25 Oct 2022
The work test and work test exemption explained
Until 1 July 2022, if you were aged 67 to 74 and wanted to make voluntary super contribution, you had to meet a work test or get a work test exemption.
Under the new rules, individuals under 75 years of age can make, or receive, personal and salary sacrifice contributions without meeting a work test or needing an exemption, subject to existing caps.
This change simplifies the rules around super contributions for older Australians and allows them greater flexibility as they save for retirement.
Generally, the last time your super fund can accept any voluntary contribution from you is 28 days after the end of the month you turn 75, unless you’re making a downsizer contribution.
The one exception
If you’re aged 67 to 74 you’ll need to meet the work test or work test exemption – but only if you want to claim a personal superannuation deduction for your contributions made on or after 1 July 2022.
Under the work test you must have worked at least 40 hours over 30 consecutive days in the financial year.
To use the work test exemption, you must satisfy the following conditions:
- you’ve met the work test in the previous financial year
- you haven’t been, and don’t intend to be, gainfully employed for at least 40 hours within 30 consecutive days in the financial year the contributions are made
- your total super balance with all super providers was below $300,000 at 30 June of the previous financial year, and
- you haven’t previously claimed a personal tax deduction under this exemption in any previous financial year.
Under the new rules, the work test can be met in any period in the financial year of the contribution. This is different to the previous rules, where the work test must be met before contributing.
Further considerations to be mindful of
- If you’re making contributions to your super, there are limits on the amount of concessional and non-concessional contributions you can make each year. If you exceed super contribution caps, additional tax and penalties may apply.
- When you turn 65, you typically have full access to your super, regardless of whether you’re working or are retired.
- The value of your investment in super can go up and down. Before making extra contributions, make sure you understand and are comfortable with any potential risks.
If you’d like to discuss the work test, or work test exemptions and how these may apply to you, please don't hesitate to contact us.
©AWM Services Pty Ltd. First published Jul 2022
If you have any questions or your personal circumstances have changed please do not hesitate to contact your financial adviser.
Any advice included in this article has been prepared without taking into account your objectives, financial situation or needs. Before acting on the advice, you should consider whether it’s appropriate to you, in light of your objectives, financial situation or needs.
