In the federal budget for 2021–22, the government has announced it will reduce the eligibility age to make downsizer contributions into superannuation from 65 to 60 years of age.
The downsizer contribution allows people to make a one-off, post-tax contribution to their superannuation of up to $300,000 per person from the proceeds of selling their home. Both members of a couple can contribute in respect of the same home, and contributions do not count towards non-concessional contribution caps.
“This measure will allow more older Australians to consider downsizing to a home that better suits their needs, thereby freeing up the stock of larger homes for younger families,” the government said.
“This improves the flexibility for Australians to contribute to their superannuation savings, and may encourage people to downsize sooner and increase the supply of family homes.”
Downsizer contributions can be made after the sale of a person’s principal place of residence, held for a minimum of 10 years.
However, downsizer contributions do not count towards the concessional and non-concessional contributions caps.
People with balances over the transfer balance cap (which is $1.7 million from 1 July 2021) are also able to make a downsizer contribution. However, the downsizer amount will count towards that cap when savings are converted to the retirement phase.
The measure will have effect from the start of the first financial year after royal assent of the enabling legislation, which the government expects to have occurred prior to 1 July 2022.
This comes as the ATO had recently flagged the need for sufficient and appropriate audit evidence when supporting the acceptance of downsizer contributions in SMSFs.
Does this mean the contract on the sale of the house needs to be dated post 1 July 2021?