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?
A: For the benefit of other readers, I will first explain the meaning of a non-concessional superannuation 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.
You don’t have to be working to make super contributions, including non-concessional contributions, 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 (for more information on the work test, see SuperGuide articles For over-65s: Ten tips when making super contributions and Over-65s work test: How does it operate?).
Anyone under the age of 65 can make a non-concessional contribution to a superannuation fund whether they’re employed, self-employed or not employed. Note that the original source of the cash, such as an inheritance or tatts lotto win or employment income, is irrelevant.
If you’re aged 75 or over, you can no longer make super contributions. You can make super contributions up to the age of 74, although in one instance you can make personal contributions after turning 75; provided you ensure that the contribution is made before the 28th day of the month following the month in which you turn 75 (for more information, see SuperGuide article Super contributions beyond the age of 75.
Note: The bring-forward rules that permit an individual to make up to $300,000 (rather than $100,000) (for the 2018/2019 year) in non-concessional contributions in one year, only apply to individuals under the age of 65. For information about the bring-forward rule, see SuperGuide article Bring-forward rule: A definitive super guide.
Warning! Since 1 July 2017, the annual contribution caps have been cut to $100,000 (non-concessional) and $25,000 (concessional). Further, anyone considering making non-concessional contributions must not have a total superannuation balance of $1.6 million or more. For more information on the new non-concessional contributions rules, see SuperGuide article New normal: $100,000 non-concessional contributions cap.
For more information…
For more information about making superannuation contributions, see the following SuperGuide articles: