Q: Thanks for your website and advice. Just a quick question: I turned 65 in January 2013. So I was 64 years of age for a large part of the 2012/2013 financial year, but of course I turned 65 during the 2012/2013 financial year, that is, in January 2013. My understanding is that because I am under 65 for part of the 2012/2013 financial year then I can exercise the bring forward provisions and make non-concessional contributions up to $450,000 before I turn 65, if I choose to do so. Is this correct?
Answer: You ask a very popular question, and the rules relating to making super contributions for an individual turning 65 during a financial year are a little peculiar, due to the operation of the over-65s work test and the operation of the bring-forward rules for non-concessional contributions.
The response outlined below is of a general nature, and you will need to verify the rules applicable for your own unique circumstances with the ATO, or your accountant or adviser.
The general rule is that if an individual is under the age of 65 on 1 July of a financial year, then that individual can contribute more than $150,000 in non-concessional contributions in a single financial year, triggering the bring-forward rules. In short, they can make up to $450,000 (for the 2012/2013 year) in non-concessional contributions in the financial year even though they turn 65 during that financial year.
More specifically, an individual can bring-forward up to 2 years’ worth of non-concessional contributions in the year that they turn 63 or 64, but that doesn’t mean they can make super contributions beyond the age of 65 without satisfying a work test. For more information see article Super contributions: Beef up using a bring forward
Special circumstance: If an individual turns 65 during a financial year, and wants to make a non-concessional contribution after turning 65 in that same financial year, then he or she must satisfy a work test. After turning 65, the maximum non-concessional contribution each year is $150,000 (for the 2012/2013 year). Generally speaking, the bring-forward is no longer available, EXCEPT in one unique instance. In the year that an individual turns 65, he or she can make a non-concessional contribution greater than $150,000 (for the 2012/2013 year) after turning 65 during that year, triggering the bring-forward rule, provided they also meet the work test before making the super contribution.
The work test that enables over-65s and under-75s to make super contributions involves working 40 hours in any 30-day period in the financial year in which you intend to make the contribution.
In short, an individual who is 64 on 1 July of a financial year can take advantage of the bring-forward rules and make up to $450,000 (for the 2012/2013 year) in non-concessional contributions. If they make those contributions after turning 65 in that same financial year, then they can still take advantage of the bring-forward rules in that specific financial year, but they must satisfy a work test before contributing. For more information see article Turning 65: Maxing out the after-tax contributions cap.