Superannuation Contributions FAQs: What You Need to Know
Superannuation contributions are essential for building your retirement savings. This FAQ provides clear answers to common queries about super contributions, ensuring you understand the rules, opportunities, and potential pitfalls.
Work Test and Contribution Rules
Can individuals aged 68 contribute to super without meeting the work test?
Yes. From 1 July 2022, individuals aged 74 or less are not required to meet the work test for non-concessional contributions (NCCs), salary sacrifice contributions, or contributions exempt from NCC caps. However, to claim a tax deduction for personal contributions, the work test applies to those aged 67 to 75.
Tips: Contributions must meet Total Super Balance (TSB) requirements. From age 75, only mandated employer contributions and downsizer contributions are allowed.
Does babysitting or managing an investment property satisfy the work test?
It depends. To meet the work test, activities must involve gainful employment, defined as working for gain or reward in a business, trade, or occupation. Passive income, such as rent from an investment property, typically does not meet this definition unless managed at scale like a business.
Personal Deductible Contributions
Can individuals with a TSB exceeding $1.9 million make personal contributions?
Yes. Personal contributions are allowed regardless of TSB. However, exceeding concessional or non-concessional contribution caps may result in penalties.
Tips: Ensure proper reporting of contributions to avoid unintended consequences.
What happens if a Notice of Intent (NOI) is not lodged before a rollover?
The deduction may be denied. If an NOI is not lodged before rolling over funds, the contributions may not be eligible for a tax deduction. Always submit NOIs before any rollover or withdrawal.
Catch-Up Contributions
How do catch-up contributions work?
Individuals with a TSB under $500,000 can carry forward unused concessional contributions (CCs) from the past five years. Contributions in excess of the current cap ($27,500) are applied to the earliest eligible year.
Can a 74-year-old use the five-year catch-up rule?
It depends. Clients aged 67 to 74 must meet the work test to use the catch-up rule. This can help offset large taxable events like property sales.
Non-Concessional Contributions
What are the rules for clients triggering the bring-forward rule?
Clients aged 67 to 74 can use the bring-forward rule to make up to three years of NCCs, provided their TSB is under $1.9 million.
Example: A client making an NCC of $180,000 in 2022/23 may contribute an additional $150,000 in 2023/24 or 2024/25 if their TSB remains under $1.9 million.
Can clients turning 75 in 2024 make NCCs?
Yes, up to $110,000. Contributions must be made within 28 days of the month following their 75th birthday.
Special Contributions
Can non-residents contribute to super?
Yes. General contribution rules apply to non-residents, but restrictions exist for downsizer contributions and government co-contributions.
Tips: Non-residents should assess their tax position, as super benefits may be heavily taxed upon leaving Australia.
What if a downsizer contribution is made incorrectly?
Funds may be reclassified as NCCs if all conditions for downsizer contributions are not met. Contributions exceeding NCC caps could result in penalties.
