A home sale can put $300,000 into super outside the caps. For an SMSF, three facts decide whether the fund can keep it

Up to $300,000 per person can move from the sale of a home into super as a downsizer contribution, and it does so outside almost every gate that constrains ordinary contributions. There is no work test. There is no upper age limit. It does not count towards the non-concessional cap, and the total super balance test that switches that cap off at $2.1 million from 1 July 2026 does not apply at the point the downsizer contribution is made. A member already above the threshold, who cannot make a dollar of ordinary non-concessional contribution, can still make this one.

That freedom is why the downsizer is often described as the one contribution the caps cannot touch. For a self-managed fund it is also why the real risk sits somewhere the eligibility rules never mention: in the sequence of dates and documents that decides whether the fund is allowed to receive the money and keep it.

It is not a non-concessional contribution

The starting point is what a downsizer contribution is not. It is its own category under section 292-102 of the Income Tax Assessment Act 1997, not a non-concessional contribution that happens to be exempt. That is why the $2.1 million total super balance test does not gate it and why it does not consume any part of the $130,000 annual non-concessional cap or a bring-forward period.

The eligibility conditions are fixed and worth stating plainly. The member must be 55 or older when the contribution is made. The home must have been owned by the member or their spouse for at least 10 years before the sale, be in Australia, and not be a caravan, houseboat or mobile home. The sale must qualify, fully or partly, for the main residence capital gains tax exemption. And the member must not have made a downsizer contribution from an earlier sale; it is available once. A spouse who was never on the title can still contribute up to their own $300,000 from the same sale, because eligibility runs through ownership by either partner.

The three facts the fund controls

Eligibility is about the member and the house. Acceptance is about the fund, and three facts decide it.

The first is the 90-day clock. The contribution must reach the fund within 90 days of the member receiving the sale proceeds, which is generally settlement, not the contract date. Miss the window without an ATO extension granted beforehand and the amount is no longer a downsizer contribution. It does not fail quietly. It falls back to being an ordinary contribution, tested against caps and age rules the member may not meet, and a fund that cannot accept it on those terms has to return it.

The second is the form. The Downsizer contribution into super form (NAT 75073) must be given to the fund before or at the same time as the contribution is made. A form that arrives afterwards cannot be cured. The order of events is the substance of the rule, not paperwork tidiness: money first, form later, means the contribution was never a valid downsizer contribution.

The third is the deed. The fund's trust deed has to allow it to accept a downsizer contribution. Most modern deeds do, but a fund running on an older deed cannot assume the power is there, and a contribution the deed does not authorise is a problem the auditor will raise regardless of the member's eligibility.

The part that arrives next year

The downsizer is outside the caps going in, but it does not stay outside your balance. The amount is included in the member's total super balance when the fund reports the 30 June figure for that year. That reported balance is what next year's non-concessional cap and bring-forward tier are measured against, so a $300,000 contribution can move a member into a lower tier, or a nil cap, for the following year. We set out how those tiers move at smsfcore.com/blog/bring-forward-tiers-fy2026-27. If the contribution is later used to start a retirement-phase pension, it also counts towards the transfer balance cap, which indexed to $2.1 million on 1 July 2026.

What the audit tests

Every SMSF is examined each year by an approved auditor, and the ATO sets out exactly what they look for on a downsizer contribution: that the deed allowed it, that the member had reached 55 when it was made, that the form was received by the fund before or at the time of the contribution, that the $300,000 per-member limit was not exceeded, and that no earlier downsizer contribution had been made. Each of those is a document with a date on it. The defence, as with related-party dealings, is contemporaneous evidence kept as the events happen rather than reconstructed at year end. It is the same habit we describe for franking at smsfcore.com/blog/franking-evidence-smsf-audit.

What we track

SMSF Core records each member's contributions as they land, tags a downsizer contribution as its own type, and holds the settlement date, the form date and the 90-day window against it, so the sequence is visible during the year rather than tested at audit. The contribution then flows into the member's running total super balance, where next year's caps read it. There is a sample fund at app.smsfcore.com/demo if you want to see the contribution and balance view with data already in it.

SMSF Core is an information tool, not a licensed financial service. Whether a particular sale and contribution meet the downsizer conditions depends on the facts of your fund. Talk to a licensed adviser or your accountant before acting.