Welcome change in new work test regulations
The regulations for the work test exemption have now been made by the Federal Executive Council and adjusted to allow individuals to use the bring-forward arrangements in the year they turn 65.
Assistant Treasurer Stuart Robert announced on Friday that the regulations for the work test exemption, which provides retirees with an extra year to contribute to superannuation, had been made by the Federal Executive Council.
The work test exemption, which was announced in the 2018–19 budget, enables Australians aged 65 to 74 with a total superannuation balance below $300,000 to be able to make voluntary contributions for 12 months from the end of the financial year in which they last met the work test.
The government released a draft legislation for consultation in October. During the consultation, the SMSF industry raised concerns about the restriction on accessing the bring-forward rules when using the measure.
Following the feedback from stakeholders on the draft legislation, the government has decided to allow those who use the work test exemption in the year they turn 65 to access bring-forward arrangements for non-concessional contributions, Mr Robert said.
SuperConcepts general manager of technical services and education Peter Burgess said that the changes made to the draft legislation make a lot of sense and are welcomed by the industry.
“It not only means this measure can now be implemented by simply amending the regulations rather than requiring both houses of Parliament to amend an act, it also significantly simplifies this measure for everyone,” Mr Burgess explained.
“The draft legislative provisions which were designed to disallowed individuals who turn 65 during the income year from counting work test exemption contributions towards the non-concessional contribution bring-forward arrangements were, in my view, unnecessary and would have resulted in some clients inadvertently breaching the non-concessional contribution cap.”
It was unfortunate, however, that the balance threshold to access the measure still remains at $300,000, Mr Burgess said.
“It is, in my view, preferable that this threshold be increased to $500,000 to coincide with the threshold for catch-up concessional contributions,” he said.
“It just means we will now have another balance threshold to keep an eye particularly for pending and recent retirees.”