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When Does the Superannuation Work Test for Super Contributions Still Apply?

Posted 6 Jun

It's a detail that can slip under the radar for many—the work test requirement for super contributions. Despite changes in legislation, the need to pass the work test remains crucial for individuals seeking to make personal concessional contributions to their super and claim a tax deduction.

Understanding the Superannuation Work Test

The superannuation work test serves as a pivotal requirement for individuals navigating the landscape of voluntary contributions to their superannuation fund, especially as they approach and surpass the age of 67. But what exactly does this test entail, and why is it so crucial?

The work test mandates that individuals between the ages of 67 and 75 must demonstrate gainful employment for a minimum of 40 hours within any 30-day period during the financial year in question. This stipulation is fundamental for those aiming to claim a tax deduction on their voluntary super contributions. In essence, it ensures that individuals actively participating in the workforce can still enjoy the benefits of contributing to their superannuation even as they edge towards retirement age.

To satisfy the work test criteria, individuals must provide evidence of their employment engagement, showcasing their commitment to gainful work. This proof typically involves documenting a consecutive 30-day period within the financial year, during which the requisite 40 hours of work were completed.

Moreover, it's essential to bear in mind that while the work test imposes a requirement for gainful employment, contribution caps remain in place for voluntary super contributions. These caps delineate the maximum amounts individuals can contribute to their super fund to avail themselves of tax concessions. For the 2023/24 financial year, these caps stand at $27,500 for before-tax contributions and $110,000 for after-tax contributions.

Changes to the Superannuation Work Test

As of 1 July 2022, significant amendments were made to the superannuation work test, ushering in new opportunities for retirees aged between 67 and 75. These changes allow eligible individuals within this age bracket to bolster their superannuation savings through non-concessional and salary sacrificing contributions, provided their super balance remains below $1.9 million as of July 2023.

It's important to note that while the work test still applies for individuals aged between 67 and 75, its scope has narrowed. Specifically, the work test now exclusively pertains to those seeking to claim a tax deduction relating to their personal super contributions.

Meeting the Work Test Criteria

Accruing the necessary 40 hours of gainful employment within any 30-day period during the financial year offers individuals flexibility in how they meet the work test criteria. Here are a few scenarios:

 Working part-time: Individuals could work 10 hours per week for four weeks, ensuring they meet the minimum requirement of 40 hours within the consecutive 30-day period.

Condensed work schedule: Alternatively, individuals may opt for a more condensed approach, working longer hours over a shorter timeframe. For instance, working 8 hours per day for five consecutive days in a single week would fulfill the work test criteria.

Weekend work: Another feasible scenario involves individuals dedicating their weekends to gainful employment. By working 10 hours each on Saturday and Sunday for two consecutive weekends, they can fulfill the 40-hour requirement within the designated 30-day period.

How individuals choose to structure their work hours is entirely up to them, as long as they ensure compliance with the work test criteria and meet the requisite 40 hours within the specified timeframe.

Reach Out With Your Superannuation Questions

Understanding the nuances of the superannuation work test will empower you to navigate your retirement planning effectively and successfully. Here at Empire Accountants, we are committed to ensuring you are informed about their voluntary contributions and tax implications. Reach out to the best accountants in Brisbane to receive the superannuation clarity and peace of mind you deserve!

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