• Must be located in Australia
• Must have been owned by you or your spouse for at least 10 years
• Must qualify for a full or partial CGT main residence exemption

You do not need to be living in the property at the time of sale, provided it has qualified as your main residence at some point during ownership.

Benefits of the contribution:

Contribute Outside Normal Caps

Downsizer contributions do not count towards concessional or non-concessional contribution caps.

No Work Test Required

There is no requirement to meet the work test.

Available Even With High Super Balances

Unlike other contribution types, downsizer contributions are not restricted by your total super balance.

Significant Contribution Potential

You can contribute up to $300,000 each (up to $600,000 per couple), limited to the gross sale proceeds.

Retirement Planning Flexibility

This strategy can assist with tax planning, wealth transfer, and the improvement of retirement income streams.

Key Eligibility Requirements

To qualify, you must:

• Be 55 years or older at the time of contribution
• Have owned the property (or your spouse has) for at least 10 years prior to sale
• Sell a property located in Australia
• Ensure the sale qualifies for at least a partial main residence CGT exemption
• Make the contribution within 90 days of receiving the sale proceeds
• Provide your super fund with the approved ATO Downsizer Contribution Form before or at the time of contribution
• Have not previously made a downsizer contribution

Common Misconceptions

Does the property need to be fully CGT exempt?
No. A full exemption is not required. A partial main residence exemption may still qualify.

Do I need to be living in the property at settlement?
No. The property does not need to be your principal residence at the time of sale.

Can only the owner contribute?
Not necessarily. A spouse who is not on title may still be eligible, provided all other conditions are satisfied.

Can I contribute more than the sale proceeds?
No. The contribution is capped at the lesser of $300,000 per person or the gross sale proceeds.

Can I contribute part now and top it up later?
No.
Downsizer contributions can be made only once per person and must generally be made within 90 days of receiving the sale proceeds.

If you choose to contribute less than your maximum eligible amount (for example, $100,000 instead of $300,000), you cannot later return and contribute the remaining amount once the time limit has passed.

You may split the contribution into multiple payments, but they must all be made within the allowed timeframe.

Because this is a once-in-a-lifetime opportunity, it is important to consider the full contribution amount before proceeding.

Important Considerations

• Downsizer contributions are not tax-deductible
• Once contributed, funds remain subject to super preservation rules
• Contributions may impact Age Pension eligibility
• Vacant land generally does not qualify
• Pre-CGT properties have specific eligibility considerations

Professional advice is strongly recommended before proceeding.

We’re Here to Help

Downsizer contributions can be a valuable retirement planning tool when structured correctly.

If you are considering selling your home and would like to explore whether a downsizer contribution suits your circumstances, please contact our team for tailored advice.

Some examples from the Australian Tax Office

(Assuming all other eligibility requirements are met — including age 55+, 10-year ownership and contribution within 90 days of settlement.)

For more information, visit the ATO’s website.

Please get in touch with us if you would like advice concerning the above or if you have any questions.

The ATO has recently signalled a much stronger focus on holiday homes and residential properties that are used partly for private holidays and partly for rental income. This change affects many people who own coastal homes, farm stays, Airbnb-style properties or seasonal rentals.

The ATO’s concern is simple. Many taxpayers claim significant deductions for a property that, in practice, is mainly used by the owner, family or friends for private enjoyment. As a result, the ATO has released new draft guidance to clarify how these properties will be treated from now on.

This includes:

• TR 2025/D1 – a draft taxation ruling setting out the general rules for rental property income and deductions
• PCG 2025/D6 – a practical compliance guideline explaining how owners must apportion expenses for properties with both private and income-producing use
• PCG 2025/D7 – a guideline explaining when a holiday home may be considered a “leisure facility” under section 26-50, which can deny major deductions

These drafts represent the ATO’s modern approach to holiday homes and signal how compliance activity will be targeted.

When Is a Property Treated as a Holiday Home?

A holiday home is generally a residential property that is sometimes rented out commercially, but is also used for private holidays. The ATO is particularly concerned where:

• The property is rarely genuinely available for rent
• it is listed at inflated prices that discourage bookings
• School holidays and peak seasons are blocked out for family use
• Family and friends stay free or at heavily discounted rates

In these situations, the ATO is likely to question whether the property is truly held for income-producing purposes.

