There have been some changes to the work test exemption from 1 July 2019. See below further information regarding these changes. 

The Work Test – What is it?

The work test generally applies from a member’s 65th birthday. To satisfy the test, a member must have been gainfully employed for 40 hours in 30 consecutive days before contributing. Mandated employer contributions (i.e. Award or Superannuation Guarantee contributions) and downsizer contributions are exempt from this requirement.

From 1 July 2019, members aged 65 to 74 are exempt from the work test for the income year following their retirement. This only applies provided that their total superannuation balance just before the start of that income year is less than $300,000, and they have satisfied the work test in the prior year of retirement.

Benefits and Restrictions

The extension of the test provides added flexibility for recent retirees. They are now able to contribute to their funds as long as they have less than $300,000 in their Total Super Balance. 

Unfortunately, there are also some restrictions on the introduction of the new legislation. If a fund member ceases work well before the age of 65, they would not be able to benefit from the original work test exemption. The exemption is only available in one financial year. This stops members using the exemption on year, then meeting the work test in the next financial year and then being able to use the exception the year after. 

Bring Forward Rules and the Work Test Exemption

The bring-forward allows fund members to contribute to up to three years’ contributions in a single year, bringing forward one or more subsequent years’ contributions. 

The new exemption does not change the bring-forward rules. The last year in which an individual can initiate a bring forward period is the year in which the fund member turns 65. After that, the maximum non-concessional contribution amount is $100,000. It will still be possible to make a concessional contribution up to the cap should a member take advantage of the work test exemption.

For any further questions regarding the work test exemption, please do not hesitate to contact Ben or Michael at our office.