Getting money into super
2.4 Work test
If a member wishes to make super contributions from age 67*, they may need to meet the work test.
From 1 July 2020, the work test applies if:
- a member is age 67 or more at the time of contribution, and
- is also gainfully employed for at least 40 hours in no more than 30 consecutive days in the financial year.
The work test must be met prior to the contribution being made to the superannuation fund. The work test does not apply to downsizer contributions.
*Prior to 1 July 2020, the work test applied if the member was age 65 or over at the time of the contribution.
Gainfully employed means they are employed or self-employed for gain or reward in any occupation or employment which involves remuneration such as salary or wages, in return for personal exertion. This would not generally include income that comes only from passive investments such as dividends, interest, and capital gains. Refer to SISR Regulation 1.03(1)).
Work Test Exemption - From 1 July 2019, individuals who would otherwise be required to meet the work test (i.e., they are aged 65 before 1 July 2020 and aged 67 from 1 July 2020) may be able to make personal contributions for 12 months from the end of the financial year in which they last met the work test. For example, this may apply to a member who retired during the previous financial year and wishes to make non-concessional contributions. This measure would allow this member an additional 12 months to make the contributions.
Eligibility for the Work Test Exemption:
- The member's total superannuation balance (TSB) must be less than $300,000 at the end of the previous financial year
- The member must have met the work test in the previous financial year
- The member cannot have previously used the work test exemption (it is a one-off opportunity)
Where a member meets the work test or work test exemption, they can contribute any amount up to the concessional and non-concessional contributions caps for that particular financial year. The bring-forward contribution provision can also be accessed, potentially allowing the member to bring forward up to three times the non-concessional contributions cap.
Proposed repeal of the work test^
In the May 2021 Federal Budget the government announced its intention to repeal the work test for those aged 67-74 to allow them to make non-concessional contributions. The proposed repeal of the work test will only apply to
- non-concessional contributions, and
- salary sacrifice contributions
Personal member contributions for which a tax deduction can be claimed were not included in the proposal. This is not yet law but may apply from 1 July 2022.
^not yet law
This technical resource is intended for the use of financial advisers only. It is current at the date of publication but may be subject to change. This publication has been prepared without taking into account a potential investor's objectives, financial situation, needs or objectives. Before making a recommendation based on this material, you should consider its appropriateness based on the client's objectives, financial situation and needs. Rainmaker Group is not a registered tax agent under the Tax Agent Services Act 2009. Your client should refer to a registered tax agent before relying on information published herein that may impact their tax obligations, liabilities or entitlements.
Last modified: Wednesday, July 28, 2021