Apportioning Deductions: New Expectations from TR 2025/D1 and PCG 2025/D6

Where a property has mixed use, income and expenses must be divided between private days and income-producing days. The draft guidance confirms:

• A time-based method is generally expected. Owners must calculate the number of days the property was genuinely available for commercial rent and the number of days it was actually rented to paying guests.
• If only part of the property is rented, the ATO expects both time and area apportionment.
• Owners can adopt a different approach, but they must demonstrate that their method is fair and reasonable.

This means deductions can no longer be claimed in full. They must accurately reflect the reality of how the property is used.

When a Holiday Home Becomes a “Leisure Facility”

The most significant change appears in PCG 2025/D7, which aligns with sections 26-50 of the tax law. The ATO may treat the property as a leisure facility if it is not mainly held or used to produce assessable income.

If that happens, many major deductions will no longer be allowed, such as:

• interest on loans
• council rates
• land tax
• repairs and maintenance
• insurance
• some utilities

Only expenses that directly relate to earning income, such as cleaning after guests or advertising fees, may still be deductible. This can drastically change the tax outcome for an owner.

The ATO’s Risk Zones: Green, Amber and Red

To help owners understand how their situation might be assessed, the ATO has introduced a traffic-light model.

Common behaviours the ATO is now watching for (red-zone indicators)

• Claiming 100 per cent of interest and holding costs despite long periods of private use
• Blocking out school holidays and peak seasons, but still treating the property as an investment.
• Listing the property at unrealistically high prices so that no one books
• Allowing friends or family to stay free or cheaply while still claiming all expenses
• Not keeping records of private stays and periods of genuine availability
• Setting unreasonable conditions, such as long minimum stays in off-peak periods

Transitional Relief

The ATO has acknowledged that its position on holiday homes has not previously been as clearly expressed. For that reason, it has indicated that it will not devote compliance resources to reviewing expenses incurred before 1 July 2026, provided:

• The property was acquired before 12 November 2025, and
• it is genuinely a rental property, even if privately used at times.

After this transition period, the new guidance will take full effect.

What This Means for Holiday Home Owners

For clients who own, or are thinking of buying, a holiday home, several practical implications arise:

• Actual use now determines the deductions. If the property is mostly for private enjoyment, the tax outcomes can change significantly.
• Record-keeping is more important than ever. Owners should maintain booking calendars, advertising records, market-rate evidence and full details of private stays.
• Occupancy, availability and pricing will be examined closely. Blocking out peak seasons or charging unrealistic rates may place the property in the red zone.
• Loan interest and major holding costs may be denied altogether if the property is treated as a leisure facility.
• Owners need to make deliberate choices about whether they want the property to operate as a genuine income-producing rental or remain primarily a private holiday home.

We are here to help.

If you own a holiday home or are considering investing in one, reach out to us. We can help you to navigate the tax implications.

When a Novated Lease Can Be a Great Fit

1. Higher income (where the tax impact is more meaningful)
2. Stable employment
3. A preference for newer cars every few years
4. A strong preference for convenience and predictable costs

How to Decide

Compare a novated lease with a standard car loan (where you choose your own insurance and servicing). With our Tax Team’s help, we’ll run a side-by-side, after-tax comparison and recommend the option that best fits your situation, in the most tax-effective way. Contact us to get started.

The Australian Taxation Office (ATO) has a factsheet that explains what this would look like and the upcoming obligations on employers.

The purpose of this is to reduce the unpaid superannuation owed to employees.
A Treasury report on its impact estimates that a 25-year-old median-income earner who is currently paid superannuation quarterly and wages fortnightly could be around 1.5% better off at retirement if they switched to the earlier contribution and payment model.

The estimate is that this initiative could bring in up to $3.4 billion of unpaid super.

