Can You Make a Downsizer Super Contribution If You Are Aged 75 or Older?

Many Australians believe that once they turn 75, they can no longer contribute to their superannuation. In most cases, this is true.

Generally, once you are 75 years or older, a super fund can only accept mandated employer contributions, such as Superannuation Guarantee (SG) contributions. Most other voluntary contribution types are subject to age-based acceptance restrictions.

However, there is an important exception that is often overlooked.

If you sell an eligible home, you may still be able to make a downsizer contribution to your super—even if you are 75, 80, 85 or older.

There Is No Maximum Age Limit

Unlike many other contribution types, downsizer contributions have no upper age limit.

Under section 292-102 of the Income Tax Assessment Act 1997, an individual only needs to be 55 years of age or older when the contribution is made. There is no maximum age specified in the legislation.

This means that, provided all other eligibility requirements are met, Australians aged 75 and over may still contribute up to $300,000 each to their super from the proceeds of selling an eligible home.

Who Can Make a Downsizer Contribution?

You may be eligible if:

• You are 55 years of age or older.
• You sell an eligible home located in Australia.
• The home has generally been owned by you or your spouse for at least 10 years before the sale.
• The sale qualifies for at least a partial main residence capital gains tax (CGT) exemption.
• You make the contribution within the required timeframe (generally within 90 days of receiving the sale proceeds, unless the ATO grants an extension).
• You provide your super fund with the approved ATO Downsizer Contribution form before or at the time you make the contribution.

How Much Can You Contribute?

Eligible individuals can contribute up to $300,000 each.

For couples, this means up to $600,000 may be contributed from the proceeds of selling one eligible home, even if only one spouse owned the property, provided both individuals satisfy the eligibility criteria.

Why Downsizer Contributions Are Different

Unlike many other voluntary super contributions, downsizer contributions:

• are not subject to the non-concessional contribution cap;
• do not require you to meet a work test;
• can generally be made regardless of your total super balance; and
• may still be accepted by your super fund even if you are 75 years of age or older, provided all legislative requirements are met.

These features make downsizer contributions a valuable strategy for retirees looking to increase their retirement savings while simplifying their living arrangements.

Things to Consider

A downsizer contribution is not automatically suitable for everyone. Before proceeding, you should consider:

• whether your property meets the eligibility requirements;
• how the contribution may affect your transfer balance cap planning;
• the impact on your total super balance;
• any potential Age Pension or other Centrelink implications; and
• your overall retirement and estate planning objectives.

Obtaining professional advice before selling your home and making a contribution can help ensure the strategy is appropriate for your circumstances.

How iCare Super Can Help

At iCare Super, we assist SMSF trustees with the administration and compliance requirements associated with downsizer contributions. Our team can help you:

• review whether your proposed contribution satisfies the legislative requirements;
• ensure the correct documentation is completed and retained;
• process the contribution within your SMSF;
• maintain accurate member records; and
• support your accountant and financial adviser with SMSF administration.

If you are considering selling your home and would like to understand whether a downsizer contribution is available to you, contact iCare Super to discuss your SMSF administration requirements.

Disclaimer: This article contains general information only and does not constitute financial, taxation or legal advice. Eligibility for a downsizer contribution depends on your individual circumstances and the relevant legislation. You should seek advice from a qualified financial adviser, tax adviser or legal professional before making any financial decisions.