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Non-concessional contributions

Definition of work test

Section: 5.3

The work test requires a member to be gainfully employed. To satisfy the work test, a member must work for at least 40 hours during a consecutive 30 day period each financial year in which the contributions are made. The term "gainfully employed" is defined to include employed or self-employed or 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.

Take 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
2004-05 to 2018-19 Under 65 years old A member does not need to meet the work test
2004-05 to 2018-19 65 to 74 years old A member needs to meet the work test.
2019-20 Under 65 years old A member does not need to meet the work test or satisfy the work text exemption criteria
2019-20 65 to 74 years old A member needs to meet the work test or satisfy the work test exemption criteria
2020-21 onwards Under 67 years old A member does not need to meet the work test or satisfy the work test exemption criteria.
2021-21 onwards 67 to 74 years old A member needs to meet the work test or satisfy the work test exemption criteria

Source: ATO

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

During 2019-20, Andy works 20 hours per week for six months as a data analyst and earns $26,000 in salary and wages. She also turns 65 years old.

As Andy is 65 years old in 2019-20, she must 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.

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

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

In 2020-21, Andy turns 66 years old. This year, she does 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: Tuesday, September 15, 2020