Under the proposal:

• Employers will be required to pay SG contributions so they are received by the employee’s superannuation fund within seven business days of payday, aligning contributions with each pay cycle rather than quarterly.
• A “payday” refers to when a qualifying earnings payment is made to an employee (updated wording to match legislative terminology)
• There are two key exceptions:
  1. For new employees and only for their first two weeks of employment
  2. For payments made outside a regular pay cycle (e.g., bonuses, commissions, correction runs), which may follow alternative timing rules defined by the ATO.

They envisage that when employers report via the Single Touch Payroll (STP) system, this will assist with some of the workload.

However, this will impact employers’ cash flow, as instead of paying the superannuation quarterly, they will need to have the funds available at each pay cycle to remit the contributions.

It is important to note that paying super late or submitting late returns can result in penalties.

Correct super guarantee (SG) payments involve four steps:

1. You must determine if a worker is “for super purposes” an Employer or a Contractor. This is a complex area.
2. You then apply the correct super guarantee percentage.
3. You have the correct earnings base. It has historically been calculated on Ordinary Time Earnings (OTE); however, draft legislation introduces the new concept of Qualifying Earnings (QE) to create consistency and reduce grey areas. This change should be incorporated into payroll systems as final definitions are confirmed.
4. The SG is paid on time within the statutory timeframe.

What happens if SG is paid late?

• Tax will only apply to “realised earnings”—that is, actual income your super fund has received, such as interest, dividends, rent, and realised capital gains from assets that have been sold.
• If your total super balance is above $3 million, the ATO will contact your super fund(s) for your share of these realised earnings.
• The ATO will then apply the new higher tax rates (15% for balances between $3 million and $10 million, and 25% for balances above $10 million) to your share of these earnings.
• The $3m and $10m thresholds will also be indexed in line with the Consumer Price Index.

These tax rates will apply in addition to the fund’s concessional tax rate of 15 per cent on taxable income.

Why is this better?

This approach is considered fairer, as impacted super fund members will only be taxed on income their fund has actually earned—not on paper profits that may never be realised. It also brings these tax rules more in line with how other investment income is taxed, and also addresses the problem of more people becoming subject to the tax over time due to ‘bracket creep’.

What do you need to do?

If your super balance never exceeds $3 million, these changes won’t affect you. If you’re above the threshold or likely to exceed it, we’ll work with you to understand your position and plan for any potential tax impacts from 2026 onwards. If you have questions about how these changes might affect your retirement planning, get in touch with us. We are always here to help.

What’s the risk?

• Ignoring your annual statement
  Many people never actually open or review the statement their super fund sends. This means missing errors, unnoticed fees, or underperformance.

• Paying too much in fees across multiple accounts
  It’s surprisingly common to have more than one super account. Each account may charge fees, which cumulatively erode your balance.

• Sticking with a low-performing fund or default investment option
  Even a 1% underperformance over decades can translate to significant differences in final balances. Many are still invested in the default option and don’t revisit their allocation as their needs change.

• Switching to cash after market drops (“locking in losses”)
  It’s a natural instinct when markets are volatile, but shifting funds to cash after a fall can mean missing out on the rebound.

• Delaying extra contributions
  Relying only on employer contributions may not get you to the retirement you hope for. Small voluntary or salary-sacrificed contributions can make a meaningful difference.

• Failing to act promptly on notices or changes
  If your super fund sends notices about your investment options, fees, or insurance, delaying review or action can lead to negative consequences.

• Switching funds carelessly (risking tax or admin issues)
  If you make a personal, tax-deductible contribution, then immediately roll over to another fund before your deduction is confirmed, you may lose eligibility for that tax deduction.

Why this matters

Over a working life, super is often one of your largest financial assets. These kinds of oversights don’t just cost a few dollars — they can mean tens or hundreds of thousands in lost value. Also, super funds and regulators are increasingly scrutinizing fund practices, so more diligence is required than ever.

What you should do now

• Open your most recent super statement.
• Check the fees being charged, investment return performance, and whether all expected contributions have arrived.
• Find out whether you have multiple super accounts; if so, consider consolidating them.
• Review your investment option and see whether it’s still aligned with your goals.
• Make (or continue) voluntary contributions if your budget allows.
• Before rolling over or switching funds, confirm any deduction claims or tax-related issues with your fund first.

