An SMSF specialist has noted pending assets test legislation amendments not directly related to superannuation will still have a significant effect on the strategic viability of making downsizer contributions for individuals receiving the age pension.
SuperGuardian education manager Tim Miller said he was referring to the pending change to the Social Services and Other legislation Amendments (Incentivising Pensioner to Downsizer) Bill 2022 that will extend the assets test exemption applied to the sale proceeds of a house from 12 months to 24 months.
More specifically he noted, should this amendment be passed, its interaction with elements like the new work test rules may question whether making a downsizer contribution is entirely necessary should the individuals already receiving the age pension want to put more money into their superannuation fund.
“What [the proposed amendment] does is it gives us a strategic opportunity [to consider whether] we put the proceeds from the sales of a house into superannuation or do we maintain it outside of superannuation under this two year exemption from the asset test and restricting rules on the deeming side of things from the income test,” Miller told attendees of a technical webinar he hosted today.
“Then potentially, with the removal of the work test, we’re not eligible for the downsizer because we’re outside of the 90 day period but in two years’ time, if our total super balance is under $1.7 million…to then make a [non-concessional] contribution to super,” he explained.
He pointed out SMSF members who are receiving the age pension are unlikely to have a total super balance of $1.7 million or more.
“So I think strategically this change really ties in with the downsizer and makes us want to think through the process of whether [making a] downsizer [contribution] is worthwhile from the point of view of our age pension clients,” he concluded.