fbpx

Eligibility Age Change For Downsizer Contributions

With the recent announcement by the Australian Government in the 2021-22 Federal Budget, the eligibility age for the downsizer contribution has been reduced from 65 to 60 years old. This age change has become a law with the passing of Treasury Laws Amendment Bill 2021, that received a royal assent on 22 February 2022.

As per the passing of the bill, the change will come into effect from 1 July 2022. This means all eligible individuals aged 60 years or older can choose to make a downsizer contribution into their superannuation of up to $300,000 per person that arises from the proceeds of selling a home.

In case, the contribution is made prior to 1 July 2022, the age change doesn’t come into play. Eligible individuals must still be aged 65 years or older at the time of making their contribution. All other eligibility criteria remain the same.

What Are Downsizer Contributions & Their Purpose?

Coming into effect from 1 July 2018, the downsizer measure was formulated to increase the flexibility of older Australians to contribute to their super. This in return, allows the eligible individuals to contribute up to $300,000 from the proceeds of selling their home, without impacting the contribution caps in any way.

Downsizer Contributions For Individuals

Compared to other contribution schemes, the downsizer contribution doesn’t count towards any of the contribution caps. This means your superannuation balance remains intact until it is re-calculated at the end of the financial year.

Though it doesn’t count towards any contribution caps, the downsize will count towards your transfer balance cap. This cap applies when you move your super savings into the retirement phase. This moving of savings is considered for determining the eligibility criteria for the age pension.

If you are considering a downsizer contribution or wish to seek independent financial advice in relation to the age pension by a qualified tax accountant, feel free to consult our team at KPG Taxation.