In a recent meeting of the Superannuation Administration Stakeholders Group, the industry representatives requested further advice, from the ATO, on the action required for ‘downsizer’ contributions that are subsequently found to be ineligible contributions. Currently there is a 13 month turnaround period for the ATO to determine whether the contributed amounts are ‘ineligible’, and this delay is exacerbating the practical problems.
The industry representatives requested further advice, from the ATO, on subsequent actions that funds are required to take, in terms of returning the money to members (including where the account has been converted to an income stream) and related reporting obligations.
The ‘downsizer’ regime started on 1 July 2018 under the Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No 1) Bill 2017, which provides an exemption, from existing superannuation contribution limits, for “downsizing” super contributions. ‘Downsizer’ contributions are those made by individuals, aged 65 or more, who sell a home they have owned, for at least 10 years. The exemption is for amounts up to $300,000. (See related Tax Technical Article.)
FJM 3.11.18
[ATO website: Meeting Minutes; LTN 200, 17/10/18; Tax Month – October 2018]
CPD questions (answers available)
- From what date have ‘downsizer’ contributions been possible?
- Is the ‘downsizing’ condition, that individuals, aged 65 or over, have sold a house they’ve owned for at least 10 years?
- What is the limit to contributions, under this regime?
- How long is the ATO taking to determine eligibility of contribution for the downsizer exemptions from contribution limits?
- Was the industry group asking the ATO for advice about how to treat contributions that are ineligible and what associated reporting might be required (or advisable)?