If anything seems off, ask questions

How AAG can help you

At AAG, we view this as part of our role to help you protect and grow your wealth for retirement. Here’s what we offer:

• A super review service to audit your current fund: fees, performance, contribution tracking, and suitability
• Help with consolidating multiple super accounts
• Guidance on optimal investment mix based on your stage of life, goals and risk tolerance
• Advice on salary sacrifice strategies, extra contributions, and tax implications
• Assistance with fund switching or rollovers, ensuring you don’t fall into common traps
• Ongoing monitoring and reviews to ensure your super remains on track

If you’d like us to review your super setup or conduct a fund review for you or your team, please don’t hesitate to get in touch with us. We’d be happy to help ensure that your super is working as hard as it can for you.

Further reading relating to optimising your Super:

Article One

Article Two

• Quarter 1 – 1 July to 30 September is due to be received by the employee’s fund by 28 October
• Quarter 2 – 1 October to 31 December is due to be received by the employee’s fund by 28 January
• Quarter 3 – 1 January to 31 March is due to be received by the employee’s fund by 28 April and
• Quarter 4 – 1 April to 30 June is due to be received by the employee’s fund by 28 July.

There is an extra day’s allowance when these dates fall on a public holiday. This does not include weekends, though, so if the due date falls on a weekend, you must take this into account, as you don’t receive the extra day’s allowance.

To comply with these rules, the contribution must be in the employee’s superannuation fund on or before this date, unless the employer is using the ATO small business superannuation clearing house (SBSCH). As we have been advising business clients for some time, we recommend that you arrange to pay your staff super at least 7 days before the due date.

The ATO has been applying considerable compliance resources in this space in recent years, which can have an impact on both employees and employers.

Employers

To be eligible to claim a tax deduction on SG contributions, the quarterly amount must be in the employee’s super account on or before the above quarterly due dates. The only exception to this is where the employer is using the ATO SBSCH. In that case, a contribution is considered made provided the SBSCH has received it on or before the due date.

Employers using commercial clearing houses should be mindful of turnaround times. Commercial clearing houses collect and distribute employee contributions and may be linked to accounting/payroll software or provided by some superannuation platforms. Anecdotally, it seems that turnaround times for some clearing houses could be up to 14 days, so it is recommended that employers allow sufficient time before the quarterly deadlines when processing their employee SG contributions.

If these deadlines are missed (yes, even by a day!), that will trigger a superannuation guarantee charge (SGC) requirement, which will result in a loss of the tax deduction and other penalties.

The SGC requirements are outlined in the ATO link below:

The super guarantee charge | Australian Taxation Office

Employers have the option to make SG payments more frequently than quarterly, and they will need to become accustomed to this if the proposed ‘payday’ superannuation reforms become law. This change is proposed to commence from 1 July 2026 and would require SG to be paid at the same frequency as salary or wages. There is some discussion on the payday super proposal at this link (noting that this is not yet law). The SBSCH will now close. Employers using this service should consider transitioning to a commercial clearing house. Please let us know if you would like assistance with this transition.

We have already been in discussion with several clients to change their frequency to at least monthly, which aligns the PAYG / Instalment Activity Statement requirements, payroll tax and now Super. If you are able to, iron out any issues with paying more frequently now (to monthly), it will start to prepare you for Pay Day Super as set out above.

Employees

It is recommended that you regularly check your superannuation fund statements and reconcile employer contributions to the amounts listed on your pay slips.

Where SG contributions are not received on time (or at all!), employees are encouraged to discuss this first with their employer. Should this not result in a satisfactory conclusion, employees can consider bringing this to the attention of the ATO.

There is some helpful discussion on this process at the following link.

If you have any queries or concerns, please get in touch with our Client Care team, and we will be happy to assist.

20% reduction in student debt

The reduction is expected to benefit more than 3 million Australians and remove over $16 billion in outstanding debt. The 20% reduction will be automatically applied to anyone with the following student loans:

• HELP loans (eg, HECS-HELP, FEE-HELP, STARTUP-HELP, SA-HELP, OS-HELP)
• VET Student loans
• Australian Apprenticeship Support Loans
• Student Start-up Loans
• Student Financial Supplement Scheme.

