If you’re 65 or over, you can continue to build your superannuation with compulsory employer contributions (such as Super Guarantee contributions your employer pays where you are eligible).
However, if you’re making voluntary contributions, which you may do through salary sacrifice (which is where you elect to have a portion of your before-tax income paid into your super), or via additional after-tax contributions, you must be under age 75 and satisfy work test requirements.
This is important, because if you do come into money (for instance, you might receive an inheritance or make money from an investment), you generally won’t be able to put this cash into super otherwise.
Your questions answered
How does the government work test work?
If you're 65 or over but under 75 at the time you're contributing, you must've been gainfully employed during the financial year for at least 40 hours over a period of no more than 30 consecutive days.
The 30 days can be any consecutive 30-day period within the financial year, so in other words it doesn’t have to be in the same month, and as it’s a minimum requirement, there is no maximum limit to how much you can work.
The work test must however be met before you make the contribution. And, you also might need to submit a work test declaration form to your super fund to confirm you’ve met the government’s work test requirements.
What type of employment is acceptable?
Gainful employment means you are employed or self-employed for gain or reward in any business trade, profession, vocation, calling, occupation or employment.
Simply put, you need to be getting paid, so unpaid and volunteer work typically don’t count.
Are there limitations to what I can contribute?
Yes, there are. The super contribution caps below apply to everyone, but note, if you’re under 65, it may be possible to contribute more under the bring-forward rules.
|Contribution type||Contribution cap|
|Before-tax super contributions||$25,000 per annum|
|After-tax super contributions||$100,000 per annum|
Meanwhile, if you happen to have total super assets over $1.6 million as at 30 June of the previous financial year, you can’t make additional after-tax contributions to your super, or penalties may apply.
What about the new rules if I’m downsizing my home?
From 1 July 2018, Australians aged 65 and over will be able to make an after-tax contribution to their super of up to $300,000 using the proceeds from the sale of their main residence – regardless of their work status, super balance, or contribution history.
For couples, both spouses will be able to take advantage of this opportunity, which means up to $600,000 per couple can be contributed toward super.
The work test doesn't apply in this instance. And, the proceeds from the sale of your main residence that are contributed into super can be made on top of any before or after-tax contributions you’re eligible to make, meaning you can exceed the contribution caps mentioned above.
Rules do apply and for more information, check out our article - New rules to benefit those downsizing for retirement.
What if I’m making a spouse contribution?
If you’re making an after-tax contribution to your spouse (husband, wife, de facto or same-sex partner), if they’re between 65 and 69 (inclusive), the work test requirements will apply to them.
You might also be interested to know that if you do help them by making an after-tax contribution into their super, you might be eligible for a tax offset. To find out more, read our article - Why it pays to contribute to your partner’s super.
Note, if your partner is under age 65, work test requirements won’t apply to them. And, if they’re 70 or over, they will no longer be eligible to receive any spouse contributions.
Is there an age I can no longer make contributions?
Once you turn 75, you can no longer make any type of voluntary contribution to your super, but compulsory employer contributions can still be made on your behalf.
Typically, you’re eligible for compulsory employer contributions, under the Superannuation Guarantee scheme, if you earn more than $450 a month, with employer contributions no less than 9.5% of your before-tax salary.
Other things to keep in mind
Your circumstances and retirement goals will play a big part in what you decide to do and as the rules around super can be complex, it might be a good idea to chat to your adviser.
If you don’t have an adviser, but would like a bit more information on the topic, you can call us on 131 267 or use our online search engine to locate an adviser near you.
In addition, you may want to find out how past and future changes to super could affect you, which you can do by reading our legislation page.
Meanwhile, the following articles may also be of interest:
We look at the average super balances for different age groups in Australia so you can see how your super savings compare.