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Downsizer changes announced ahead of looming election

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Miranda Brownlee
17 May 2022 — 1 minute read

The Coalition has announced further changes to downsizer contributions, with the federal election now only days away.

In an election campaign speech on Sunday (15 May), Scott Morrison announced plans to reduce the eligibility age for downsizer contributions to age 55 from 1 July 2022, if elected this weekend.

The eligibility age for downsizer contributions was already set to be reduced to age 60 from 1 July this year, down from the current 65.

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Downsizer contributions allow individuals to contribute up to $300,000 from the proceeds of the sale or part sale of their home into their superannuation fund, where they meet the eligibility criteria.

Mr Morrison also announced plans to extend the period that pensioners have to structure their assets following the sale of their home without impacting their pension.

Under the announced measure, which would commence 1 January, pensioners would have two years to structure their assets following a sale of their family home, without their pension being impacted by the assets test, where they intend to buy another property.

Under the current rules, where individuals sell their main residence and intend to buy a new home within 12 months, the portion of the sale proceeds that will be put towards the purchase of the new home is exempted under the assets test for up to 12 months.

SMSF Association deputy chief executive Peter Burgess said the association supported the measure, which would provide greater flexibility for individuals over the age of 55 to make contributions and sell their home and contribute the proceeds into super.

Mr Burgess reminded SMSF professionals that downsizer contributions don’t count towards the contributions caps but do count towards a member’s total super balance.

This means that making a downsizer contribution could potentially impact their ability to make non-concessional contributions in the next income year, including catch-up concessional contributions.

“It’s very important [therefore], to consider the timing of these contributions,” he noted.

“If someone has the capacity to make large non-concessional contributions then you’d want to get them out of the way before you make your downsizer contribution in order to maximise the amounts you can get in.”

The Association of Superannuation Funds of Australia also welcomed the announcement.

ASFA supports the downsizer measure announced earlier today as it will help increase the housing stock for families and the retirement balances of older Australians, said ASFA deputy chief executive Glen McCrea.

Miranda Brownlee

Miranda Brownlee

Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.

Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.

You can email Miranda on: [email protected]momentummedia.com.au
Downsizer changes announced ahead of looming election
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