The reduction will be based on the loan balance at 1 June 2025, before indexation was applied. Indexation will only apply to the reduced balance. The ATO will apply the reduction automatically on a retrospective basis and will adjust the indexation that is applied. No action is needed from those with a student loan balance, and the Government has indicated that you will be notified once the reduction has been applied.

If you had a HELP debt showing on your ATO account on 1 April 2025, but you paid the debt off after 1 June 2025, then the reduction will normally trigger a credit to your HELP account. If you don’t have any other outstanding tax or other debts to the Commonwealth, then the credit should be refunded to you.

The HELP debt estimator is a valuable tool for estimating the reduction amount. Please reach out if you need any help in working out eligibility.

Changes to repayments

The Government has also modified the way that HELP and student loan repayments operate, primarily by increasing the amount that individuals can earn before they need to make repayments.

The minimum repayment threshold for the 2025-26 year is being increased from $56,156 to $67,000. The threshold was $54,435 for the 2024-25 year.

Under the new repayment system, an individual will only need to make a compulsory repayment for the 2025-26 year if their income is above $67,000. The repayments will be calculated only against the portion of income that is above $67,000.

Repayments will still be made through the tax system and will typically be determined when tax returns are lodged with the ATO.

For many people, the change in the rules will mean they have more disposable income in the short term, but it will take longer to pay off student loans. The main exception to this will be when an individual chooses to make voluntary repayments.

Extra Repayments

Several clients have asked us if they should make additional repayments against HELP debt, particularly those parents assisting adult children to obtain a home loan. Our view is not to do so at this time, until the reduction has been processed. It appears from the current position that if your HELP debt has been paid off before 1 April 2025, you will have no benefit in relation to the reduction.
If you have any queries or concerns, please get in touch with our Client Care team, and we will be happy to assist.

Governor Bullock emphasised that the decision was unanimous and that larger cuts weren’t considered. She did, however, leave the door open for further action if conditions warrant it. The unanimous decision was made because:

• Headline inflation has eased to 2.1% year on year, and the RBA’s preferred trimmed mean measure sits at just 2.4–2.7%, comfortably within the desired 2–3% range. So, it’s now within target.
• There’s still soft economic growth; quarter 1 saw GDP grow 0.2% and unemployment has gone up slightly to roughly 4.3%.

This is a welcome move for many with flow-on impacts across a broad section of the community.

Borrowing and mortgages:

A borrower with a $600,000 mortgage can expect monthly repayments to fall by around $89, saving over $1,000 annually.

Refinancing:

The latest cut has triggered a wave of refinancing. Canstar estimates monthly savings of around $272 on a $600,000 loan, potentially taking years off the loan term and saving tens of thousands in interest expenses.

Housing and lending:

The cut may revive home-buying sentiment, though the risks of swelling property prices remain. Borrowers and buyers alike are feeling the relief.

Currency and markets:

The Australian dollar did weaken moderately following the decision. On the ASX 200, financial stocks, notably the Commonwealth Bank, took a hit as investors fretted over shrinking interest margins.

Lower interest rates ripple across the investment landscape:

Lower interest rates stimulate the economy by increasing investment and household consumption, which leads to higher domestic output (GDP).

Investors are encouraged to borrow and invest in projects, while households spend more by saving on mortgage payments.

Lower rates also support higher asset prices (think share markets and property), which can boost household wealth and spending. These combined effects result in increased demand for goods and services and higher economic activity.

Key takeaways

• Borrowers: Strong relief through lower mortgage repayments, refinancing opportunities, and improved property sentiment.
• Investors: Mixed effects – equities and property benefit, but fixed-income returns (term deposits and bonds) fall; real estate demand may strengthen.
• Retirees: Cash, term deposit, and bond income weaken, super balances may rise, but managing volatility and inflation (to preserve purchasing power) remains critical.
• Economy overall: Stimulates borrowing and spending, though risks of overheating in housing or misallocated capital remain

More on what it means for Borrowers

Now is an ideal time to review your current lending arrangements. Many lenders have already adjusted their rates, creating opportunities to secure a more competitive interest rate and potentially reduce your repayments.

