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Re: Making contributions aged 74 and work test

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(1) My wife is 73 years and she would like to contribute $100,000 (from a property sale) to her fund.  But her fund already has $475,000.  She satisfies the work test very easily.  Can she make this contribution or is there a limit to prevent it?

(2) In my case I am 74 years and made a $100,000 contribution to our SMSF in December, 2019. Again the work test is OK. Can I make another $100,000 contribution in the next financial year (July) before I turn 75 years in August?

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Devotee Registered Tax Practitioner

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She satisfies the work test very easily.

 

You have to be really careful with terminology.  The work test means working 40 hours within a 30 day continous period before a contribution can be made.

 

We mistakenly thought that if she aleady had more than $300,000 in her SMSF component that further contributions could not be made. 

 

That is not the work test  -  that is the new special exemption to the work test in the first year that some-one over 65 fails to meet the work test.

 

Her income is already well under the tax threshold.  She does satisfy the work test.

 

You did not mention her income level originally, so covering all possibilities.  Then there is no point in making concessional contributions (CC) because the SMSF would have to pay 15 % contributions tax.  Best to get expert advice, from someone who has all your particular circumstances, before acting.

 

 

 

 

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Devotee Registered Tax Practitioner

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She satisfies the work test very easily.  Can she make this contribution or is there a limit to prevent it?

 

Yes, and also concessional up to her 2020 CC cap if a tax deduction is needed.

 

Can I make another $100,000 contribution in the next financial year (July) before I turn 75 years in August?

 

Yes, as long as you can pass the work test before the contribution.  The work test exemption would only be available if your super balance was under $ 300 K.

 

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Sorry, but I don't understand the answer to the first question regarding my wife's contribution to SMSF.  It appears that "Yes" she can make the $100,000 contribution (from the sale of a privately owned property) even though she has about $475,000 already in her component of our SMSF.  We mistakenly thought that if she aleady had more than $300,000 in her SMSF component that further contributions could not be made. 

But what does it mean to say..."and also concessional up to her 2020 CC cap if a tax deduction is needed." What is a 2020 CC cap?  She has not contributed into her SMSF for many years, and at age 73 she is well into pension mode.  I don't think a tax deduction is needed or is being sought.  Her income is already well under the tax threshold.  She does satisfy the work test.

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Most helpful response

Devotee Registered Tax Practitioner

Replies 0

She satisfies the work test very easily.

 

You have to be really careful with terminology.  The work test means working 40 hours within a 30 day continous period before a contribution can be made.

 

We mistakenly thought that if she aleady had more than $300,000 in her SMSF component that further contributions could not be made. 

 

That is not the work test  -  that is the new special exemption to the work test in the first year that some-one over 65 fails to meet the work test.

 

Her income is already well under the tax threshold.  She does satisfy the work test.

 

You did not mention her income level originally, so covering all possibilities.  Then there is no point in making concessional contributions (CC) because the SMSF would have to pay 15 % contributions tax.  Best to get expert advice, from someone who has all your particular circumstances, before acting.