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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. *See below for definitions.

Table 1: Work test by financial year and age

Year Age Work test and work test exemption conditions
     
2021-22^ 67 to 74 years old A member does not need to meet the work test to make non-concessional contributions
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 does not need to meet the work test to make non-concessional contributions^
2004-05 to 2018-19 Under 65 years old A member does not need to meet the work test
Source: ATO

*Definition of gainfully employed - 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 documented 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.

^The Treasury Laws Amendment (Enhancing Superannuation Outcomes for Australians and Helping Australian Businesses Invest) Bill 2021 passed on 10 February 2022, which removed the work test for those ages 65 to 74, allowing them to make non-concessional contributions.

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: Tuesday, February 22, 2022