“In one particular case I saw, the client wanted to subdivide their land into six lots and demolish the house and sell it off and they thought they might be able to use the downsizer contribution on the one parcel of the land, which was attributable to their home, but there was no home on it so they couldn’t get the downsizer,” explained Mr Lewis.

“There is nothing stopping them from building another dwelling and selling that and it doesn’t necessarily have to be as good as the home they bought, but the issue is that you have to be disposing of a dwelling to get the benefit of it.”

Mr Lewis said SMSF practitioners should also consider the estate planning opportunities for clients with downsizer contributions.

One way it can be used for clients, he said, is for them to withdraw money from super to buy another property, sell their current property, and then with the proceeds of that sale, contribute that as a non-concessional contribution to their super fund.

“From an estate planning point of view, it can help reduce the taxable component and therefore the tax on what will be paid out to adult children. So that is an option, provided that all the eligibility criteria are satisfied,” he said.