Downsizer reduction passes parliament

Downsizer reduction

A further reduction in the eligibility age to make downsizer contributions has passed through parliament and may take effect by the start of next year.

Legislation making a further reduction to the eligibility age to make downsizer contributions from 60 to 55 has passed both houses of parliament and is now awaiting royal assent and changes to regulations to take effect.

The Treasury Laws Amendment (2022 Measures No 2) Bill 2022 passed through the Senate on 28 November after first having been introduced into the House of Representatives on 3 August.

The bill received minor amendments in both houses and, among a range of measures, will allow people aged 55 and above to make downsizer contributions to their superannuation fund from the proceeds of selling their main residence.

The explanatory memorandum to the bill stated it will amend the Income Tax Assessment Act 1997 (ITAA) to allow the reduction in age, which was previously set at 60, after having also been reduced from its initial starting age of 65 when the downsizer contribution measures were first introduced.

The changes to the ITAA will be accompanied by changes to superannuation and retirement regulations, according to the explanatory memorandum.

“In conjunction with amendments contained in Schedule 5 to the bill, changes to the contribution acceptance rules in the Superannuation Industry (Supervision) Regulations 1994 and Retirement Savings Account Regulations 1997 are required,” it said.

“These changes will ensure that downsizer contributions can be accepted by regulated superannuation funds and retirement savings account institutions for individuals aged 55 and over.

“However, as the changes to the contribution acceptance rules require amendments to regulations, they are being progressed separately to the amendments in Schedule 5 to the bill.”

The changes will take effect on the first day of the first quarter after the day the bill receives royal assent, which will be 1 January if assent is received before 31 December.

The reduction to age 55 was proposed as policy by both major political parties during the 2022 election campaign.

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