Downsizer contributions¶

If you are 55 or older and you sell a home you have owned for a long time, you may be able to put some of the sale money into your super. This is called a downsizer contribution.

It is a special type of contribution with its own rules. One helpful feature is that it does not count towards your usual non-concessional (after-tax) contribution cap, and you do not have to meet a work test to make it.

In one line

A downsizer contribution lets someone aged 55 or older add money from selling a long-owned home into super, up to a set amount, outside the non-concessional cap.

Why this matters¶

Selling the family home can free up a large amount of money. A downsizer contribution is one way older Australians can move some of that money into super. Because it sits outside the usual after-tax cap, it can be a useful option — but only if you meet every eligibility rule. Getting a rule wrong can mean the contribution is not allowed.

What you will learn¶

What a downsizer contribution is
The main eligibility rules the ATO sets
Why it does not count towards the non-concessional cap

Understanding the concept¶

A downsizer contribution is money from the sale of your home that you pay into super under a special set of rules. The ATO sets these rules, and you must meet all of them.

The main rules the ATO describes are:

You must be 55 or older at the time you make the contribution.
You (or your spouse) must have owned the home for 10 years or more before the sale.
The home must be in Australia, and it must not be a caravan, houseboat or mobile home.
The sale must qualify (fully or partly) for the main residence exemption from capital gains tax.
You must make the contribution within a set time after the sale settles.
You must give your super fund the ATO's downsizer contribution into super form before, or at the time, you make the contribution.
You can only use the downsizer rules once — you cannot use them again for a later home sale.

You can add up to a set amount that the ATO sets from the sale proceeds. Both members of a couple may be able to contribute from the sale of the same home, if each person meets the rules.

Two features make it stand out from other after-tax contributions. First, it does not count towards your non-concessional (after-tax) contribution cap. Second, there is no work test — you do not have to be working to make it.

Despite the name, you do not have to buy a new, smaller home to make a downsizer contribution. The rules are about selling a qualifying home, not about buying another.

For accountants & bookkeepers

The ATO treats a downsizer contribution as a non-concessional-style contribution that is nonetheless excluded from the non-concessional cap and exempt from the work test and the usual age-based restrictions on voluntary contributions. The approved form (the downsizer contribution into super form) must reach the fund at or before the time of the contribution, and the contribution must be made within the ATO's time limit after settlement. Full eligibility, the current dollar limit and the timing rules are on the ATO's downsizer pages — confirm them before advising, as thresholds and rules can change.

Example¶

Nina and Sam are both over 55. They have owned and lived in their home for more than 20 years, and they decide to sell it. Because they meet the age and 10-year ownership rules — and the sale qualifies for the main residence exemption — each of them may be able to make a downsizer contribution from the sale proceeds, up to the amount the ATO sets per person.

Before they pay the money into their super fund, they complete the ATO's downsizer contribution into super form and give it to the fund. They also check the ATO's timing rules so the contribution is made within the allowed period after settlement. Because they are unsure how it fits with the rest of their super, they speak to a licensed adviser first.

Common mistakes¶

Assuming you must buy a smaller home — you do not; the rules are about the sale.
Missing the time limit — the contribution must be made within the ATO's set period after settlement.
Forgetting the form — the ATO's downsizer form must reach the fund at or before the contribution.
Thinking the ownership test is short — the home must have been owned for 10 years or more.
Treating it as ordinary advice — eligibility is strict, so check the ATO and get advice.

How this works in myaccountant¶

In the app — myaccountant reports the employer and salary-sacrifice super contributions it processes through Single Touch Payroll (STP). A downsizer contribution is a personal contribution you arrange directly with your own super fund, using the ATO's form — it is not something you set up in myaccountant. To make one, and to check it against your super, work with your fund and the ATO.

Key points¶

A downsizer contribution moves money from selling a long-owned home into super.
You must be 55 or older and have owned the home for 10 years or more.
You can add up to a set amount the ATO sets, per person.
It does not count towards the non-concessional cap, and there is no work test.
You must give your fund the ATO's downsizer form at or before the contribution.
The rules are strict — check the ATO and get advice before you act.

Learn next¶

General information only — not tax, super or financial advice.

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