Checking downsizer contribution compliance
Members of self-managed superannuation funds (SMSFs) can make downsizer superannuation contributions of up to $300,000 from the proceeds of selling their main residence.
When conducting an audit of an SMSF, SMSF auditors need to obtain sufficient and appropriate audit evidence to verify the fund has complied with the downsizer contribution requirements.
Auditors should check for and obtain evidence of the following:
- the SMSF trust deed allows the fund to accept a downsizer contribution
- the member had reached the following eligible age at the time the contribution was made, noting there is no maximum age limit
- from 1 January 2023, 55 years old or older
- from 1 July 2022, 60 years old or older
- from 1 July 2018, 65 years old or older
- the member provided a tax file number (TFN)
- either an approved
- Downsizer contribution into super form
- form provided by the fund containing the key elements in the Downsizer contribution into super form
- the member signed and dated the approved form
- the contribution was made either at the same time or after the form was received by the fund and the contribution does not exceed the $300,000 cap per member
- the member has not previously made downsizer contributions to the fund from a previous sale of property
- the contribution has been correctly allocated to the member's account.
You don't need to check if a member has met any other downsizer eligibility requirements. You can rely on the member's declaration "I meet all of the eligibility requirements to make a downsizer contribution" in the Downsizer contribution into superannuation form to confirm that a member has met other downsizer eligibility requirements.
Contributions that aren't downsizer contributions
Contributions that don't meet downsizer contribution requirements may still be accepted by the fund as personal contributions for the member. This is provided the contributions meet the acceptance of contribution rules in regulation 7.04 of the Superannuation Industry (Supervision) Regulations 1994.
If the contribution doesn't meet the rules, a contravention of regulation 7.04 occurs when the contribution is not returned within 30 days.
You must:
- report the contravention by completing the auditor contravention report (where the reporting criteria are met)
- notify the trustees with a management letter, and
- modify Part B of the Self-managed super fund independent auditor’s report.