It’s often referred to as Australia’s best-kept superannuation secret, but it’s been around for almost three years.

Back on New Year’s Day, the Australian Government lowered the eligible age for making a downsizer contribution to superannuation from 60 to 55 years. The reduction allows eligible Australians to contribute more to their superannuation earlier, enabling them to retire with greater financial security, thanks to the power of compound interest.

If you’re aged 55 or older, you can now make a one-off downsizer contribution to your super account up to $300,000 (or $600,000 per couple) using proceeds from the sale of your home.

A downsizer contribution is a non-concessional contribution (that is not subject to extra tax) and doesn’t count towards the annual non-concessional contribution cap (currently $110,000). It also won’t affect your total superannuation balance (TSB) until it’s recalculated at the end of the financial year.

However, downsizer contributions do count towards your TSB, which increased to $2 million on 1 July 2025 (up from $1.9 million in 2024/25). The TSB limits the amount you can transfer into the retirement phase of super, and IT helps determine your eligibility for any age pension support.

It’s worth noting that the Government’s proposed Better Targeted Superannuation Concessions (BTSC), also known as the Division 296 tax, has introduced additional confusing caps.

This latest measure, announced in October by the Treasurer, applies an additional tax of 30% on the proportion of earnings from super balances between $3 million and $10 million, and 40% on earnings linked to balances above $10 million. The good news is that only 80,000 Australians have super balances exceeding $3 million[i], while these changes are still under consultation and are not slated to take effect until the 2026–27 financial year at the earliest.

Despite the complexity of Australia’s superannuation system, the one-off downsizer contribution offers Australians aged 55 and over an excellent opportunity to right size their home, boost their retirement savings in a tax-effective way, and free up housing stock for the next generation of buyers.

Of course, it’s essential to seek advice from your accountant or financial adviser before taking any action.

[i] https://australiainstitute.org.au/post/do-you-have-3-million-in-super-me-neither-these-changes-will-actually-help-you/