The 2017 federal budget was a quiet one for superannuation with no substantial reforms or tinkering with the system.
One reform announced was the ability for amounts to be contributed to superannuation over and above the current limits where individuals are downsizing their primary residence.
Following budget announcement draft legislation has been released for consultation.
The downsizer contributions are proposed to be available from 1 July 2018. In addition the following eligibility criteria will apply:
- The individual making the contribution must be 65 years of age or older
- The maximum contribution is $300,000
- The contribution will not be counted to the non-concessional contributions cap, be impacted on the $1.6m total superannuation balance limit and the work test will not be required to be met
- The property must have been held for a period of at least 10 years as the principal residence.
The draft legislation also allows for contributions to be made on behalf of both members of a couple in the event of the property only being held in one of the individuals names.
The draft legislation will only apply to the sale of the primary residence after 1 July 2018. Consideration should be given to the impact of this measure where there are plans to downsize a primary residence post retirement into the future.