You can make superannuation contributions up to the age of 74, and these can be concessional (before-tax) or non-concessional (after-tax) contributions. If you’re aged 65 or over, then you must satisfy a
Here are ten tips to help you understand the super contribution rules for over-65s.
- Anyone aged 65 or over must satisfy a work test, before contributing. If you’re aged 65 or over (but under the age of 75), you can make super contributions if you’re at least gainfully employed on a part-time basis. In short, you must work for at least 40 hours in a period of not more than 30 consecutive days in the financial year in which you plan to make a super contribution. See Tip 6.
- People aged 75 or over cannot contribute to a super fund.
- If you intend to claim a tax deduction for concessional super contributions, you need assessable income, such as employment income, or business income, or net rental income, to justify the tax deduction.
- Tax-deductible super contributions and other concessional contributions are subject to 15% tax within a super fund, which means that claiming a tax deduction for super contributions may not be tax-effective if you pay less than 15 cents in the dollar tax on your personal income.
- The key term in the work test (see Tip 2) is “gainfully employed”. Gainfully employed means employed or self-employed for gain or reward in any business, trade, profession, vocation, calling, occupation or employment. According to the Australian Prudential Regulation Authority’s circular on contributions, “gain or reward” involves remuneration such as “salary or wages, business income, bonuses, commissions, fees or gratuities, in return for personal exertion”.
- The work test can be satisfied when “employment” involves any endeavour where you receive remuneration for your efforts, including farming, babysitting, cleaning, lawnmowing, gardening, consulting and paid employment. You will need to confirm with the tax office whether your arrangements satisfy the work test rules.
- Volunteer work does not count towards the 40-hour work test.
- An individual only has to work 40 hours of gainful employment in one 30-day period to satisfy the work test for contributing in a financial year.
- Any income that you receive for this work must be fully documented and declared for tax purposes.
- When aged 65 or over, you cannot take advantage of the bring-forward rules when making non-concessional contributions, that is, after-tax contributions,. The
I am 72 and have a super fund; A M P flexible lifetime.
1. Can I add to that fund before June 30th.
2. And then withdrawn again during the year ? For a tour.
3. How long must i leave my supper in for.
4. I have worked the time needed, 40 hours in 30 days.
5. Do I need to lodge a tax return, for that time ?
Thanking you
Hi Dorothea
Thanks for your comment. We are an information site rather an advisory site so I can only provide general comments. You will need to verify your circumstances with your super fund.
Generally speaking:
1. An individual who is aged 72 who satisfies the work test for contributing can make a super contribution.
2. An individual aged 65 or over can access super benefits at any time. The ability to withdraw after contributing may depend on the rules of the super fund, and whether the individual is claiming a tax deduction. If you’re claiming tax deduction for the super contribution, then there is a timing issue regarding submitting ‘notice of intent’ form etc, if the tax deduction is to be accepted by the tax office. Your super fund can assist you with this.
3. Whether a tax return is needed depends on your personal circumstances, and this will need to be checked with your accountant. In relation to the work test, the hours and payment need to be documented.
4. If an individual is currently receiving a pension and the super fund has to set up another account to accept the super contribution, then a fee may be charged by the fund. If this is the case, and the money is going to be withdrawn fairly soon after contributing, then there may be other cost-effective saving options for short-term savings.
Hope this helps
Regards
Trish
Just to clarify:
In the financial year that I turn 65, I can contribute a one off $450,000 non-concessional contribution as long as it is before my actual 65th birthday, however once I have turned 65 I would need to break it up into 3 X $150,000 contributions. Is this correct? (Assume work test satisfied and bring-forward not already triggered)
Hi David
Thanks for your comment, and sorry for the delay. My response is general information – you will need to verify your personal circumstances with an accountant.
If an individual is under the age of 65 on 1 July, then the bring forward rules are available for that individual. If the individual makes the contribution after turning 65 in that financial year, then a work test must be satisfied and the individual can make a maximum of $150,000 in a single contribution. When eligible for the bring-forward rules in these circumstances, the minimum number of contributions for the year is $150,000 x3 when contributing $450,000
The rules are summarised in the article below:
http://www.superguide.com.au/boost-your-superannuation/bring-forward-rule-10-facts-you-should-know
Regards
Trish