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Self Managed Super Funds (SMSF)

Six key superannuation changes for financial planners to consider

By Graeme Colley
Executive Manager, SMSF Technical and Private Wealth - SuperConcepts Sydney, Australia

Contribution advice in the current financial year

Providing advice on whether a client should contribute to super continues to become more complex. The boundaries are set by the person’s age, who made the contribution, whether a work test is required to be met, the type of contribution and the total amount they have in super, and an individuals’ total super balance at the end of the previous financial year. From the beginning of this financial year, we see new rules commencing that will abolish the work test until a person reaches 67 years of age, and an extension of spouse contributions to the age of 75. However, it be some time before we see the bring forward rule for non-concessional contributions finally make it into law.

Abolition of the work test to age 67

Until 30 June 2020 there was no requirement to satisfy a work test until a person reached the age of 65 for personal concessional and non-concessional super contributions. Once they reached 65 years of age, a work test of 40 hours in 30 consecutive days was required to be met during the financial year and prior to the contribution being accepted.

From 1 July 2020, the work test has now been abolished until a person reaches the age of 67. In the financial year the member reaches 67 years of age, personal contributions can be made prior to reaching that age without meeting the work test.

Accessing the bring-forward rules from 1 July 2020

The announcement in the 2018 Federal Budget proposed to allow a person who was under 67 years of age on 1 July access the bring-forward rule that can allow a person to bring forward up to two years of non-concessional contributions. However, due to the highly unusual events of this year, the legislation has been delayed in the parliament and may not be debated in the Senate for another few months.

Until the law is passed, the current rules for the bring forward of personal non-concessional contributions will continue in place. This means that only those who are no older than 65 years of age on 1 July in this financial year can access the rule. From a financial planning perspective, the holdup will prevent anyone who is age of 66 or 67 years old access to the bring forward rule in this financial year up until the time the law is amended. The main issue arises for anyone who wished to access the bring forward rule but does not meet the work test, however, reaches 67 years of age between 1 July 2020 and the time the legislation is passed. In this situation, they may find their non-concessional contributions are limited to no more than $100,000, rather than gaining access to a potential non-concessional contribution of $300,000.

Whether a person has access to triggering the bring-forward rule depends on their total superannuation balance on 30 June in the previous financial year. For anyone with a total super balance of less than $1.4 million, they are able to bring forward up to two years' standard non-concessional contribution. Furthermore, individuals with a total super balance of between $1.4 and $1.5 million is able to bring forward up to one year’s standard non-concessional contribution of $100,000. Once a person has a total super balance of between $1.5 and $1.6 million, only the standard non-concessional contribution is available and access to a bring forward amount is not available. For those with a total super balance of $1.6 million or more, they are unable to make a non-concessional contribution without incurring a tax and interest rate penalty.

Spouse contributions and the tax offset

Contributions can be made for an eligible spouse which are treated as non-concessional contributions and counted against the spouse’s non-concessional contributions cap. If the spouse has an adjusted income of less than $37,000, it is possible for the contributing spouse to receive a tax offset of up to 18% on the first $3,000 of any non-concessional spouse contribution. The tax offset amount phases out between $37,000 and $40,000 on a dollar-for-dollar basis.

Until 30 June 2020, it was only possible to make spouse contributions up until age 70. Between the age of 65 and 70, the spouse was required to meet the work test of 40 hours in 30 consecutive days for the year in which the contribution was made. However, from 1 July 2020 this has now been extended to apply for spouse contributions made between 67 years of age and 28 days in the month after the spouse reaches 75 years of age, which puts it in line with other personal superannuation contributions. It is important to note that the work test must be met by the receiving spouse prior to contributions being made to the fund.

No work test required

There are three types of contributions that can be made to super once a person reaches 67 years of age without the requirement to meet the work test of 40 hours in 30 consecutive days. They are the ceasing work contributions, downsizer contributions, and employer contributions made for superannuation guarantee or purposes of an industrial agreement.

Ceasing work contributions

Ceasing work contributions are permitted on a once-only basis after the member has reached 67 years old, previously age 65, in the year after they have ceased work. These rules allow a person to make 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.

Downsizer contributions

Downsizer contributions can made after the sale of a person’s main residence, as described for capital gains tax (CGT) purposes, 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.

Employer contributions

When it comes to employer contributions for anyone 65 years of age or older, there are no work tests or age limits for compulsory employer contributions such as superannuation guarantee contributions or those made under an industrial award. However, a work test must 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.

Making contributions to super after 65 years of age

There are a number of worthwhile opportunities for concessional and non-concessional contributions to super after the age of 65, but understanding when this is possible forms an important part of financial planning. Abolition of the work test up until the age of 67 has certainly opened up some doors for last minute contributions to be made for anyone who has retired but after that there are a number of other opportunities as well for persons who may not have met the work test during the financial year.

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Graeme Colley, Executive Manager, SMSF Technical and Private Wealth SuperConcepts
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Important notes

While every care has been taken in the preparation of this article, AMP Capital Investors Limited (ABN 59 001 777 591, AFSL 232497) and AMP Capital Funds Management Limited (ABN 15 159 557 721, AFSL 426455)  (AMP Capital) makes no representations or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This article has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this article, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. This article is solely for the use of the party to whom it is provided and must not be provided to any other person or entity without the express written consent of AMP Capital.


This article is not intended for distribution or use in any jurisdiction where it would be contrary to applicable laws, regulations or directives and does not constitute a recommendation, offer, solicitation or invitation to invest.

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