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Match sale date to birthday to boost downsizer

SMSF contribution settlement

An SMSF expert has said trustees who fall under the downsizer contribution age may still be eligible to make a contribution if their birthday aligns with the 90-day settlement period.

SMSF trustees who do not meet the downsizer contribution age limit may still be eligible to make a contribution if they reach the appropriate age within the 90-day settlement period, an SMSF expert has said.

Speaking during a webinar, Smarter SMSF chief executive Aaron Dunn noted trustees aged 64 could potentially make a contribution into their super fund following the sale of their home if their 65th birthday has fallen in the 90-day settlement time frame.

“We have a 90-day time frame in which to be able to make that contribution into the fund from the sale proceeds, but there cannot be any previous downsizer contributions from another sale of a home that would have qualified,” Dunn said.

“What we know about these rules is that the individual must currently be 65 years or older at the time the contribution is made, that is absolutely critical.

“Do not assume the date of sale, that is, the contract date, matters; it is the settlement date. Just because they are 64 years of age at that point in time, it will not preclude them if they turn 65 in the following 90 days.”

Once trustees have finalised the sale of a housing asset, he said: “We need to make the election to treat that amount as a downsizer contribution because it is not going to count towards the non-concessional cap unless it is found to not meet the eligibility criteria of being a downsizer contribution in the first place.”

He added that where a superannuation fund was owned by a couple, using the downsizer contributions and the bring-forward provisions they could each contribute up to $630,000 each in a single year.

“You need to map that out a little bit further to ensure and determine whether an individual will qualify to make that contribution or not,” he said.

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