CFS clarifies confusion around age limits for work test changes
While clients turning age 75 in June this year may still be able to take advantage of the work test changes that start 1 July, they will be restricted from using the bring-forward rules, Colonial First State explained.
Speaking in a recent podcast, Colonial First State senior technical services Linda Bruce said one of the areas Colonial First State has been receiving from advisers in regard to the work test changes is in relation to clients that turn 75 in June this year.
Ms Bruce said advisers often want to know whether a client who has their 75th birthday in June this year can make a non-concessional contribution in July in the 2022-23 financial year.
“The answer is that they can. If you have a look at the rules, the cut-off date for when a super fund can accept a personal voluntary contribution, as opposed to a downsizer contribution, is at the end of the month the client turns 75 plus another 28 days,” explained Ms Bruce.
“So, in this particular case, if the client’s 75th birthday is in June 2022, then the cut-off date for the fund to accept a personal voluntary contribution would be 28 July 2022. As long as the client makes the personal contribution before 28 July 2022, they won’t have to worry about the work test.”
However, while the client will be able to make a non-concessional contribution, they won’t be able to use the bring-forward rule, Ms Bruce warned.
“Let’s assume the client wants to contribute up to $300,000 and their total superannuation balance isn’t an issue because it’s below $1.48 million on 30 June 2022. If we look at the rules for bring-forward contributions, the client needs to be under age 75 at the very beginning of the financial year,” she said.
“They are already age 75 on 1 July 2022, they are not under 75, which means the answer is no, they cannot use the bring-forward non-concessional contribution cap, but they can still contribute the standard $110,000 non-concessional contributions cap.”
Miranda Brownlee
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.
