Q: If I have retired from work and later on inherit a reasonable sum of cash, can I make a non-concessional contribution into my superannuation fund? OR is that only permitted while I am working, regardless of my age?
Trish’s response: For the benefit of other readers, I will first explain the meaning of a non-concessional contribution. A non-concessional contribution is a superannuation contribution made from after-tax dollars. Such contributions used to be known as ‘undeducted’ contributions, and they are often described as after-tax contributions. You cannot claim a tax deduction for such a contribution.
Anyone under the age of 65 can make a non-concessional contribution to a superannuation fund, and the original source of the cash, such as an inheritance, is irrelevant. You don’t have to be working to make a non-concessional contribution, unless you’re aged 65 or over.
If you’re aged 65 or over (but under 75), you can make a non-concessional contribution if you satisfy a work test in the financial year that you contribute. In short, the work test is working 40 hours in any 30-day period in the financial year in which you intend to make the contribution.
If you’re aged 75 or over, you can no longer make super contributions.
Note: The bring-forward rules that permit an individual to make up to $450,000 (rather than $150,000) (for the 2010/2011 year) in non-concessional contributions in one year, only apply to individuals under the age of 65.
I explain the contribution rules in more detail in the ‘Boost your super’ section of our website. In particular you may find the following articles useful:
- Your 2010/2011 guide to non-concessional (after-tax) contributions
- For over-65s: Ten super tips when making super contributions
Super contributions: Turning 65 part-way through the year
Turning 65: Maxing out the after-tax contributions cap
65 and over: making super contributions
Wearing two contributions caps
Watch the (contributions) caps when super sailing
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