Super fund members who have remarried can have their new partner make a downsizer contribution alongside them as the rules do not prohibit this action even when a marriage partner does not have their name on the title of a property.
BT Technical Services technical consultant Tim Howard said the issue of whether a current partner was able to make a downsizer contribution on a property purchased when their spouse was in a previous relationship, and solely in their name, was mainly related to eligibility requirements and not ownership.
“The main consideration as to whether an individual meets the eligibility requirements, in particular, is whether they have lived in the property as their main residence,” Howard said.
“So if a client and his spouse are both looking to make a downsizer contribution, the spouse may be eligible to do so if they have lived in the property with the client.”
He said the issue of someone’s name not being on the title of the property was not an uncommon scenario due to second relationships, asset protection strategies or because a property may have been inherited by a particular individual, and section 292.102 of the Income Tax Assessment Act 1997 addressed this in regards to downsizer contributions.
“The income tax law clearly states that a contribution can be considered a downsizer contribution where ‘you or your spouse’ held an interest in the property just before it was sold,” he said.
“This seems like a simple enough statement, however, the requirements extend slightly beyond that. The eligibility tests apply to the individual making the contribution to super,” he said.
He added these included the age of the contributing individual was 55 years or older, the property had been held for 10 years or more and the proceeds of sale partially or wholly qualify for the main residence capital gains tax (CGT) exemption.
“Where a spouse not on title is contributing, the tests apply to that individual. So how can, for example, the main residence CGT exemption apply when they don’t own an interest in the dwelling? Fortunately, this scenario is also accounted for within the legislation and applies notionally,” he said.
“If all the basic requirements are met and the current spouse has lived in the dwelling as their main residence, they could be eligible to make a downsizer contribution to their superannuation.”
