There are a considerable number of changes that will shortly come into effect aimed at benefiting those approaching retirement who wish to contribute more to superannuation in a tax-effective manner.
For the first time, age limits have been reduced in an effort to allow slightly younger individuals and couples to build up their superannuation sooner.
From July 1, those aged 60 and over can access the post-tax downsizer scheme when they sell the family home. This is down from the previous age of 65. Legislation is now proposed (and expected to pass through the senate) that will see the age reduced further to 55 years.
Key points
The super downsizer scheme is a one-off post-tax super contribution of up to $300,000 per person when they sell their family home.
The aim is to help ease Australia’s housing crisis, while allowing those moving toward retirement to put more money into their super earlier. The scheme is not income-tested. You are still eligible even if you have maxed out your contribution caps.
In addition, in the new legislation, the scheme will not immediately affect the pensions asset test. Normally if your main residence is sold and some of the proceeds added to your super, that value will then be assessed, and this may reduce your age pension benefits. However, the proposed legislation will give pensioners an additional 12-month asset test exemption on their home sale proceeds to allow them to purchase a new home or to plan before their pension is affected.
There are a number of rules to be noted:
- You can currently only use the scheme if you are 60 or older (or 55 if new legislation passes)
- Your home must have been owned for at least 10 years
- The home must be exempt or partially exempt from CGT under the main residence exception
- You must deposit the money into a super fund within 90 days of settlement.
- Couples can contribute twice the $300,000 maximum amount if they are both eligible for the scheme.
- The scheme is a one-off and can be used only once.
If you are thinking of selling your home and believe you qualify for the super downsizer program, give dmca a call and we can discuss if this strategy is right for you and your circumstances.