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Provision for Downsizing

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Newbie

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I have a client who is 66 and his wife is 60. Together they are the trustee's for their SMSF. The wife owns a home in her name. They are looking to sell the home and contribute $300,000 of the sale to their SMSF through a contribution made by him. I'm inclined to believe that this isnt possible as the home is in her name. Is this correct? 

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ATO Certified

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Hi @Keone

 

Welcome to our Community.

 

@Bruce4Taxis correct. Your client will be able to make a downsizer contribution as long as they meet all of the eligibility criteria.

 

You can have a look at the criteria by checking out the eligibility for the downsizer measure section of the downsizing contributions into superannuation page on our website.

 

Based on the information that you have provided, your client will meet the age requirement as they are 65 years of age or older. Their spouse's age isn't relevant (unless they want to make a downsizer contribution too).

 

They will also meet the ownership requirement because their wife owns the home. The fact that they don't have an ownership interest doesn't matter as only one member of a couple has to have an ownership interest in the home to meet this requirement.

 

As @Bruce4Tax has said, as long as your client's spouse has owned the home for 10 years or more, the length of ownership requirement will also be met.

 

Regarding the rest of the requirements, you will need to have a chat with your client to determine whether they will meet the other eligibility criteria (e.g. the CGT main residence exemption requirement).

 

Also, you can read our definition of spouse by checking out Section 995-1 of the Income Tax Assessment Act 1997 which can be found in our legal database.

 

Hope this helps.

 

Thanks,

 

ChrisR

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Devotee Registered Tax Practitioner

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As long as all the conditions are met, I don't see why he can't make the contribution.

 

1.  The age condition is for the contributor, not the spouse  

 

2.  The 10 years main residence test must be met by the spouse, as owner

 

3.  They need to be married, I believe, for at least 2 years

 

GDN 2018/2

 

 

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Best answer

ATO Certified

Community Support

Replies 0

Hi @Keone

 

Welcome to our Community.

 

@Bruce4Taxis correct. Your client will be able to make a downsizer contribution as long as they meet all of the eligibility criteria.

 

You can have a look at the criteria by checking out the eligibility for the downsizer measure section of the downsizing contributions into superannuation page on our website.

 

Based on the information that you have provided, your client will meet the age requirement as they are 65 years of age or older. Their spouse's age isn't relevant (unless they want to make a downsizer contribution too).

 

They will also meet the ownership requirement because their wife owns the home. The fact that they don't have an ownership interest doesn't matter as only one member of a couple has to have an ownership interest in the home to meet this requirement.

 

As @Bruce4Tax has said, as long as your client's spouse has owned the home for 10 years or more, the length of ownership requirement will also be met.

 

Regarding the rest of the requirements, you will need to have a chat with your client to determine whether they will meet the other eligibility criteria (e.g. the CGT main residence exemption requirement).

 

Also, you can read our definition of spouse by checking out Section 995-1 of the Income Tax Assessment Act 1997 which can be found in our legal database.

 

Hope this helps.

 

Thanks,

 

ChrisR