David Busoli, principal of SMSF Alliance, said a work test exemption allows eligible individuals to make personal concessional contributions for one additional year, provided several conditions are met.
“Firstly, they have to have met the work test in the financial year immediately prior to the year in which the contribution is made. Additionally, their total super balance at the previous 30 June has to be under $300,000, and they must not have used the exemption previously,” Busoli said.
Busoli continued that this exemption is particularly useful for clients transitioning out of the workforce who want to make one last deductible contribution, even if they don’t work in that year.
He continued that to satisfy the “work test”, a member must be “gainfully employed” for at least 40 hours within 30 consecutive days in a financial year.
“The work test can be satisfied at any time during the financial year, even after the contribution is made, provided it is within the same financial year as the contribution,” he said.
However, he said that being gainfully employed means being employed or self-employed for gain or reward in any business, trade, profession, occupation or employment and does not include voluntary or unpaid work.
“While not generally a common law employee, particularly in the case of a non-executive director who does not engage in the day-to-day management of the organisation, a director of a company is specifically included as an employee for SIS purposes provided the director is entitled to payment for their duties as a director.”
“This is irrespective of whether the company is carrying on a business or not. A self-employed person would need to be carrying on a business.”
Furthermore, he said that while gain or reward is not specifically defined in the SIS regulations, it would include remuneration such as salary or wages, directors’ fees, business income, bonuses, commissions, fees or gratuities which have been obtained in return for personal exertion.
“Unpaid work does not meet the definition of gainfully employed.”
“Also, work can be undertaken overseas, though residency matters may arise.
