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  • Sufficient and appropriate audit evidence to support the acceptance of downsizer contributions

    From 1 July 2018, members of self-managed super funds (SMSFs) aged 65 years or older can make downsizer contributions into their fund of up to $300,000 from the proceeds of selling their main residence provided certain eligibility requirements are met.

    When conducting the fund’s annual audit, approved SMSF auditors need to obtain sufficient and appropriate audit evidence to verify the fund has complied with the downsizer contribution requirements.

    At a minimum, we expect auditors to check for and obtain evidence of the following:

    • the member is aged 65 years or older at the time the contribution was made
    • a tax file number (TFN) for the member has been provided
    • the SMSF trust deed to ensure the fund can accept a downsizer contribution
    • an approved Downsizer contribution into super form (NAT75073) from the member that has been signed and dated. The member is able to use a form provided by the fund however, to be in the approved form, it must contain a number of key elements which are listed on our website
    • the contribution was made either at the same time or after the form was received by the fund and that 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.

    We do not require auditors to check a member has met any other downsizer eligibility requirements as they can rely on the member making a correct declaration on the approved form (NAT75073).

    Contributions that do not meet the eligibility criteria as a downsizer contribution may be able to be accepted by the fund as a personal contribution for the member. Where the contribution does not satisfy the acceptance rules under regulation 7.04 of the Superannuation Industry (Supervision) Regulations 1994, trustees are required to ensure the contribution is returned by the fund. The contribution must be returned within 30 days of the fund becoming aware that the amount received did not meet the eligibility criteria (where the SMSF trust deed allows this).

    A contravention of regulation 7.04 occurs where the contribution is not returned within 30 days. The auditor will be required to:

    • report the contravention to us via an Auditor/actuary contravention report (where the reporting criteria is met)
    • notify the trustees via a management letter, and
    • modify Part B of the SMSF Independent Auditor’s Report (IAR).

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      Last modified: 27 Apr 2021QC 65463