Changes to superannuation contribution age requirements

This article was originally published 8 September 2020.

Despite consecutive Federal Governments making changes to superannuation rules and regulations, superannuation remains one of the most attractive investment options for many Australians. The low rate of tax in the accumulation phase and zero tax rate in the pension phase makes it hard to beat. The latest change extends the age-based limit for contributing to superannuation without having to meet a work test.

Superannuation contribution age requirements eased on 1 July 2020. While there continues to be no age limit imposed for mandated employer contributions, there are updated age restrictions in place for voluntary contributions (both pre-tax and post-tax). Contribution limits remain unchanged at $25,000 for concessional (pre-tax) contributions and $100,000 for non-concessional (post-tax) contributions.

Previously, individuals younger than 65 years of age could generally make superannuation contributions with no restriction. This age limit has now increased, and an individual must be younger than 67 years of age to contribute.

Any individual aged 67 or above must satisfy a work test at the time of contribution, this means the individual must be gainfully employed for at least 40 hours for 30 consecutive days in the financial year the contribution is made. There is a work test exemption available for individuals who have retired in the financial year prior and have a superannuation balance of less than $300,000 prior to 30 June. This exemption can only be applied once.

If an individual is aged 75 or above, only mandated employer contributions can be accepted. Retirees may also be able to contribute to superannuation above these age limits if the contribution is a downsizer contribution.

Bring-forward rules, which allow individuals to bring forward three years of after-tax contributions, are currently only available to individuals aged 64 years at the start of the financial year. This age limit may increase to 66 years of age, but it currently remains before parliament as a proposal.

If you would like to discuss your superannuation requirements or any other personal financial matters, please contact a BDO Private Wealth adviser today.

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