make a downsizer contribution, provided that the dwelling is not a houseboat, caravan or other mobile home. [Schedule 2, item 4, paragraph 292102(1)(b) and (f)] For the purposes of the downsizer contribution rules, the definitions of interest’ and that are contained in ‘ownership ‘dwelling’ sections 118-115 and 118130 apply. However, as this definition includes houseboats, caravans and other mobile homes, those types of dwellings are specifically excluded. Restricting the downsizer contribution rules in this way is appropriate because the policy intent is to free up larger houses or units for younger, growing families. Because the contributions must relate to the proceeds of the disposal of an ownership interest, the amount of the contribution cannot be more than the proceeds that were received from the disposal, up to a limit of $300,000 (these limits are explained separately below). In addition, downsizer contributions can be made in respect of an individual if they or their spouse held an ownership interest in the dwelling, whether that ownership interest was held solely, jointly or as tenants in common. [Schedule 2, item 4, paragraphs 292-102(1)(c) and (i)] The 10 year ownership test An individual or their spouse must have owned the dwelling for 10 or more years just prior to disposing of it. [Schedule 2, item 4, paragraphs 292102(1)(c) and (e)] The period of the 10 year ownership test is calculated from the day ownership of the dwelling commenced to the day it ceased. This ownership period would usually be from the settlement date of the original contract to purchase the dwelling to the settlement date of the later contract. As a general rule, individuals must have disposed of their ownership interest in a dwelling in order to make a downsizer contribution. The only exception to this is where only one spouse holds an ownership interest in the dwelling but the other spouse does not. In these circumstances it is sufficient that one spouse held the ownership interest, as long as the spouse who doesn’t hold an ownership interest continues to meet the other requirements for the contribution to be a downsizer contribution. In certain cases, there may have been a change in ownership between two spouses over the 10 year period that preceded the sale of dwelling. Provided that either of the spouses held an ownership interest in the dwelling at all times during the period, downsizer contributions can be
make a downsizer contribution, provided that the dwelling is not a houseboat, caravan or other mobile home. [Schedule 2, item 4, paragraph 292102(1)(b) and (f)] For the purposes of the downsizer contribution rules, the definitions of ‘ownership interest’ and ‘dwelling’ that are contained in sections 118-115 and 118130 apply. However, as this definition includes houseboats, caravans and other mobile homes, those types of dwellings are specifically excluded. Restricting the downsizer contribution rules in this way is appropriate because the policy intent is to free up larger houses or units for younger, growing families. Because the contributions must relate to the proceeds of the disposal of an ownership interest, the amount of the contribution cannot be more than the proceeds that were received from the disposal, up to a limit of $300,000 (these limits are explained separately below). In addition, downsizer contributions can be made in respect of an individual if they or their spouse held an ownership interest in the dwelling, whether that ownership interest was held solely, jointly or as tenants in common. [Schedule 2, item 4, paragraphs 292-102(1)(c) and (i)] The 10 year ownership test An individual or their spouse must have owned the dwelling for 10 or more years just prior to disposing of it. [Schedule 2, item 4, paragraphs 292102(1)(c) and (e)] The period of the 10 year ownership test is calculated from the day ownership of the dwelling commenced to the day it ceased. This ownership period would usually be from the settlement date of the original contract to purchase the dwelling to the settlement date of the later contract. As a general rule, individuals must have disposed of their ownership interest in a dwelling in order to make a downsizer contribution. The only exception to this is where only one spouse holds an ownership interest in the dwelling but the other spouse does not. In these circumstances it is sufficient that one spouse held the ownership interest, as long as the spouse who doesn’t hold an ownership interest continues to meet the other requirements for the contribution to be a downsizer contribution. In certain cases, there may have been a change in ownership between two spouses over the 10 year period that preceded the sale of dwelling. Provided that either of the spouses held an ownership interest in the dwelling at all times during the period, downsizer contributions can be
c2017-t200724-Explanatory-memo.docx