Downsizer Contributions - Now in place ready for 1 July 2018

The legislation to implement this measure was enacted in December 2017.  The measure applies from 1 July 2018 and permits individuals to apply the proceeds from the sale of a current or former principal place of residence as an additional superannuation contribution.

The amount of the contribution is capped at $300,000 per individual.  Consequently a married couple could contribute $600,000 for their superannuation interests.  The contribution can be made even if you are over age 75 and do not satisfy the work test.  Additionally the contribution can be made even if your total superannuation balance exceeds $1.6m.  However, unfortunately, the additional contributions cannot increase the transfer balance account.

There are a number of conditions which must be satisfied before downsizer contributions can be made, including the following conditions:

• you must sell a current or former principal place of residence on or after 1 July 2018 (ie exchange contracts on or after 1 July 2018);
• the residence must be located in Australia and cannot be a caravan, houseboat or a mobile home;you must have owned the residence for at least 10 years before the sale;
• the residence need not have been your principal place of residence immediately before the sale;
• the contribution must be made within 90 days of settlement;
• the contribution must be made after you have attained age 65;
• if you are making a contribution for your spouse, the contribution must be made on or after your spouse attains age 65;
• the source of the contributions for downsizer contributions must be one current or former residence:  all downsizer contributions for an one individual must be made from the same property. 
• however, you may have one residence from which your downsizer contributions are sourced and your spouse may make their downsizer contributions from another property;
• unfortunately any unused portion of the downsizer contribution cap cannot be transferred to your spouse.

The SUPERCentral Governing Rules will be updated before 1 July 2018 (possibly in early May) so that downsizer contributions can be made as soon as possible once the new measure applies.