More people eligible for the super downsizer December 1st, 2022
This week, the Senate passed laws that make big changes to super downsizer rules and they coincide with a relaxation in the rules for pensioners returning to the workforce. The reduction in the super-downsizer eligibility age from 60 to 55 years of age!
The changed rules are set to apply from January 1, making it possible for those who sold their property in the last few weeks to take advantage of the new regime.
It means a couple could dump up to $1.32 Million into super in a single day.
Under the change, people aged 55 or over at the time of the contribution, can make a once-in-a-lifetime superannuation contribution of $300,000 within 90 days of the settlement of an eligible property.
That means a home you have lived in for a ten-year period and classified as your “primary dwelling”.
A person who settles on their home one December 3rd and turns 55 on January 26 next year, could make use of the concession from their birthday up until March 3 2023.
There is no upper age-limit to make use of the super downsizer rules.
Significantly, these contributions don’t count towards your concessional or non-concessional contribution caps.
Under the current contribution rules, a person can make a non-concessional contribution of up to $110,000 in a single year. But under special “bring-forward” concessions, you can elect to use the next two years of contributions this year, to increase the contribution to $330,000.
If a couple selling their family home made full use of the super-downsizer and bring-forward rules, they could each deposit $660,000 or a combined $1.32 Million in a single day.
That might be limited however, if your Total Superannuation Balance (TSB) is close to your Transfer Balance Cap (TBC) limit of $1.7 Million per person. TSB includes the money you have invested in Super accumulation and retirement phase such as an account based pension.
It might be helped by putting in the non-concessional money first and then the downsizer. That’s because the rules restricting non-concessional contributions don’t count with downsizer. You can put downsizer money in, even if you are over the $1.7 Million limit.
In other rule changes targeting seniors, and Age and Department of Veterans pensioners who elect to return to the workforce, can effectively put their Age pension in furlough for up to two years.
People who come off the pension because of the income means test, will be able to re-apply for the pension using a short-cut application process.
Currently, a person who stops receiving a pension needs to start a completely new application for a pension, once thirteen weeks have passed.
Similarly, pensioners who have returned to work will be able to retain their pension concession card for up to 2 years as well.
The Association of Independent Retirees has previously estimated that the pension concession card could be worth up to $7,000 per year in state and federal government discounts on services and utilities.
Base knowledge for this information is contained in Netplan Session 3 Packages (Superannuation) and Netplan Session 4 Packages (Centrelink).