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Edited version of private advice

Authorisation Number: 1051993261061

Date of advice: 14 June 2022


Subject: Downsizer eligibility for land more than 2 hectares


Are you eligible to make a downsizer contribution into superannuation, utilising proceeds from the sale of farm property which exceeds the value attributable to the principal residence and surrounding area of 2 hectares?



This advice applies for the following period:

Year ending 30 June 20XX

The arrangement commences on:

1 July 20XX

You and your spouse acquired the property (the Property) as joint proprietors in 19XX.

Your date of birth is xx xx xxxx.

The Property has been your principal residence since 19XX.

The Property comprises of XX acres of land and the farming area was used for primary production business to produce assessable income.

You sold the Property on xx xx xxxx and the interest in the Property is sufficient to fund the maximum Downsizer contribution of $XXX.

The proceeds from the sale of the Property were exempt or were partially exempt from capital gain tax (CGT) under the main residence exemption.

The Property has been your principal residence for more than XX years.


You have not previously made downsizer contribution.

You will make the downsizer contribution within the prescribed time.

You provide the relevant complying superannuation fund with the Downsizer contribution into super form (NAT 75073) either before or at the time of making the downsizer contribution.

Detailed reasoning

The Commissioner of Taxation has published Law Companion Ruling 2018/9 - Housing affordability measures: contributing the proceeds of downsizing to superannuation (LCR 2018/9) which describes how the Commissioner will apply the downsizer requirements in section 292-102 of the Income Tax Assessment Act 1997 (ITAA 1997).

Paragraph 44 of the LCR 2018/9 states that to be eligible for the downsizer contribution, the property must be the individual's main residence for the purposes of main residence exemption. The capital gain or loss incurred upon disposal of the property must be wholly or partially disregarded because the property has been treated as the individual's main residence.

Paragraph 47 of the LCR 2018/9 explains that a partial main residence exemption may apply to a property that is on land greater than two hectares and was used to produce assessable income for a period of time during the ownership.

Paragraph 50 of the LCR 2018/9 then states that for the purpose of making a downsizer contribution, it is not relevant how the main residence exemption is calculated or apportioned. The downsizer contribution amount available relates to the proceeds from the disposal of the interest in a dwelling and does not depend on the extent to which the amount is exempt as a main residence for GST.

So, once it is established that the Property was subject to full or partial main residence CGT exemption the entire sale proceeds from the disposal of the property can be utilised to finance the downsizer contributions.

The maximum amount of the contributions is the lesser of either $300,000, or the proceeds from the sale of the interests in the dwelling.

You advised us that the Property was your main residence for more than XX years, was subject to partial CGT exemption as it exceeded 2 hectares and was sold for a disclosed amount.

Based on this information you are eligible to make the downsizer contribution up to the maximum amount of $300,000 providing you also meet all the other condition prescribed under section 292-102 of the ITAA 1997.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-130

Income Tax Assessment Act 1997 Section 292-102

Income Tax Assessment Act 1997 Subsection 292-102(1)

Income Tax Assessment Act 1997 Subsection 292-102(2)

Income Tax Assessment Act 1997 Subsection 292-102(3)

Income Tax Assessment Act 1997 Subsection 292-102(8)