Leveraging Lump‑Sum Super Deposits (e.g., Downsizer, Inheritance) for 30–55 Year‑Olds.
For Australians aged 30 to 55, sudden lump sums—whether from a house sale or inheritance—represent an opportunity to supercharge retirement savings. Rather than leaving these funds in everyday accounts, strategic contributions to super offer unique tax and wealth benefits. Below, we explore two key strategies: downsizer contributions and inheritance recontributions, detailing the rules, benefits, and planning steps for each.
Downsizer Contributions from Home Sales
Selling a long-held family home triggers the downsizer contribution option, a government incentive encouraging older Australians to reinvest equity into super. If you're 55 or older and have owned your home for at least ten years, you can contribute up to $300,000 from sale proceeds into your super. Couples can contribute a combined $600,000. ¹
These contributions are exempt from concessional and non-concessional caps, making them an exceptional wealth-building avenue². They do, however, count toward the Transfer Balance Cap, so if you’re approaching retirement, you should review how this contribution impacts your tax-free pension eligibility³.
To qualify, you must make the contribution within 90 days of settlement and submit the ATO’s form NAT 75073 to your fund⁴. If unavoidable circumstances delay your contribution, you may request an extension—but it must be before the deadline passes.
Inheritance Recontribution Strategies
Inheritance windfalls can also be leveraged in super—but with stricter rules. Once you receive inherited money, you may contribute it as either concessional or non-concessional, depending on your age and caps. Concessional contributions are taxed at 15%, and when combined with unused cap space, offer optimal tax efficiency. Non-concessional contributions follow regular after-tax rules, subject to the bring-forward provision.
A more advanced technique known as recontribution strategy involves withdrawing money from your super and recontributing it, effectively converting taxable components into tax-free ones. This strategy is most effective for individuals with significant balances who want to reduce tax liabilities for beneficiaries. Implementing this strategy requires care: you must receive the withdrawal externally (not by internal transfer) and then recontribute within allowable caps.
Planning & Compliance Requirements
Whether using downsizer or recontribution strategies, planning is critical. For downsizer contributions, ensure you:
Meet the age and home ownership test.
Pay the funds into super within 90 days.
Submit the correct ATO form before or with payment.
For inheritance and recontribution strategies, check:
Contribution cap limits, including bring-forward rules for non-concessional deposits.
Conversion of taxable components through withdrawal and recontribution must follow formal external processing.
Remaining total super balance to stay under the Transfer Balance Cap for pension phase benefits.
Who Gains the Most?
In the 30–55 age bracket, younger individuals often benefit more from inheritance strategies, where salary and employment status typically support concessional contributions. Downsizer contributions are more accessible for older or semi-retired individuals looking to retire in place but still grow their super.
For those with significant super balances and estate planning goals, recontribution strategies offer a path to maximise tax efficiency across generations.
Final Thoughts
Both downsizer contributions and inheritance recontribution strategies provide powerful, compliant ways to boost super with lump sums. Downsizer allows large equity transfers tax-free, while inheritance recontributions can convert taxable funds into more favourable tax profiles. Each requires careful navigation of ATO rules, timely submissions, and cap awareness.
With the right advice and planning, Australians in their 30s to 50s can leverage these strategies to accelerate retirement savings and optimise estate outcomes, all within the bounds of current regulation.
Note: Always confirm your total super balance and current year contribution limits before proceeding, as exceeding caps may trigger additional tax obligations.
Disclaimer: The information provided in this blog is for general informational purposes only and does not constitute financial, tax, or investment advice. We recommend speaking with a qualified financial adviser before making any decisions regarding your superannuation. Every individual’s financial situation is unique, and personalised advice is essential to ensure the best outcome for your specific circumstances.
