Maximising Downsizer: A Strategy to Boost your Retirement Savings

Maximising Downsizer:

A Strategy to Boost your Retirement Savings

The Downsizer Contribution enables individuals to contribute additional money into super after selling their family home.

Eligibility

You are eligible to make a downsizer contribution if you meet the following conditions:

  1. You have reached the eligible age:
    • From 1 January 2023 – 55 years or older
    • From 1 July 2022 – 60 years or older
    • From 1 July 2018 – 65 years or older
  2. Your home was owned by you or your spouse for 10 years or more prior to sale (generally calculated from settlement of purchase to settlement of sale);
  3. Your home is in Australia (and is not a caravan, houseboat or other mobile home);
  4. The capital gain/loss on sale would be exempt (or partially exempt) under the CGT main residence exemption;
  5. You have not previously made a downsizer contribution.

How do I make the contribution?

If you meet the above conditions and can make a downsizer contribution, to make the contribution, you must:

  1. Provide your superfund with a Downsizer contribution into super form before or at the time of making the contribution (if you make multiple contributions, you must provide a form for each contribution – up to the maximum contribution limit of $300,000);
  2. Make the contribution within 90 days of receiving the proceeds of the sale (this is generally the settlement date).

How much can I contribute as a downsizer contribution?

You can make a downsizer contribution up to a maximum of $300,000 (each spouse) but the contribution can’t be greater than the total proceeds from the sale of your home.

How does a downsizer contribution differ to other types of super contributions?

The contribution doesn’t count towards any of the contribution caps (so these caps will still be available to you). 

The downsizer contributions will count towards your transfer balance cap.  This cap will be considered when determining eligibility for the age pension.

If I’m eligibility, should I make a contribution to super as a downsizer contribution?

This is a good question, and one that we are often asked as accountants.  Unfortunately, the question of should you make this contribution is one that a financial planner needs to answer for you.  As an accountant, we can give you the facts about whether or not you are eligible and the limits on what you are able to contribute.  However, we cannot advise whether you should do so.  We work closely with several financial planners and we can put you in touch with these planners.  They can provide you with holistic advice for your financial position and whether or not a downsizer contribution is right for you.

What should I do next?

If you are over the relevant age to make the downsizer contribution and you are thinking of selling your home, give us a call or book in a meeting to talk about your eligibility.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

Exit Strategies for Business Owners: Planning your Successful Departure

Exit Strategies for Business Owners:

Planning Your Successful Departure

When is the best time to start thinking about your business exit strategy?  To be honest, it should be before you even start your business.  Before you start your business and invoice your first client or customer, you should be thinking about what you would like to achieve with your business and where you would like it to go. 

But let’s say you’re now several years into running your business and you haven’t even thought about your exit strategy…that’s okay because the second best time to start thinking about your business exit strategy, is today (cue that Chinese Proverb about planting trees…). 

We have been working with a number of clients over the past few years to successfully exit their business.  “Successfully exiting a business” can mean different things to different people, but generally includes:

* Selling for an acceptable price
* Minimising the resulting tax liability on the sale
* Minimising the disruption to the business during the due diligence and negotiation stages, and then the actual changeover
* Getting the right advice on how to best utilise the net sales proceeds.

No business exit is the same as another.  Some of the recent sales we have assisted with involved very different purchasers, we have had:

* A sale to a ASX listed company
* A sale to a private equity group
* A sale to an employee
* A sale to an overseas buyer.

One commonality with each of these sales, however, is that each involved technical legal and accounting advice and involvement to ensure each party was adequately protected and achieved the best outcome.

Your business exit strategy is something that you should think about at least on an annual basis.  We generally have this conversation with each client around tax planning time.  If you haven’t previously done so, spend some time this week thinking about your exit strategy from your business, specifically:

1) What is your exit strategy?  Is it sale to a third party?  Is it a sale to employees? Will your children take over the business?
2) What is your timeframe for exit?
3) Is your business in the best shape to achieve your exit strategy goals?

We recommend that business exit plans start at least 5 years before your proposed exit.  This will give us enough time to help you get your business “sale ready” and ensure it is appropriately structured for the exit you want.

Feel free to book in a time with us to discuss.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

Show me the money…how to get your debtors to pay faster

How can I get my accounts paid faster?


We all know that cash is king, especially for small businesses, but how can you improve the cash collection for your accounts receivable (debtors)?

The faster you are paid by your debtors, the faster you can put that money to work for you and your business – so quick debt collection is imperative for a strong business.  You also don’t want to be left with a debtor who suddenly goes out of business and can no longer pay your account.

Here are some tips for you to improve the collection of your debtors:

  1. Invoice promptly after providing the goods / services – where your customer can see the connection between the invoice and the value they have received, they are more likely to pay promptly;
  2. Have clear payment terms – have these stated on your invoice together with the consequences for late or missed payments;
  3. Offer payment options and terms – the easier it is for customers to pay, the more likely they are to pay quickly (most online accounting software packages provide options for you to take payment by credit card with the associated cost being passed on to your customer);
  4. Promptly follow up overdue accounts – keep up-to-date records of your debtors and make sure you promptly follow up on overdue balances (this can be done automatically with most online accounting software);
  5. Maintain good customer relationships – building strong relationships with your customers improves your chances of collecting the debt;
  6. Consider hiring a collection agency – if you have exhausted all other options and are struggling to collect your debt, consider hiring a debt collection agency to assist you.

Not all businesses are suited for providing goods/services on account – you need to consider whether it is appropriate for your business. 

Most accounting software packages give you data regarding your debtors.  You should review this information on a regular basis.  For example, your software should be able to show you:

  • Your current outstanding debtors and the length of time they have been outstanding.
  • The number of days (on average) it takes you to collect your debtors.
  • The amount of your debtors compared to your total sales.
  • The average amount of your debtors over time.

If you find you are making a lot of sales but your cashflow is struggling, it may be because your cash collection is low and you have many outstanding debtors.

We can help you to review the state of your current debtors, as well as provide you with recommendations on how to improve your cash collection from outstanding accounts.  Feel free to book in a time with us to discuss.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.