In order to contribute to an SMSF, a Member over a certain age might have to meet the work test. An age restriction does not apply to your SMSF accepting mandated employer contributions.
For a contribution to be made to your SMSF when the Members are over 75 years old on 1 July 2022, they will need to meet the requirements for the work test, which requires the Member to be gainfully employed.
Being gainfully employed means working for at least 40 hours during a consecutive 30-day period. This test has to be met each financial year in order to make contributions (both concessional and non-concessional) into your SMSF. Unpaid work is not considered as being “gainfully employed”.
Work Test Exemption
From 1 July 2019, Members with a low superannuation balance will be able to make voluntary contributions if they met the Work Test in the previous financial year. The conditions are outlined below:
The Work Test Exemption was authorised in the 2021 Federal Budget. To access the 2021 Budget, please click on the button below:
Other considerations when utilising the Work Test Exemption:
Nichole (69 years old) retires from full-time work on 1 June 2021. Her total superannuation balance is $150,000 at the end of the 2020-21 financial year. Nichole had not reached her concessional contribution cap over the past 2 years, having contributed only $18,000 in 2019-20 and $12,000 in 2020-21.
|Does Nichole meet the Work Test in the 2021-22 financial year?||No|
|Does Nichole meet the Work Test Exemption in the 2021-22 financial year?||Yes|
|Is Nichole eligible to make contributions under Work Test Exemption in the 21-22 FY?||Yes|
|Under the existing carry forward arrangements and new Work Test Exemption, how much concessional contribution can Nichole make?||Up to $47,5,000|
|How much non-concessional contribution can Nichole make as a result of Work Test Exemption?||Up to $110,000|
This simplified version of Work Test rules is effective from 1 July 2019. Members of an SMSF can use the templates provided below to assist with informing any relevant party that they have met the work test requirements.
For further guidance on the work test provisions, please see here for ATO guidance.