What’s different about downsizer contributions?

Downsizer contributions can be made on top of the existing caps that apply to super contributions. There is no maximum age limit. Also, you can contribute regardless of how much you have in super, also known as your ‘total super balance’ (TSB)1. This gives you an opportunity to put more into super, even if your TSB was more than $1.9 million last 30 June.

1 Total super balance is the sum of your accumulation account balances, retirement phase pension balances and the outstanding balance of certain loans if you have a self-managed super fund which has borrowed to invest.

Boost super tax-effectively

Downsizer contributions can help you to boost your retirement savings and benefit from potential tax concessions. Investment earnings in super are taxed at a maximum rate of 15% during the ‘accumulation phase’ and are tax-free if you’re receiving a ‘retirement phase pension’. This typically means less tax is payable on earnings than money held outside super, in your own name, where marginal rates of up to 47% (including Medicare) apply.

Manage tax on income payments and death benefits

While the contribution must be made within 90 days from when the property sale settles, you don’t actually have to contribute sale proceeds. If you reuse all the sale proceeds to buy another property you can still use the downsizer rules to your advantage.

If you need all the proceeds to purchase a new home, you might still be able to make a downsizer contribution by using other savings in your bank account. Alternatively, if you’re eligible to access your super, you might make a withdrawal and recontribute the money back into super under downsizer rules. By doing this, you could convert some of the taxable component of your super into the tax-free component. This may enable you to manage

tax on payments:

• from retirement phase pensions under age 60, or
• to adult children and other ‘non-dependants’ in the event of your death.