From 1 July 2018, the Australian Federal Government introduced a new contribution cap - the downsizer contribution cap.
The scheme was announced as part of the 2017/2018 Federal Budget and has been designed for people downsizing their main residence to contribute funds into their superannuation fund.
Facts and conditions to consider:
Gerrald and Louise have just sold their family home for $2M. They are both aged over 65 and have owned their home from 20 years. The entire capital gain is tax-free as their main residence. They are buying into an aged care facility, using $1M of the sale proceeds to fund the purchase. They can each put $300,000 into superannuation within 90 days of settlement of the sale using the downsizer contribution cap.
Example Two: more complex example
Emma sells a property that has been rented out by her for the last nine years. After she split from her first husband 12 years ago, she lived in the property for the next three years and so the capital gain qualifies as partly exempt from CGT under the main residence rules. The sale proceeds are $900,000. Emma can contribute $300,000 into superannuation using the downsizer contribution cap for herself, and also for her current spouse, Bill. Bill has never lived in the property (both are aged over 65).
In both examples, it does not matter how much they already have in superannuation, or whether they are gainfully employed at all.
Want more information about the downsizer contributions scheme?
Visit the ATO website here
Note: The downsizing and super contributions proposal was announced as part of the 2017/2018 Federal Budget (May 2017 Budget). The proposal became law on 13 December 2017.
Cooper Grace Ward Lawyers provided the examples at https://www.cgw.com.au/publication/downsizer-contributions-need-know-new-contribution-cap/