Considerations for clients turning 65
If a client has turned 65 after 1 July 2019, under current law, this financial year is their last chance to trigger the bring-forward rule which allows non-concessional contributions of up to $300,000 over three years (assuming they haven’t already triggered the three year cap in the previous two financial years). For further information on the non-concessional cap see the ‘Optimising super contributions’ section above.
Clients aged 65 (refer note below) and over must meet the work test to contribute to super. That is, if contributing after turning 65, they must be gainfully employed for at least 40 hours in 30 consecutive days in the financial year the contribution is made. From 1 July 2019, those aged 65 to 74 are exempt from the work test in the year financial year following the year they retire, provided their total superannuation balance (TSB) at the prior 30 June is less than $300,000.
The work test is not required for mandated employer contributions, such as superannuation guarantee.
Super funds generally require a work test declaration to be provided each financial year a contribution is made after a client reaches age 65.
Note – In the 2019-20 Federal Budget, the Government proposed to increase the age the work test first applies from age 65 to age 67. Laws have now been made to implement this change and apply from 1 July 2020.
Macquarie Big Black Book (pages 33-34)