Q: I have a three-part question.
- I turn 65 in January 2019 and would like to make a $325,000 contribution by way of off-market share transfers and cash to my SMSF before I turn 65 ($25K deductible super contributions and $300K non-deductible under the bring forward rules). Will I be able to take advantage of the $25K cap for deductible super contributions to reduce capital gains tax on my personal tax in the 2018/2019 year, or would I have to satisfy the work test as I will be 65 at the end of the financial year?
- Presuming I have made these contributions before age 65 in this financial year, could you clarify whether I am able to make deductible contributions to my SMSF after age 65 if I pass the work test. (I have retired but could satisfy the work test if needs be).
- I am presently receiving an allocated pension from my SMSF. If I wished to take out a lump sum at any stage to help my children with a house deposit, is this possible before/after age 65?
Super alert! From 1 July 2019 (subject to yet-to-be-enacted legislation), the federal government will introduce a one-year exemption from the over-65s work test for Australians aged 65 to 74 with superannuation balances of less than $300,000. What this means is that, for the first year an individual doesn’t meet work test requirement, an individual can still make super contributions. The full $25,000 concessional cap (plus catch-up concessional contributions) will be available, and the $100,000 non-concessional cap will also be available. On 17 December 2018, as part of the 2018 Mid-Year Economic Outlook, the federal government announced that the bring-forward rule will also be available during the one-year exemption.
We suggest you chat to an accountant about your options and how your questions relate to your personal circumstances but we provide responses to your questions below, and links to SuperGuide articles that can provide more detailed responses to the questions.
Contributions work test for over-65s
In response to question 1, an individual can make concessional (before-tax) contributions or make non-concessional (after-tax) contributions without a work test if they make the super contributions before turning 65. Note that if an individual wants to make a super contribution after turning 65, then they must satisfy a work test. The bring-forward rule (making up to $300,000 in non-concessional contributions) is available in the year that an individual turns 65. For more information, see SuperGuide article Super contributions: Turning 65 part-way through the year.
Age limit for making super contributions
In response to question 2, individuals can make concessional (before-tax) contributions or non-concessional (after-tax) contributions up to the age of 74, although if the super contribution is made on or after turning 65, then a work test must be satisfied. For more information on the work test, see SuperGuide article Over-65s work test: How does it operate?
Accessing super before and after turning 65
In response to question 3, if an individual is retired they can access super benefits on or after reaching preservation age, including lump sums. If an individual is aged 65 or over then an individual can have access to super benefits whether they are retired or not. For more information on preservation age and accessing super benefits, see SuperGuide articles Accessing super: What is my preservation age? and Age 65: Accessing your super is a right.