Financial success can hold a different meaning for all of us. Despite this, financial success is often linked to something we all tend to have in common, financial goals—our vision for the future. This vision can often centre on retirement (and our desired retirement lifestyle) and the accumulated wealth needed to support it.
Notably, the financial decisions you make throughout your life will often determine whether you achieve your financial goals, and in doing so, make your version of financial success a living and breathing reality.
With the above in mind, approaching retirement planning early on can help you to benefit from the power of compounding, and provide flexibility to make adjustments if and when required. This approach can also assist you in working towards your financial goals at a more comfortable pace.
In terms of accumulating wealth and funding retirement needs, super can be a powerful investment structure and is something we have recently covered.
Importantly, to accumulate wealth in super, it takes, among other things, contributions. However, this isn’t without its limits—there are contribution eligibility considerations to be mindful of. For example, aside from the various limits on the amounts that can be contributed, age and work test conditions also exist.
Below, we provide a brief overview of age and work test conditions on contribution eligibility.
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Super contribution eligibility |
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Contribution type |
Conditions |
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Maximum age* |
Work test# |
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Mandatory employer contribution (includes Super Guarantee contributions and employer contributions required under a particular award or certified agreement) |
None |
No |
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Voluntary employer contribution (includes salary sacrifice contributions) |
75^ |
Yes, if aged 67 or more at time of contribution |
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Personal contribution (includes non-concessional contributions, personal deductible contributions, and small business CGT contributions) |
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Spouse contribution |
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Downsizer contribution (must be 65 or older and meet other eligibility conditions) |
N/A |
No |
*Member age from which contribution can’t be accepted.
^Must be received within 28 days of end of month in which member reaches age 75.
#Work test must be met prior to contribution being made. Must have worked at least 40 hours over a consecutive 30 day period in financial year of contribution to meet work test, unless work test exemption applies. Please note: If member is aged 67 to 74, a work test exemption applies for 12 months from the end of the financial year in which they last met the work test, provided their total superannuation balance was less than $300,000 at the prior 30 June and they have not previously used this exemption.
Aside from the age and work test, another important contribution eligibility condition is your Tax File Number (TFN). For voluntary employer, personal and spouse contributions, your TFN needs to have been supplied to your super fund. As an example, if your super fund doesn’t have your TFN then they are required to:
- tax employer contributions at 47%*.
*Generally concessional contributions are taxed at 15%, and if you have income and concessional contributions totalling more than $250,000, an additional 15% (called Division 293 tax) applies to concessional contributions exceeding the $250,000 income threshold that are within your concessional contributions cap.
- not accept member contributions including non-concessional and personal deductible contributions, which also means that you are unable to participate in the Government's Co-Contribution scheme.
Your annual super statement should list whether you have supplied your TFN. If you haven’t supplied your TFN, your super fund will have information on how to update your member details.
Important things to note
- In the recent 2021-22 Federal Budget papers, several proposed policy measures were announced:
- The Government will reduce the eligibility age to make downsizer contributions into superannuation from 65 to 60 years of age. The measure will apply from the start of the first financial year after Royal Assent of the enabling legislation—the Government expects this measure to apply from 1 July 2022.
- The Government will allow individuals aged 67 to 74 years (inclusive) to make or receive non-concessional (including under the bring-forward rule) or salary sacrifice contributions without meeting the work test—subject to the contributions caps. Individuals aged 67 to 74 years will still have to meet the work test to make personal deductible contributions. The measure will apply from the start of the first financial year after Royal Assent of the enabling legislation—the Government expects this measure to apply from 1 July 2022.
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