Work Test Deferred to Age 67
Previously the superannuation work test applied from age 65. This meant that if you were over 65, you had to work at least 40 hours in any consecutive 30 day period for your super fund to be able to accept any voluntary contributions.
From 1 July 2020, the age at which the work test applies has been extended to age 67. This aligns the work test with the scheduled Age Pension age increase to 67 from 1 July 2023.
So what does this mean?
If you are aged 65 on 1 July 2020 you are entitled to contribute to super in the 2020/21 financial year without having to meet the work test.
If you are aged 66 on 1 July 2020 you are entitled to contribute to super in the 2020/21 financial year without having to meet the work test, provided you make the contribution before your 67th birthday. If the contribution is made after your 67th birthday, the work test requirement will again apply, but the work simply had to occur at some point during the year, not only after age 67.
The amount you may contribute is subject to the concessional contribution cap, non-concessional contribution cap, your total super balance as at 30 June 2020 and whether you have triggered a bring forward period in any of the previous 3 years.
General contribution caps for the 2020/21 financial year are:
Concessional contributions: $25,000
Non-concessional contributions: $100,000. Where your total super balance exceeds $1.6m, your non-concessional cap is $NIL.
However you may be able to contribute more than the general cap, using the Bring Forward Rule*. Bring forward caps and periods are based on your total super balance.
|Total Super Balance at 30 June 2020||Bring-forward amount for the first year (2020/21)||Bring forward Period|
|Less than $1.4 million||$300,000||3 years|
|$1.4 million to less than $1.5 million||$200,000||2 years|
|$1.5 million to less than $1.6 million||$100,000||No Bring Forward period, general cap applies.|
|$1.6 million or more||Nil||Nil|
*The legislation to extend the bring forward rule to those aged 65 & 66 is still before Parliament. It is expected to pass, but contributions in excess of the general caps should not be made before that occurs.
It is important to establish your total superannuation balance as at 30 June 2020 prior to making any voluntary contributions post 1 July 2020. If you have a self-managed superannuation fund, you may find it beneficial to prepare the financial statements and annual return as early as possible to determine the maximum amount of contributions allowable.
If you are unsure how these rules may affect you, please feel free to speak with our Superannuation Specialist Malcolm Barkle to discuss contribution options for the 2020/21 financial year.
Malcolm Barkle: M.Barkle@uhyhnseq.com.au
Article by Zoe Reddman
FACTUAL INFORMATION WARNING
This content has been prepared to provide you with factual information only and has not taken into account your personal objectives, financial situation or needs. It does not contain and it is not to be taken to contain Personal Financial Advice. Before making any financial or investment decisions, you should seek advice from an appropriately licenced or authorised financial advisor. The content was prepared by UHY Haines Norton. AFS Licence No. 483056