DOWNSIZER CONTRIBUTIONS INTO YOUR SMSF

In the recently announced Federal Budget, the government has announced that the age to make downsizer contributions will be reduced from 65 to 60. This will not come into effect however until the legislation has been passed.

If you make a downsizer contribution to your Self Managed Superannuation Fund (‘SMSF’), you will need to provide sufficient evidence to your Fund’s auditor that it was a contribution that was made properly and in line with what is required. The auditor will expect to see:

Proof that the member is aged 65 years or older at the time the contribution was made (if the budget announcement is passed into law, this age requirement may be reduced to 60 or older)

That a tax file number (TFN) for the member has been provided

That the SMSF trust deed allows the fund to accept a downsizer contribution

An approved downsizer contribution into super form (NAT75073) from the member (if you are making your contribution to a fund that is not an SMSF, you may be able to use the Fund’s own form)

Evidence the contribution was made either at the same time or after the form was received by the fund, and that the contribution does not exceed the $300,000 cap per member

The member has not previously made downsizer contributions to the fund from a previous sale of a property

The contribution was made within 90 days of receiving the proceeds

The contribution has been correctly allocated to the member’s account.

If you are currently aged between 60 and 65 years old and are in a position where you may wish to take advantage of a downsizer contribution, the recent Budget announcement to reduce the age to 60 should be taken into consideration when making the  decision as to when you sell your property. Contributions must be made within 90 days of selling your property, so you do not want to be in a position where you just miss that cutoff because you sold before the new age limit came into play.

Downsizer contributions can also be made in conjunction with other contributions.

If the funds available are sufficient, a couple may be able to contribute as much as $1.2 million into their super fund in one go after selling their main residence (or another property that has been their main residence).

If you are over 60 and intend to sell a property in the near future, or have recently sold a property, it is important that you speak with us so that we can determine your options when it comes to contributions.

We will ensure that the required information is correctly provided to the Fund’s auditor and that your deed is up to date.

This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is suitable for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement.