Work Test For Making Super Contributions

When you reach senior age and are able to enjoy your super, will you still be able to make contributions toward your super? It’s possible if you know the rules and the limitations to this.


What is the Work Test?


Satisfying this work test allows you to make voluntary contributions to your super and take advantage of lower tax rates given to pre-tax contributions.

Previously, the work test exemption was applied to citizens 65 years old. However, in July 2020, the start of the work test was changed to 67 years old, giving people more chances to take advantage of tax benefits and increase savings in their super accounts.

How It Works

To make voluntary, pre-tax super contributions when you turn 67, you must show proof that you have been employed (gainful employment) for at least 40 hours within a 30-day period in a financial year. It’s up to you how to accrue the hours within the prescribed period. You can work twice a week for 5 hours, for four consecutive weeks or 2 hours every day for 4 weeks.

At the end of each financial year, you have to accomplish a work test declaration form. You need to submit this to your super and wait for the confirmation of the declaration. Once confirmed that you’ve satisfied the requirements, you can use the letter for claiming tax deductions.

Gainful Employment

According to the ATO, gainful employment is defined as being employed or self-employed and getting paid for it. This doesn’t include money earned from voluntary work, passive income, or ad hoc income.

You don’t need to receive the income into your bank account to be considered gainfully employed. You can choose to put the whole or part of the income as salary sacrifice contributions.

Contribution Limits

When it comes to contribution caps, the same limits apply to concessional and non-concessional contributions: $27,500 for pre-tax and $110,000 for after-tax contributions.

If you’re over 67 years old, you’re still qualified for government co-contributions. You can also make voluntary payments to your partner’s super.


Work Test Exemption


Satisfying the work test exemption lets you make voluntary contributions for the next 12 months and enjoy the tax benefits associated with it without having to work as stipulated in the work test criteria.

For the work test exemption, you must fulfil the following conditions:

-          Satisfied the work test in the previous financial year wherein you made a contribution

-          Your total super balance doesn’t exceed $300,000 at the end of the previous income year

-          You didn’t apply for work test exemption in the previous financial year


Changes to the Work Test


In May 2021, the government announced that it will abolish the work test by July 2022. This means that seniors aged 67 to 74 years old will be able to contribute to their super without the need to satisfy the work test, so long as their super account doesn’t exceed $1.7 million by July 2022. However, this new regulation is yet to be legislated, so the proposed change isn’t set in stone.

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