Super Newsletter
Downsizer Contributions: What the Latest ATO Data Reveals
The Australian Taxation Office (ATO) has released updated statistics on downsizer contributions, showing how Australians are using this strategy to boost their retirement savings. Since its introduction in July 2018, the scheme has allowed eligible individuals to contribute up to $300,000 from the sale of their home into superannuation, without impacting their non-concessional contribution caps.
Key Trends Over Seven Years
Strong Uptake Since Launch: In 2018–19, 6,500 individuals contributed $1 56 billion By 2021–22, participation peaked at 19,700 individuals contributing $5.06 billion.
Recent Years Show Stability: Contributions have remained steady:
- 2022–23: 15,900 individuals, $4.24 billion
- 2023–24: 16,900 individuals, $4.49 billion
- 2024–25: 15,800 individuals, $4 17 billion (data still being finalised)
Total Impact: Since inception, over 98,500 Australians have contributed $25 3 billion to super via downsizer contributions.
Eligibility Requirements
To make a downsizer contribution, you must:
Be aged 55 or older at the time of contribution (age reduced from 65 to 60 in July 2022, and to 55 from January 2023)
Have owned the home for at least 10 years prior to sale.
The home must be in Australia and eligible for the main residence exemption under CGT rules.
Make the contribution within 90 days of settlement.
Submit the ATO Downsizer Contribution Form to your super fund before or at the time of contribution.
You can only use this measure once, and the contribution does not count towards your nonconcessional cap.
Why This Matters
Downsizer contributions remain a powerful tool for:
Boosting retirement savings without breaching contribution caps.
Speakwithyoursuperteamtoensure complianceandtooptimiseyoursuperposition.
Downsizercontributionshaveaddedbillionsto Australians’retirementsavings Witheligibilitynow startingat55,thisstrategyismoreaccessiblethan ever,makingitanidealtimetoreviewyourplans.
Penalty Rates Are Higher
From 7 November 2024, the value of a penalty unit increased to $330. This affects all administrative penalties, including late lodgement of returns. For example:
ATOPenaltiesAreIncreasing–AndRemissionIsHarderThan Ever
Individuals: Up to $1,650 per overdue document.
TheATOhasincreaseditscomplianceactivityin 2025,andpenaltiesforlatelodgementandnoncompliancearerisingacrosstheboard.For businesses,individuals,andSelf-ManagedSuper Funds(SMSFs),themessageisclear,proactive complianceisessential
SMSFs: Failure to lodge an annual return can attract up to $1,650 per return, and trustees may also face personal administrative penalties under the Superannuation Industry (Supervision) Act (SIS Act).
Interest Charges Are Punitive
ThishasbeenfuelledbytheATO’sgrowingdebt bookwitha28percentincreaseintheamountof taxdebtbeingtransferredtotheinsolvency category(from$14.3billionto$18.4billion)and thisiscoupledwithincreasingdirectorpenalty noticesforunpaidliabilities.TheATO2025report highlightssmallbusinessasrepresentingthe majorityofcollectibledebt,establishingakeyfocus areafortheATO.
The General Interest Charge (GIC) accrues at over 10% per annum, compounding daily From 1 July 2025, GIC and Shortfall Interest Charge (SIC) are no longer be tax deductible, increasing the real cost of using ATO debt
Penalty Remission Is Increasingly Difficult
Historically and particularly during COVID, the ATO was lenient, approving over 90% of penalty remission requests. That era appears to be over. Approval rates have dropped to around 70%, and the ATO is applying strict criteria. For SMSFs, remission is particularly challenging because breaches often involve trustee obligations under superannuation law.
SMSF-Specific Risks
The ATO’s 2025–26 compliance plan highlights SMSFs as a major focus area. Common issues include:
Outstanding Annual Returns: Lodgement is the most critical compliance obligation. Late lodgement can:
Trigger Failure to Lodge penalties (up to $1,650 per return).
Change your fund’s status on Super Fund Lookup to “Regulation Details Removed”, blocking employer contributions and rollovers.
Lead to loss of tax concessions, exposing the fund to a 45% tax rate instead of 15%.
Illegal Early Access: Severe penalties, additional tax, and trustee disqualification
Commutation and Release Authorities: Failure to comply within 60 days can remove tax exemptions on earnings
Record-Keeping Breaches: Penalties range from $3,300 for omitted trustee minutes to $19,800 for lending to members
What Your Should Do
Prioritise Lodgement Deadlines: For SMSFs, key dates are 28 February 2026, and 15 May 2026 depending on your circumstances.
Engage Early: If you identify a breach, use the ATO’s voluntary disclosure service before an audit.
Maintain records: Trustees must keep minutes and compliance documentation for at least 10 years.
Seek advice promptly: Penalty remission is far more likely if you act before the ATO intervenes
Where the penalties are higher, interest is more expensive, and the ATO is less forgiving, staying on top of your SMSF obligations is the best way to avoid unnecessary costs.
