Super contribution age 67 measure

24 August 2020

The Government’s 2019-20 budget measure to increase the cut-off age (from 65 to 67 years) that super funds can accept voluntary contributions in respect of a member regardless of the work test has been implemented.

Superannuation Legislation Amendment (2020 Measures No 1) Regulations 2020 have been registered and will apply to contributions made in the 2020-21 financial year. 

The provisions

  • Non-mandated contributions can be made in respect of a member up to age 67 without the member having to meet the work test requirement (ie. gainfully employed for at least 40 hours in a consecutive 30 day period).
  • The age that spouse contributions can be accepted by a fund in respect of a member has been increased from under 70 to under 75.

How the work test applies under the new rules

  • Mandated employer contributions including superannuation guarantee contributions.

Mandated employer contributions can be accepted by a fund anytime regardless of the age of the member and the number of hours worked.

  • Voluntary contributions including non-mandatory employer contribution (e.g. salary sacrifice contributions), concessional and non-concessional contributions (“NCC”).

Members between age 67 and 74 must meet the work test requirement. For those turning age 75, contributions can be received no later than 28 days after the end of the month the member turns 75 years old.

  • Spouse contributions

Spouse contributions can be made in respect of a member aged under 75 but the receiving spouse between age 67 and 74 must meet the work test requirement. 

  • Downsizer contributions

The fund can accept downsizer contributions in respect of a member at any age regardless of employment status as long as the member has attained age 65.

Normal eligibility criteria apply to the above contributions. 

How about bring forward contributions?

The 2019-20 Budget initiative also includes a measure to enable those age 65 and 66 to bring forward NCC up to three years. 

This is a tax measure.  Treasury Laws Amendment (More Flexible Superannuation) Bill 2020 has been introduced into Parliament.  The cut-off age for accessing the bring forward NCC cap will be increased from 65 to 67 years, starting in the 2020-21 financial year.

However, until legislation has been passed, the NCC bring forward cut-off age is still 65 years.  This means for those aged 65 and 66 years, they should only initiate the NCC bring forward for 2020-21 after the relevant Bill has passed both Houses of Parliament.

 

For further information and assistance, please contact us on 02 8296 6266.

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