Q: Could you please explain under what circumstances I am able to make a contribution to Superannuation. I am 68 years old.
A: From 1 July 2020, the work test has now been abolished until a person reaches the age of 67. In the financial year the Superannuation fund member reaches age 67, personal contributions can be made prior to reaching that age without meeting the work test of 40 hours in 30 consecutive days in the financial year prior to making a contribution to Super.
There are three types of Superannuation contributions that can be made once a person reaches 67 years of age without the requirement to meet the work test. They are the Superannuation home downsizer contribution, ceasing work contribution and employer contributions made for the Superannuation Guarantee or as required as part of an industrial award.
Superannuation home downsizer contributions can made after the sale of a person’s main residence which they have owned for at least 10 years. To be eligible the person must be 65 years of age or older and a contribution of up to $300,000 can be made within 90 days of the property settlement. The person’s spouse may also be eligible to contribute up to $300,000 if they are 65 years of age or older. There is no upper age limit applying to downsizer contributions or any work test that applies.
Ceasing work contributions are permitted on a once-only basis after the Superannuation fund member has reached age 67, in the year after they have ceased work. These rules allow a person to make both Concessional and Non-concessional contributions providing they have a total super balance of less than $300,000 on 30 June in the previous financial year. These contributions can be accepted during the year after ceasing work up to 28 days after the month in which the person reaches 75 years of age.
Regardless of how old an employee is, there are no work tests or age limits for compulsory employer contributions for those aged over 65. Obligatory Employer contributions include Superannuation guarantee contributions or those made under an industrial award. However, a work test must still be met if the employee wishes to make a salary sacrifice to super between the age of 67 and up until 28 days after the month in which the employee reached 75 years of age. After that time, no further salary sacrifice contributions can be made to super.
Please note that if your combined Superannuation and Account based pension is valued at greater than $1.6 million at 1 July 2020, regardless of your age, you will be ineligible to make after tax non-concessional contributions with the exception of the Superannuation home downsizer contribution.