Aware Super Logo

Home

Non-concessional contributions

Definition of work test

Section: 5.3

5.3 Definition of work test

The work test requires a member to be gainfully employed in order to make non-concessional contributions.

To satisfy the work test, a member must work for at least 40 hours during a consecutive 30-day period in the financial year in which the contributions are made.

The term gainfully employed is defined to include employed or self-employed for reward in any business, trade, profession, vocation, occupation or employment. The member is remunerated in return for the personal service provided either as salary, business income, bonuses and commissions that are fully document and declared for tax purposes.

Note: this does not include passive investment income such as rental income or dividend income. Furthermore, members who volunteer their services are generally not considered to be gainfully employed as they do not receive remuneration for their services.

Table 1: Work test by financial year and age

Year Age Work test and work test exemption conditions
2021-21* 67 to 74 years old A member needs to meet the work test or satisfy the work test exemption criteria
2020-21 Under 67 years old A member does not need to meet the work test or satisfy the work test exemption criteria.
2019-20 65 to 74 years old A member needs to meet the work test or satisfy the work test exemption criteria
2019-20 Under 65 years old A member does not need to meet the work test or satisfy the work test exemption criteria
2004-05 to 2018-19 65 to 74 years old A member needs to meet the work test.
2004-05 to 2018-19 Under 65 years old A member does not need to meet the work test
*Note: In the 2021 Federal Budget the government announced its intention to remove the work test for those aged 67-74 to allow them to make non-concessional contributions (not yet law)

Source: ATO

Example  - Work test to claim a deduction for personal super contributions

Example:

During 2019-20, Daniella worked 20 hours per week for six months as a data analyst and earned $26,000 in salary and wages. She also turned 65 years old.

As Daniella was 65 years old in 2019-20, she had to satisfy the work test or meet the work test exemption criteria to be eligible to claim a deduction for any personal (after-tax) super contributions she makes after turning 65 years old.

Daniella satisfied the work test because she was gainfully employed for at least 40 hours during a consecutive 30-day period in 2019-20.

Daniella gave her fund a notice of intent to claim $2,000 as a deduction and received an acknowledgement of that notice. She met all the other eligibility criteria and could claim a deduction for her personal super contributions of $2,000 in her 2019-20 tax return.

In 2020-21, Daniella turned 66 years old. This year she did not need to satisfy the work test or meet the work test exemption criteria to be able to claim a deduction for personal super contributions in her 2020-21, tax return.

However, she must still give her fund a notice of intent and receive an acknowledgement of the notice.

This technical resource is intended for the use of financial advisers only. It is current as 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: Friday, July 2, 2021