SMSF Work Test

Over 65 work test for contributions

Posted on Posted in SMSF Contributions

Over 65 work test for contributions

Work Test over 65 years still exists

In the 2016 Budget announcements the work test was going to be removed - however this was reversed several months later.   

Making concessional or non-concessional contributions for over 65's is is possible, however you need to be aware of the rules.

65 Work test SMSFAged between 65 and 75?

The first thing to remember is that anyone age 65 or over must satisfy a work test before contributing to super. This applies up to the age of 75 when you no longer can contribute to super (your employer can still make SGC contributions).  If you satisfy the work test you can make either or both concessional (tax deductible) or non-concessional contributions to your superannuation fund. These contributions will of course be subject to the contribution caps rules.

So what is the Work Test for Super Contributions?

To satisfy the work test for super contributions you must be “gainfully employed” on at least a part time basis during the financial year that you make the contribution.  This means that you must be employed or self-employed  for gain or reward which APRA describe in their circular on contributions as 'gain or reward' involves remuneration such as 'salary or wages, business income, bonuses, commissions, fees or gratuities, in return for personal exertion'.

The “gainful employment” needs to consist of at least 40 hours in a 30 consecutive day period during the financial year.  From a practical point of view, evidence of meeting the work test should be relatively easy for an employee.  If you are working at the local IGA or Bunnings for example, there would be payslips detailing your hours during a given pay period.  Also there may be timesheets, PAYG Summaries or you could get a declaration for the employer.

For members who are self employed it may be more difficult, however records should be kept to provide evidence of gainful employment.  The member could also provide the account/auditor with a contributions work test declaration (see our resources page).  I would also suggest that you keep records such as diary entries and notes as evidence of your gainful employment.

If you have any questions relating to contributions for over 65's feel free to contact us.

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