Qualify
Age, property ownership history and eligibility rules must be carefully checked before proceeding.
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Frequently Asked Questions
What is a downsizer contribution?
A downsizer contribution allows eligible individuals to contribute proceeds from the sale of their main residence into superannuation without counting towards standard contribution caps.
Who is eligible to make a downsizer contribution?
Eligibility depends on age, ownership of the property for a minimum period, and meeting specific ATO conditions, including timing requirements.
How much can be contributed using the downsizer rules?
Eligible individuals can contribute up to a set limit per person from the sale proceeds, subject to current downsizer contribution rules.
Does a downsizer contribution count towards my contribution caps?
No. Downsizer contributions sit outside concessional and non-concessional caps, but they do not increase your total super balance cap.
Should I seek advice before making a downsizer contribution?
Yes. Downsizer contributions can affect tax outcomes, Centrelink entitlements and estate planning, making professional advice important.
If I sell my home after I retire, can I still put some of the proceeds into super?
Yes. The Government introduced a measure to allow people over 65 to contribute money into super from the sale of their home, even if they’ve already finished working.
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