“So, you might have somebody who is 60, they've sold their house and have $600,000 they're looking to put into super. They potentially can put in $300,000 as downsizer and $300,000 as non-concessional, subject to their total super balance. But you don't have to worry about their total super balance when it comes to making that downsizer contribution.”

Cullen said this may be a reason why people between 55-64 years may not want to utilize the downsizer contribution, even though the age limit has dropped.

“It's not a use it or lose it. As a 55-year-old, you might want to defer and make that contribution later. It might be that if I make the downsizer contribution, although it's not subject to total super balance, once that money is in super when the ATO determined your total super balance at the end of the next financial year, or the year that you make that contribution, it's going to be part of that super balance,” he said.

“So, if you’re sitting on total super balance of $1.6 million and make a downsizer contribution, and get a little bit of growth at the end of the financial year, the total super balance is likely to exceed $2 million which means that, based on current tables and values, you would not be able to make a non-concessional contribution the next year.”

He added that making a downsizer contribution earlier potentially impacts on contribution strategies going forward.

“If you wait to make a downsizer contribution for example at 78, you’re not allowed to make non-concessional contributions. You’re over the age of 75 and your total super balance is in excess of the general transfer balance cap, you’re also not able to make contributions or non-concessional contributions, but you can make a downsizer contribution,” he said.

“Just because you can make a contribution at that earlier age bracket, there may be benefits for some clients to delay it, making it the last contribution they can make after they don't satisfy any other rules.”

Cullen added that another thing to consider in regard to downsizer contributions is the fund’s trust deed.

“Depending on how old your client's deed is, and depending on how the deed is written, a lot of deeds these days will have a clause in there in terms of contribution. If the law allows for a contribution to be made, the deed allows for it as well, so that would cover downsizer contributions,” he said.

“But some older deeds might be more descriptive on what contributions can be made. If it doesn't include downsizer contributions, you may not be able to make contributions. You might have a deed that specifically says that the fund cannot accept contributions after the member turns 75. That would restrict the fund's ability to receive the downsizer contribution.”

He continued it is best not to assume the fund's deed is going to allow for downsizer contributions and to make it a priority to check before implementing any strategy.

“The other thing to think about particularly for the younger age bracket is that when this law first came into place, you had to be at least 65, and already met a condition of release which meant [the contribution] would be unrestricted, non-preserved, be able to be accessed straight away,” he said.

“[For younger members] the contribution is going to start off as being preserved, and the only way it's going to become unrestricted is if they meet a condition of release. So that younger age bracket also needs to be mindful that it's going to be locked away and that may impact on their ability to buy another house.”