Since 1 July 2019, there has been an exemption allowing members to make additional super contributions when they no longer meet the work test. This can be great for members who have recently retired but would still like to make some final larger contributions to their SMSF to top up super.
This one-year work test exemption is only available for members aged 67-74 who have a total super balance (TSB) of less than $300,000 at 30 June of the prior year. The exemption can only be used once in the member’s lifetime and only in the financial year following the year they met the work test.
Although the exemption can only be used once, it is not lost if the member doesn’t use it. For example, if a member retired and later went back to work without using the exemption, they could use it at a later point in time when the member retires again. Therefore, when a member retires, it may be worth considering if they might return to work at some stage and whether it would be more advantageous to use this exemption in a later year.
The Government has proposed that from 1 July 2022, members who are between 67 to 74 will no longer need to meet the work test to make non-concessional and salary sacrificed contributions, but will need to for personal concessional contributions.
The exemption applies to the following types of contributions:
If a member has recently retired or is planning to, and they meet the other criteria, utilising the work test exemption should be considered as a tool to top up their superannuation before they transition into the next phase of their life.
If you’d like to discuss this option for your client, make an appointment with Alex today
Keep up to date with all the latest SMSF news and updates by subscribing to SMSF Engine’s newsletter.