A senior technical specialist has confirmed SMSF members can apply to the ATO to have the 90-day time limit associated with downsizer contributions extended, but such an action is unlikely to yield a positive result if the regulator believes this provision is being manipulated.
Under the downsizer rules, the contribution to the SMSF must be made within 90 days of receiving the proceeds from the sale, which is usually the date of settlement, of the residence in question. In addition, from 1 January 2023 an individual is required to be 55 years of age to be eligible to make this type of contribution.
Accurium senior SMSF educator Anthony Cullen acknowledged an extension to the 90-day deadline can be sought as long as there is a valid reason behind the request.
“What I can tell you is the ATO has said that if you’re 54, don’t bother writing to us saying: ‘Can I get an extension so I can be [age] 65 when I make the contribution?’ The ATO will not entertain that idea,” Cullen stressed to attendees of a recent practitioner webinar.
He pointed out an extension request might be granted in a situation where a relevant residence is sold by a deceased estate where the SMSF member is not the executor and the event of death delays the proceeds from the property sale.
The ATO itself has detailed a situation where an extension to the 90-day timeframe would be granted.
To this end, it has cited a situation where an individual has sold the family home in order to move into a retirement village. However, the retirement village has only just been built and final approvals from council took longer than expected, resulting in delayed settlement for the person looking to make a downsizer contribution.
The regulator indicated if the super fund member in this situation applies for an extension because they are reticent to make the contribution before settlement to ensure they have enough money to do so, the request would be granted.
