Work Test over 65 years (including managing investment property)
If you are aged 65 or over (but under the age of 75) you can make voluntary super contributions providing you have been gainfully employed during the financial year. You will need to sign a ‘work test’ declaration that you have worked at least 40 hours in a period of not more than 30 consecutive days in the financial year in which you plan to make the super contribution. This includes non-mandated employer contributions, person contributions, spouse contributions and government co-contributions.
The work test can be satisfied when ‘employment’ involves any endeavour where you have received remuneration for your efforts in any business trade, profession, vocation, calling, occupation or employment. It is a minimum requirement.
Examples where the work test is not met:
• Volunteering for a charity (church, local hospital etc)
• Baby-sitting grandchildren • You personally own residential/commercial properties and you look after their maintenance and collection of rent – this is because you are not in the business of property management and rental, you are an investor.
Examples where the work test is met:
• Your family trust owns residential/commercial properties and you are employed by the trust and receive a salary to look after their maintenance and collection of rent.
• The work test can be met with work performed overseas, not just in Australia.
If you make the contribution to your self-managed super fund, you have more responsibility. In this situation you are acting as a member and as trustee. If for some reason you could not prove you passed the work test. The Tax Office has advised that the onus of proof is on the person making the contribution, not the fund receiving the contribution. If the ATO is not satisfied that the work has been done or paid for legitimately, or was not paid at a commercial rate, the contribution could be disallowed.
The work test also discriminates against people that choose to do unpaid volunteer work.
The existing ‘work test’ for voluntary contributions made by members 65-74 does not apply to downsizing contributions which came in to effect 01/07/2018.
From 1/07/2019 the government will introduce an exemption from the over – 65’s work test for Australians aged 65-75 with superannuation balances of less than A$300,000, for the first year members do not meet a work test requirement. The full $25,000 concessional cap (plus catch-up concessional contributions) will be available, and the $100,000 non-concessional cap will also be available. Total superannuation balances will be assessed for eligibility at the start of the financial year following the year in which they last met the work test.
If you have reached 75 years and make a member contribution the transaction has to occur within 28 days after your 75th birthday. However you can accept mandated employer contributions, such as super guarantee contributions from a member’s employer at any time.
Non-mandated contributions are not accepted after 28 days from a member’s 75th birthday and that includes personal contributions, super co-contributions, eligible spouse contributions and contributions made by a third party, such as an insurer. The work test does not apply to 75 and over.