In the 2018 Federal Budget, the Government announced it will introduce a measure designed to give recent retirees flexibility to get their financial affairs in order in the transition to retirement. In essence, this means a year when they can still make contributions, even if they are no longer working ‘at least part-time’.
This exemption will be for 65-74 year old members, in the first year they don’t pass this test, if their superannuation balances are below $300,000.
This ‘work test’ is the one found in Regulation 7.04 of the Superannuation Industry (Supervision) Regulations 1994 (SIS Regs). This regulation governs the types of contributions the trustee of a complying superannuation fund can accept. After the member turns 65, and before he or she turns 75, the member must work ‘at least part time’, for the trustee to be able to accept member contributions or employer contributions (beyond those ‘mandated’ by the SGC legislation). For these purposes, ‘part time’ is a minimum of 40 hours in any 30 day period, in the financial year under SIS Reg 7.01(1) (roughly 10 hours a week). And, after the member turns 75, the trustee can only accept ‘mandated’ employer contributions and ‘downsizer’ contributions (out of sale proceeds, received by 65+ members, from ‘downsizing’ their home).
This measure will take effect from 1 July 2019.
[Treasury website: Budget Paper, Part 1 – Revenue Measures, p29; Tax Month May 2018]
Study questions (answers available)
- Does a member, who is aged 65-74, have to pass a ‘work test’ before the trustee of the Fund can accept member contributions or non-SGC mandated employer contributions?
- Is this measure a partial exemption from that test?
- Is this partial exemption, for members with less than a $300,000 account balance, for as long as it takes to get that balance up, over $300,000, or they turn 75, which ever happens first?
- Will this measure begin on 1 July 2020?
