The change to the downsizer contribution rules announced in the 2021 budget has worked to solve two issues that existed in the retirement savings system, a technical specialist has said.
The change to the legislation dictates that from 1 July 2022 the age at which a person can make a downsizer contribution will be 60 instead of 65 and SuperConcepts SMSF technical and strategic solutions executive manager Philip La Greca said this will benefit couples with a significant age difference.
“One of the issues [this legislative amendment has addressed is] you could have situations previously where you had one person in the couple who could make a downsizer contribution and the other one couldn’t because of an age gap,” La Greca noted.
“So [the amendment] has helped alleviate that issue.”
Further, he pointed out the change to the law has helped define one characteristic of the downsizer contribution provisions more clearly.
“I think the other thing here is it’s also probably a recognition that the downsizer [contribution] is not really linked to age pension [elements],” he said.
According to La Greca, this fact will help ensure the purpose of the downsizer rules can ultimately be achieved.
“We want to encourage people to downsize or potentially relocate and it’s not just about the age pension,” he said.
“So that’s really I think what this age change is really about.
“It could be people who are ‘sea changing’ for instance, but if they are doing it at an older age, well this [amendment] gives them that opportunity as well.”
Revised contribution strategies involving aspects such as the new downsizer rules will be discussed in more detail by Philip La Greca and the SuperConcepts technical team at the selfmanagedsuper SMSF Professionals Day to be held on 31 May in Sydney.
To register, please click here.
