The Work Test

Recently the age restriction of 65 was increased to the age of 67 so that anyone under the age of 67 could contribute to super. But what about people over the age of 67?

Once you turn 67 and until you turn 75, you must have been gainfully employed for at least 40 hours within 30 consecutive days in a financial year before your super fund can accept any voluntary employer contributions and member contributions for you.

This is an annual test. This means once you meet this test you can make contributions for the entire financial year. For 2019–20 and earlier financial years, this rule applied once you turned 65 years old and until you turned 75 years old.

Example:

During 2020–21, Kumiko works 20 hours per week for six months as a data analyst and earns $26,000 in salary and wages. She also turns 67 years old.

As Kumiko is 67 years old in 2020-21, she must satisfy the work test or meet the work test exemption criteria to be eligible to claim a deduction for any personal (after-tax) super contributions she makes after turning 67 years old.

Kumiko satisfies the work test because she was gainfully employed for at least 40 hours during a consecutive 30 day period in 2020–21.

Kumiko gave her fund a notice of intent to claim $2,000 as a deduction and received an acknowledgement of that notice. She meets all the other eligibility criteria and can claim a deduction for her personal super contributions of $2,000 in her 2020–21 tax return.

In 2020–21, Kumiko turns 66 years old. This year, she does not need to satisfy the work test or meet the work test exemption criteria to be able to claim a deduction for personal super contributions in her 2020-21 tax return. However, she must still give her fund a notice of intent and receive an acknowledgement of the notice.

Work Test Exemption

You will see in the example that we talked about a “work test exemption”. Recently the law was changed to allow you to make a contribution to super, as a 67 to 74 year old, even if you don’t meet the work test provided you met the work test last year and:

1. You have less than $300,000 in superannuation; and
2. You have not used the work test exemption previously

So in the above example, let’s say Kumiko finished working in the 2020-21 year and her total balance of all her super funds was under $300,000. During the 2021-22 year Kumiko will again be able to contribute to her super fund.

There is also a different work test for children under the age of 18 years if they wish to claim a tax deduction for any contributions they make to superannuation. We will cover that work test in a separate article.

Disclaimer: This article contains general information only. Regrettably, no responsibility can be accepted for errors, omissions or possible misleading statements or for any action taken as a result of any material in this guide. It is not designed to be a substitute for professional advice, as such a brief guide cannot hope to cover all circumstances and conditions applying to the law as it relates to these items.