ATO, Downsizer, Property

Downsizer timeframe absolute

Downsizer timeframe

The timeframe within which a downsizer contribution has to be made is definitive for all circumstances relating to this type of strategy.

A senior superannuation executive has reminded practitioners the maximum timeframe with regard to making a downsizer contribution, being 90 days after receiving the proceeds of sale from the property in question, covers all aspects of this strategy.

In particular, Colonial First State head of technical services Craig Day noted the 90-day window captures applications requesting the ATO to grant more time to make the contribution itself.

“You can apply for an extension, and I’ve seen the ATO give taxpayers up to an extra 12 months to get the downsizer contribution in, but you just need to apply [for it] within the 90 days,” Day told attendees of the recent SMSF Association Technical Summit 2023 hosted on the Gold Coast.

“Once you’re over 90 days, bad luck.”

He confirmed a request to be allowed more time to make a downsizer contribution can only be made where factors outside the trustee’s control have played a part in preventing the money in question to be paid into the superannuation fund. These include circumstances such as ill health or a death in the family.

Day pointed out the ATO is very strict on the definition of having sold a dwelling and in the past has been unwilling to apply any discretion to these rules.

“Remember those horrible bushfires we had a couple of years ago? People actually had their homes destroyed, but still had a block of land and they wanted to sell up and contribute [the sale proceeds to super under the downsizer rules as] they’d had enough of living in the country, and the ATO said no because there was no dwelling on it,” he revealed.

“Brutal. And the question was asked can we put a caravan on it [and the answer was] no you can’t.”

He also took the opportunity to confirm the dedicated downsizer contribution form must be lodged otherwise the super fund will have to treat the money as a non-concessional contribution.

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