SMSF Solutions for Accountants and Financial Planners
by Mark Phillips
The rules around eligibility to make non-concessional contributions can be a little confusing. We have created a flowchart to assist you to work through the current rules, which include increasing the age at which you need to meet the work test from 65 to 67. There is pending legislation also to be effective from 1st July 2020 that will allow people aged 65 and 66 to take advantage of the bring forward rule which we have not included as it is not yet law. We will amend the flowchart when the pending legislation has passed.
Total Super Balance (TSB)
A member’s TSB is the total of all their benefits held in any superannuation fund, not just the fund to which the contribution is being made. For contributions made during the 2020/21 financial year, the relevant TSB is that calculated as at 30th June 2020. For many SMSF’s that value will not be known with any certainty until the financials are prepared.
Work Test
The work test requires a member to be gainfully employed for at least 40 hours in a consecutive 30 day period during the financial year. The member must have received salary or wages, bonuses or business income for the work undertaken. Unpaid work does not meet the definition of gainful employment. It is also important that the member meets the work test before making any contributions.
NCC’s made in 2018/19 Year
At step 3 of the flowchart we’ve put together, only include NCC’s made in the 2018/19 financial year if the bring forward rule was triggered in that year.
Please download the flowchart, hopefully it makes NCC clearer for you.