Q. I am 67 and self-employed doing part-time contract work. As I am over age 65 are there any restrictions on me contributing to Superannuation? Can I make a tax deductible contributions into a super fund?
A. To be eligible to make a Superannuation contribution past the age of 65, you are required to satisfy a work test. The test requires 40 hours of “gainful employment” over a 30 day consecutive period during the Financial Year in which the contributions are to be made. It is important to note that contributions can only be made to a Superannuation fund once the work test is satisfied in the Financial year.
“Gainfully employed” means employed or self-employed for gain or reward. Unpaid Charity work does not count, so if you wish to make a contribution to Super you need to make sure you secure work that qualifies as “gainful employment”.
To be eligible to claim a tax deduction on a personal Superannuation Contribution, less than 10% of your assessable income including Fringe Benefits and Employer Superannuation Contributions can be derived as an employee. So if you receive remuneration as an employee of say $5,000, you would need to derive income generated by you of more than $50,000 to be eligible to claim a tax deduction for Superannuation.
To claim a tax deduction for a personal contribution, you must submit a notice of intent to claim the tax deduction to the Superannuation fund by the earlier of the time you lodge your tax return or by the end of the financial year following the year in which the contribution was made. Contributions tax at 15% will be deducted from the Superannuation contribution.
A Concessional Superannuation Contribution is one in which either an employer or the individual claims a tax deduction for the contribution. The maximum Concessional Contribution for the 2015-2016 tax year is $35,000 for those over 49 on 30 June 2015 and $30,000 for those younger.
The Concessional Contribution cap should not be confused with the Non-Concessional Contribution Cap. The Non-Concessional Cap is for Contributions to Superannuation where a tax deduction is not claimed. The tests operate exclusive of each other. The Non-Concessional Contribution Cap is $180,000 per financial year or if under 65, $540,000 every 3 years. To be eligible to make a Non-Concessional Contribution, you are still obligated to satisfy the work test. No Contributions Tax is payable on Non-Concessional Contributions.