Turning 65 soon? See what this means for contributing to your SMSF

Turning 65 soon? See what this means for contributing to your SMSF

Turning 65 years old is an important milestone when it comes to superannuation.

When you turn 65, certain regulations around withdrawing from your superannuation fund (including SMSFs) and your options around contributing to it, change. In summary:

  • Most significantly, it’s the age that an individual can withdraw from their superannuation without any cashing restriction (for example not being limited to 10%, and no retirement from work required).
  • If you want to continue contributing to your superannuation when you turn 65, you'll need to meet the 'Work Test'
  • In the lead-up the turning 65 (and in some cases just after you have turned 65), you're able to contribute more to your superannuation via the 'bring-forward provision'.
I offer more detail on the latter two points and an example case study below.

What the 'Work Test' is, and how to pass it

Prior to turning 65, you are able to contribute to your superannuation/SMSF without having to meet any 'Work Test'. After turning 65 (and before you turn 75) you can only contribute to your super if you have met the 'work test'. This means you must work for 40 hours in a 30-day period in the financial year you wish to contribute. This work must be paid (that is, it cannot be voluntary).

Is an SMSF right for you? Schedule a no-obligation call with me now.

How to use the 'Bring Forward Provisions' to contribute more to your SMSF

Firstly, the annual contribution limits for the 2015 financial year are:


2015 Financial Year
Concessional (pre-tax) contribution
$35,000 for the 2015 financial year for those aged over 49 on 30 June 2014
Non-concessional (post-tax) contribution
$180,000 per person per year

Although the annual limit for non-concessional contributions to your superannuation is currently $180,000 as mentioned above, if you are 64 or younger at 1 July you can utilise the ‘bring-forward provision’ during that financial year. This involves contributing three times the annual limit in one year and not contributing for the next two years, meaning you can contribute up to $540,000 in one year (being $180,000 x 3 years). Note the wording in the law: "64 or younger at 1 July": it doesn't say "before you turn 65". This wording means that you can utilise the bring-forward provisions even if you’re 65 – you will still qualify as long as you were 64 at 1 July in the financial year you wish to contribute.

HOWEVER: if you have turned 65 by the time the contribution is actually made, you will need to meet the work test in order for the contribution to qualify. This little timing difference in the law becomes more apparent by using an example:

Case study

Nellie turned 65 on 20 January 2015. In late February 2015 she sold a property and wished to deposit some of the proceeds, being $480,000 to her SMSF.

  • Q: Can Nellie still take advantage of the bring-forward provisions even though she has already turned 65?
  • A: Yes. According to the law, since she was 64 at 1 July 2014 she is still able to utilise the bring-forward provision as long as the contribution is made before 30 June 2015. This means that she can contribute the whole $480,000. However, because she is already 65, she needs to meet the work test in order for the contribution to be valid and accepted by her SMSF.
  • Q: What happens if Nellie makes the contribution but hasn't met the work test for the 2015 financial year?
  • A: The contribution, together with a reasonable calculation of the earnings made on that contribution, has to be returned to Nellie.
  • Q: Can Nellie contribute the proceeds in the next financial year (2016) if she can’t/doesn't meet the work test before 30 June 2015?
  • A: Yes, but only up to $180,000 since she will no longer be eligible to use the bring-forward provisions. Additionally the work test still needs to be met for each year a contribution is made. This means that in order to contribute all of the $480,000, Nellie will need to do it over a period of three financial years, meeting the work test each year. If the work test had simply been met during the 2015 financial year, this would not have been required.

You might also be interested in reading: When can you withdraw your superannuation? or Franking credits – how the 45-day holding rule works.

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