Using the One-Year Work Test Exemption to Maximise SMSF Contributions After Retirement

Clients approaching or entering retirement often want to make final contributions to top up their superannuation balance. However, once they retire, contribution rules tighten significantly.

Unless they qualify for the one-year work test exemption.

This exemption can create valuable opportunities for SMSF members aged 67 to 74, but advisers must carefully consider eligibility criteria and timing. Knowing when to recommend this strategy or when to defer it, can make a significant difference to your client’s retirement outcomes.

What Is the One-Year Work Test Exemption?

Since 1 July 2019, individuals who have recently retired may be eligible to make super contributions without meeting the work test in the current financial year. Provided they met it in the previous year.

To qualify, a member must:

• Be aged 67 to 74 (inclusive)
• Have a Total Superannuation Balance (TSB) of less than $300,000 on 30 June of the previous financial year
• Have met the work test in the previous financial year (i.e. worked at least 40 hours over 30 consecutive days)
• Not have previously used the one-year exemption (lifetime limit of one use)

Strategic Insight: The exemption can only be used once, but it’s not lost if unused. For example, a member who retires and later returns to work without using the exemption can still use it in a future retirement year, provided they remain eligible.

Types of Contributions Allowed

During the exemption year, the member can make the following contributions:

• Personal contributions (both concessional and non-concessional)
• Spouse contributions
• Small business CGT contributions
• Salary-sacrifice contributions, but only if the arrangement was in place prior to retirement

Excluded contributions:

• Mandatory employer contributions (e.g. Super Guarantee)
• Downsizer contributions (separate eligibility rules apply)

Note: Since 1 July 2022, individuals under 75 no longer need to meet the work test for non-concessional or salary-sacrifice contributions. However, the work test, or this exemption, still applies for personal concessional contributions (i.e. those claimed as a tax deduction).

Planning Considerations for Advisers

The exemption is often underutilised or misapplied.

It can be highly effective for clients who:

• Wish to retire but contribute in the following financial year
• Expect a windfall (e.g. inheritance or property sale) after retirement
• Want to equalise member balances for estate planning or transfer balance cap reasons
• Are unlikely to return to work again, making this their last opportunity to contribute

Questions to guide timing strategy:

• Has the member already used the exemption?
• Do they intend to return to work, even part-time?
• Will their TSB exceed $300,000 next financial year?
• Would it be more advantageous to defer the exemption for a future year?

For more information on contribution timing and end-of-financial-year strategy, see our full EOFY SMSF checklist.

Strategy in Practice

Case Study 1: Use the Exemption Now

Hayley, aged 68, retires in April 2025. Her TSB at 30 June 2025 is $250,000. She met the work test during 2024–25 and hasn’t used the exemption.
In September 2025, she sells an investment property and wants to contribute some of the proceeds.
Outcome: Hayley can make up to $120,000 in non-concessional contributions without needing to meet the work test in 2025–26.

Case Study 2: Defer Use of the Exemption

Geoff, aged 72, resigns in June 2025 with a TSB of $270,000. He plans to work part-time in 2025–26 and retire later in that financial year.
Outcome: Geoff can continue contributing while working. If his TSB remains under $300,000 at 30 June 2026, he may use the exemption in 2026–27, when he fully retires.

Case Study 3: Combine with Downsizer Contribution

In the same scenario, Geoff retires in June 2025 and sells his home in 2026. His TSB at 30 June 2025 is under $300,000.
Outcome: He may be eligible to make a downsizer contribution (up to $300,000) and also make personal concessional contributions under the one-year exemption in 2025–26, maximising his contribution strategy.

How SMSF Engine Can Support Your Business

Clients often have questions about post-retirement contributions or whether to use the one-time work test exemption. Our technical team can support advisers by:

• Reviewing TSB and contribution history to ensure eligibility and compliance
• Assisting with strategy development and modelling outcomes
• Reviewing trust deeds for contribution provisions
• Preparing supporting documentation

Common Client Questions

“I’m retired but may return to work next year. Should I use the exemption now?”
It depends. If there’s a risk their TSB may exceed $300,000 later, it may be worth using now. Otherwise, it may be more valuable to defer the exemption until they permanently retire.

“Can I use the bring-forward rule with this exemption?”
No. The bring-forward rule ends at age 75 and is not activated by this exemption alone. Other age and TSB thresholds apply.

“Can I make a downsizer contribution as well?”
Yes, provided the member meets separate eligibility requirements. Timing and contribution sequencing are important.

For eligibility criteria and timing tips, see our section on downsizer contributions.

Final Thoughts

The one-year work test exemption offers a limited but powerful window to make additional contributions in retirement.

Advisers can deliver significant value by helping clients understand not only if they’re eligible, but also when to use the exemption.

Our team assists advisers in developing SMSF contribution strategies that account for liquidity, timing, and member goals.

Need help navigating contribution timing or retirement exemptions? Contact SMSF Engine to speak with our technical team.

We support advisers with strategy, modelling, and documentation to keep your clients compliant and confident.