Even a slight decrease can make a meaningful difference over the life of your loan. If it’s been some time since your last review, it may be worthwhile to explore whether refinancing could deliver savings or better align your loan with your current goals.

More on what it means for investors

• Equities: With more disposable income in the economy, there is usually more money to invest in stocks, leading to a shift in money from bonds.
• Bonds and Fixed Income: With yields declining, existing bondholders benefit from higher prices, but reinvestment risk grows for those relying on bond income. Investors may shift toward riskier assets (equities) in search of better returns.
• Property and Alternatives: Lower rates may further boost real estate demand, driving capital appreciation but also increasing affordability concerns. Alternatives such as infrastructure may gain traction as investors diversify away from traditional fixed income.
• Global Investors: Foreign capital flows may adjust in response to a weaker AUD, influencing both valuations and the competitiveness of Australian exports. If the AUD weakens, this makes our market more attractive to investors from overseas.

More on what it means for retirees

• Income Pressure: Those relying on term deposits, annuities, or bonds will see lower returns, potentially forcing a rethink of income strategies.
• Cost of Living: While inflation is now within target, retirees on fixed budgets remain sensitive to rising essentials such as healthcare and housing. But easing rates tends to lessen the cost-of-living pressures across all demographics.
• Superannuation and Pensions: Super fund performance may benefit from rising equity and property values, but volatility and risk remain concerns for those drawing down balances.
• Capital Preservation vs Growth: Many retirees may feel compelled to move further up the risk curve to maintain income, but this raises questions about portfolio resilience in the face of market shocks.

The Bottom Line

While there are always winners and losers, for many Australians, this is a positive change.

Borrowers and home buyers feel immediate relief, while investors and retirees face a more complex landscape—balancing opportunity with caution.

Either way, please reach out if we can help you understand how to best manage your debt, explore refinance options or evaluate investment readiness in light of these changes.

How does it work?

While we wait to see whether the measure will become law, let’s assume for the moment that the Government passes legislation consistent with its announcements to date. If so:

• If your TSB is over $3 million as of 30 June, a portion of your annual superannuation earnings above that threshold will be taxed at an additional 15%.
• The tax is assessed to you personally and can be paid from your super or your own funds.
• Superannuation earnings for this purpose reflect the increase in your net super balance for the year, adjusted for specific contributions (eg, inheritance via death benefit pension) and withdrawals.
• Some exclusions apply: children on super pensions, structured settlements (personal injury), and the deceased.

It is important to remember that your TSB is the aggregate of all Australian superannuation interests (including balances with APRA funds, SMSFs and defined benefit schemes) held at the end of the income year.

If the start date is 1 July 2025, then the first test date will be 30 June 2026. An individual’s TSB at this date, and each following 30 June, will determine whether they will have a Division 296 tax liability for that income year. Only where the individual has a TSB on 30 June in excess of $3 million will they have a Division 296 tax liability for that income year.

Examples

Sam’s account

• 30 June super balance: $4 million.
• Annual growth: $120,000.
• Portion above $3m: ($4m–$3m)/$4m = 25%
• Taxable earnings: $120,000 × 25% = $30,000
• Extra tax: $30,000 × 15% = $4,500

 Chris withdraws

• Chris withdraws $200,000 before 30 June, so his TSB is below $3 million at year’s end.
• Chris will not pay Division 296 tax for that year.

 Lisa’s inheritance

• Lisa’s balance rises from $2m to $4.5m after receiving a death benefit pension.
• Only new investment growth (not the transferred amount) is taxed as earnings; however, a total balance exceeding $3 million may still result in a liability.

What can you do?

• Review your super fund liquidity and cash flow planning for future tax payments
• Ensure your asset valuations are up to date
• Estimate your combined super balances and plan for any large transactions
• Document asset values, especially for SMSF members
• contact us for tailored professional advice before making any changes

While we await the outcome of the legislation passing through Parliament and whether any significant amendments or adjustments are made to the proposed measures, if you have any questions or concerns in the meantime, please reach out – we’re here to help.