One good change the federal government has made to superannuation in the last May budget was to allow people over 65 years of age to downsize and sell their home (only if they owned it for more than 10 years) and place up to $300,000 each (or for a couple - $600,000) of the sale proceeds into super. Mind you, this opportunity does not apply to investment properties.

Normally, those who are over 65 years of age can normally put into super a maximum of $100,000 per year (it used to be $180,000/year before 1 July 2017) as non-concessional member contributions. By downsizing their home, this restriction does not apply. You can put in the $300,000 without any problem as long as it is from the sale of your home. Also, the normal work test applicable to people aged over 65 years will not apply in this situation.

This new strategy is seen as a bonus for those who haven’t been able to accumulate much in super during their working lives due to various reasons and have large homes which may no longer suit their living requirements anymore, mainly because their kids may have left the nest and only mum and dad remain in the home.

The benefit of downsizing is to lock away some extra money in a tax free environment inside super which can be used to pay a tax-free income stream or even lump sums when needed. However, this extra money in super will be counted towards the assets test for Centrelink purposes, so one needs to bear this mind when contemplating such a strategy. Good advice should always be sought from a financial adviser rather than doing it without advice. One may get a better outcome in terms of extra income in their hands by adopting this strategy whilst losing a portion of their Centrelink benefits.