Question 1

Hello Craig, I am 61 and planning to retire this year. My wife is 56. We have a SMSF and have three properties in it and some shares. I wasn’t planning on getting a government pension as I am planned to earn enough in our SMSF for us to enjoy our later years. To do this I plan to sell our family home and downsize. I hope to have enough left over from the downsize to put $300K each as a downsizer contribution into super and a further $110K each as non-concessional before this financial year and purchase a fourth investment property. Then deposit another $110K each per year until my wife reaches the preservation age of 60 for her. My question is: With this strategy am I still able to deposit a final $330K each ($110K x 3 years pay it forward) in our last year before we retire to top up our share portfolio. Hopefully the income earnt through the SMSF will be sufficient so we don’t need to sell anything to make up the minimum drawdowns each year that are required by the ATO?

Yes, the ‘preservation age’, which is generally the earliest age at which you can access your super, is now 60 for everyone.

Broadly what you have outlined is correct.

You can both use the downsizer rules to contribute $300K to super so long as you have held the home for 10 years-plus.

In addition, you can contribute $120,000 to super as a non-concessional contribution each financial year (up from $110,000 as at July 1, 2024).

You can use the bring-forward rule to contribute three years’ worth of annual contributions in one go, i.e. $360,000.

As you have said you need to meet minimum pension payments each year. That’s very important when you have a high percentage of your balance tied up in illiquid assets like property.

Additionally, to make non-concessional contributions to super you still need to check your ‘total super balance’ each year to ensure you can still contribute.

As per the below table shows:

Question 2

The following two questions relate to the superannuation downsizing rules and have been answered together.

(a) My wife and I used all our super and closed the account. If we downsized and used the new rules about putting the excess funds into super, would we be able to open a new super fund. We are both over 75.

(b) I read that you can put money into super under downsizing rules even if you are over 75. I only have a ABP (account-based pension) super account. Can I contribute any leftover money into my ABP?

Yes, so long as you 55 or over, you can make a downsizer contribution to super.

There is no maximum age.

The maximum amount you can contribute to super under this rule is $300,000.

If you are a member of a couple you can both make a $300,000 downsizer contribution to your respective super funds.

• A few other things to note:• You have to have owned the home for at least 10 years
  • The home, at least for part of its ownership, must have been your main residence, i.e. it can’t just have been an investment property or holiday home
  • You must make the contributions within 90 days of the change of ownership (settlement date). Sometimes the ATO will allow an extension on the 90 days if you apply
  • You can only make one downsizer super contribution in your lifetime.

The funds first have to be contributed to super.

They cannot go straight into an account-based pension. There is no problem in opening a new super fund to make the contributions if you no longer have one.

Craig Sankey is a licensed financial adviser and head of Technical Services and Advice Enablement at Industry Fund Services.

Disclaimer: The responses provided are general in nature, and while they are prompted by the questions asked, they have been prepared without taking into consideration all your objectives, financial situation or needs.

Before relying on any of the information, please ensure that you consider the appropriateness of the information for your objectives, financial situation or needs. To the extent that it is permitted by law, no responsibility for errors or omissions is accepted by IFS and its representatives.