New Work Test Exemption for Over 65s
Though its application is limited, there is a new work test exemption for super contributions that’s been effective since 1 July 2019.
A voluntary super contribution can now be made for a member, over age 65 but under age 75, in the first income year after retirement. This means that a 67-year-old individual, that retired in the 2019 financial year, can make a personal contribution this year without satisfying the work test. The $25k concessional cap applies however an additional consideration is the ability to utilise any unused portion of the concessional contribution caps from 1 July 2018. The $100k non-concessional cap also applies.
The catch is that the member needs to have a total super balance of less than $300,000 as at 30 June 2019.
Unfortunately the 3 year non-concessional contribution bring forward provision may only be triggered if the necessary contribution was made in a year in which the member turned 65. This change avoids the necessity for the member to satisfy the work test if the contribution is made after turning 65 but before the next June 30th. If, however, the member can satisfy the work test for that year, such that the exemption is not required, the result is more favourable as the $300k total super balance limitation is increased to the general standards surrounding non-concessional contributions.
The exemption is only available for one 12-month period in an individual’s lifetime.